A former employee who claims Snap Inc. lied to investors ahead of its initial public offering has escalated his lawsuit against the company and is seeking protection under whistleblower laws.
Anthony Pompliano, who served as Snap's growth lead for three weeks in 2015, is transferring his suit against the company from state to federal court, demanding a trial by jury and seeking damages of at least $10 million, according to a complaint seen by Business Insider that will be filed Tuesday in the U.S. District Court for the Central District of California.
Pompliano's lawsuit names Spiegel, Snap Director of Revenue Brian Theisen, and Chief Strategy Officer Imran Khan as defendants.
Additionally, Pompliano is filing for protection under the whistleblower provisions of the Dodd-Frank finance reform law. Those provisions apply to company employees who have come forward with information under the reasonable belief that their company committed fraud against shareholders.
Pompliano first sued the app-maker in January for allegedly "falsely misrepresenting" several key user metrics to outside investors. He also claimed that Snap conducted a "smear campaign to ruin his career" after he was fired.
Many of the details surrounding Pompliano's tumultuous three-week tenure at Snap were revealed when the company said it had "nothing to hide" and unredacted his original complaint in April. But his new, 45-page complaint includes slides from a presentation he claims to have given Snap CEO Evan Spiegel and other executives about the company's need to address its conflated app metrics.
Here are a few of Pompliano's other key allegations:
- In early 2015, Snapchat was telling investors it had 100 million daily active users (DAUs). But Pompliano claims the true number was "closer to 80 million."
- Between January and September 2015, Snap allegedly projected it was experiencing double-digit, month-over-month growth in DAUs. But according to Pomplianco's complaint, the app's growth rate during that period was "often flat, or at times ranged from 1% to 4% per quarter."
- Snap management overstated by more than 100% how many people completed the app's registration process, according to the suit.
- Company management also overstated the portion of users who continue using the app seven days after signing up, Pompliano claims. While Snapchat management claimed its retention rate was roughly 40%, the actual figure was closer to 20%, the suit states.
- Snap chief strategy officer Imran Khan asked Pompliano to violate a non-solicitation and non-compete agreement he signed with his former employer, Facebook, the suit claims. According to the filing, Khan asked Pompliano to "draw a detailed organizational chart of Facebook, name the key employees, and identify which ones were particularly talented and could be poached by Snapchat."
Snap has disparaged Pompliano's allegations in public statements and court filings, calling him a "disgruntled former employee" whose claims are "without merit." The company faced heated criticism after Pompliano's complaint revealed that Spiegel had allegedly said Snapchat was "only for rich people" and he didn't "want to expand into poor countries like India and Spain." Snap has called the alleged comment "ridiculous."
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