You could definitely lose face, but i don't believe it is a jailable offense to exaggerate the logistics of your operation.
If he is exaggerating to get investors then he is most likely violating the law. This is really bad policy, since due diligence will wipe those illusions clear.
If exaggerating features of a product, again bad policy, if you are selling something you don't have you are going to end up with an unhappy customer.
In this case exaggerating number of employees would be exaggerating features if he is selling support as a feature, bad policy to make promises that are not true.
Overall as long as they arent asking you to do anything you feel is not just, i wouldnt worry about it to much.
These lessons usually end up making teachers out of themselves.
If he is exaggerating to get investors then he is most likely violating the law. This is really bad policy, since due diligence will wipe those illusions clear.
If exaggerating features of a product, again bad policy, if you are selling something you don't have you are going to end up with an unhappy customer. In this case exaggerating number of employees would be exaggerating features if he is selling support as a feature, bad policy to make promises that are not true.
Overall as long as they arent asking you to do anything you feel is not just, i wouldnt worry about it to much. These lessons usually end up making teachers out of themselves.