March 1, 2024

Abrupt Turn as Facebook Battles Suit

Before the cinematic Winklevoss twins battled with Mark Zuckerberg over the origins of Facebook, and before the company’s co-founder Eduardo Saverin became estranged from his friend Mr. Zuckerberg, there was Paul Ceglia.

In one of the strangest tales to hit Silicon Valley in years, Mr. Ceglia, a wood-pellet salesman from upstate New York, last year filed suit saying that a 2003 work-for-hire contract between him and Mr. Zuckerberg, then 18, entitled him to an 84 percent stake in Facebook.  

Mr. Ceglia’s own history did nothing to lend credibility to his improbable claim. In 1997, he pleaded guilty to possession of hallucinogenic mushrooms in Texas, and last year, he was arrested, charged with fraud and had his business shut down by Andrew Cuomo, then the New York State attorney general. 

But the skepticism and scorn initially heaped on Mr. Ceglia’s claims turned to astonishment last week when he added some ammunition to his case. Mr. Ceglia filed an amended complaint in federal court in New York written by lawyers from DLA Piper, a law firm with offices around the world. It includes excerpts from e-mails purportedly exchanged between him and Mr. Zuckerberg and that, if authentic, could become a major headache for Facebook.

So far, neither Mr. Ceglia nor his lawyers have produced originals of the e-mails or the contract. Facebook says the e-mails were fabricated, and that although there was a 2003 contract, it was doctored. The company has called the lawsuit a fraud.

“This man is a convicted felon with a history of fraud charges,” said Orin Snyder, a partner at Gibson, Dunn and Crutcher, which is representing Facebook. “His revised complaint is simply his latest scam — supported by a doctored contract and fake e-mails.” 

Still, the details laid out in the new complaint, as well as Mr. Ceglia’s new legal team, which also includes a former attorney general of New York, are giving skeptics pause.

“It is a little harder to dismiss him out of hand,” said Scott C. Dettmer, a longtime Silicon Valley lawyer who has advised start-ups and founders for decades.  Even so, Facebook watchers point to a series of inconsistencies and unanswered questions in the case. For one, the 2003 contract was signed about a year before Facebook was created, and most historical accounts of the company say Mr. Zuckerberg had not yet conceived the social networking site at that time.

Skeptics have also asked why Mr. Ceglia waited so long to come forward with his claims. Mr. Ceglia , through his lawyers, declined to be interviewed for this article and he did not respond to a Facebook message asking for comment. But last year, he told Bloomberg News that he had simply forgotten about the contract with Mr. Zuckerberg. The explanation did not satisfy most skeptics, given that well before last year, Facebook was worth billions, and had become ensconced in popular culture. Also, some of the other disputes over its origins had been well publicized by that time.

 When asked by The New York Times to produce the original documents backing up Mr. Ceglia’s complaint, Robert W. Brownlie, a partner at DLA Piper, declined.   “That will come out during the course of litigation,” Mr. Brownlie said. “Anyone who claims this case is fraudulent and brought by a scam artist will come to regret those claims.”  

Mr. Ceglia’s new legal team includes Dennis C. Vacco, a former New York attorney general now in private practice in Buffalo, who did not respond to requests for comment. Mr. Brownlie said he was skeptical about Mr. Ceglia’s claims initially, but performed due diligence to ensure the documents were authentic. He said that he had not seen the originals himself, but that others on the team had and that he was confident of their authenticity.

If Mr. Ceglia’s tale is real, it would be a significant rewriting of Facebook’s early history, as documented in one movie, two books and scores of newspaper and magazine articles.

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