March 24, 2023

DealBook: Lawyer Withdraws From Case by Man Claiming Facebook Ownership

Paul Ceglia, who claimed he owns half of Facebook, at home in 2010.John Anderson/Wellsville Daily ReporterPaul Ceglia, who claimed he owns half of Facebook, at home in 2010.

The lawyer representing a man claiming to own a substantial stake in Facebook withdrew from the case on Tuesday, just a day after he defended his client in an interview with The New York Times.

Federal prosecutors arrested the entrepreneur, Paul Ceglia, last week on fraud charges, accusing him of forging the e-mails and contract that supported his two-year-old claim against the social networking giant.

Dean Boland, the lawyer for Mr. Ceglia, notified the court that he was dropping out of the civil lawsuit. His reasons for withdrawing were filed under seal, but in the public portion of his filing, Mr. Boland supported his client.

“The undersigned feels it is important to emphasize in the strongest terms possible, that the reasons underlying this request, provided to the court for its review, have nothing to do with any belief by the undersigned that plaintiff is engaged in now or has been engaged in during the past, fraud regarding this case,” Mr. Boland wrote.

In an interview with The Times on Monday, Mr. Boland backed his client’s claims and said he would continue to pursue the case against Facebook. He said that the government’s criminal charges would help his client’s cause because it suggested that some of Mr. Ceglia’s evidence was authentic.

Prosecutors say that Mr. Ceglia, 39, of Wellsville, N.Y., filed a spurious lawsuit claiming that Mr. Zuckerberg, as Harvard freshman in 2003, promised him an at least 50 percent in the social network, and that he doctored, fabricated and destroyed evidence to support his claims.

“Ceglia’s alleged conduct not only constitutes a massive fraud attempt, but also an attempted corruption of our legal system through the manufacture of false evidence,” Preet Bharara, the United States attorney in Manhattan, said in a statement. “Dressing up a fraud as a lawsuit does not immunize you from prosecution.”

Mr. Ceglia has been detained since his arrest on Friday and is expected to make an appearance and enter a plea in Federal District Court in Buffalo on Wednesday. A federal public defender represents him in the criminal case.

Mr. Boland is the latest lawyer to withdraw from his civil case.

Mr. Ceglia’s lawyers since 2010 have included Robert W. Brownlie of DLA Piper, the world’s largest law firm, and Dennis C. Vacco, a former New York attorney general now in private practice. Mr. Brownlie and Mr. Vacco dropped out of the case after Kasowitz Benson Friedman Torres, another law firm that had briefly represented Mr. Ceglia, notified them that it believed Mr. Ceglia’s supposed contract with Mr. Zuckerberg was a sham.

Mr. Brownlie, who last year staunchly defended the legitimacy of his client’s claims to The Times, has not returned multiple calls and e-mails seeking comment. Mr. Vacco declined to comment, citing attorney-client privilege.

In his withdrawal filing on Tuesday, Mr. Boland, of Lakewood, Ohio, said that no one had proved that Mr. Ceglia’s claims were fraudulent.

“Myself and prior counsel all have and had a duty to bring to this court any evidence of fraud, even fraud by our own client, should we have come across it,” wrote Mr. Boland. “No prior counsel and current counsel, including the undersigned, have done so. The undersigned, at no time, has encountered evidence of fraud by plaintiff.”

Facebook’s lawyers at Gibson, Dunn Crutcher have suggested that Facebook could pursue disciplinary claims against some of the lawyers that represented Mr. Ceglia.

“Now that Ceglia is being brought to justice for his crimes, Facebook intends to hold accountable all of those who assisted Ceglia in this outrageous fraud,” Orin Snyder, a partner at Gibson Dunn, said in a statement. “Facebook will send a strong message that it does not tolerate legal shakedowns and will take aggressive action against all those who file abusive lawsuits against the company.”

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DealBook: Carlyle Strikes Deal for TCW

7:42 p.m. | Updated

The Carlyle Group said on Thursday that it would buy the TCW Group, a Los Angeles-based investment manager whose clients include some of the nation’s biggest pension and endowment funds, from Société Générale of France.

The buyout firm is buying TCW as a portfolio company, rather than adding it to its own operations. The terms were not disclosed.

Carlyle is partnering on the deal with TCW’s management team, which will increase its already substantial stake in the investment firm to 40 percent. The transaction is expected to close in the first quarter of 2013.

“TCW is a premier global asset manager that will become even stronger as a free-standing company with increased employee ownership,” Olivier Sarkozy, Carlyle’s head of financial services, said in a statement. “The firm has enviable institutional relationships, a world-class distribution network and a vibrant and fast-growing mutual fund complex.”

The transaction will conclude a lengthy sales process for TCW, which has some $130 billion in assets. Société Générale, which bought a controlling stake in TCW in 2001 for about $880 million, has been under pressure to raise additional capital and has been exploring the divestiture of noncore assets.

Several private equity firms had participated in an auction of TCW, people briefed on the matter said previously, with Carlyle taking the lead in recent weeks.

Until December, TCW had been locked in a lengthy legal battle with Jeffrey E. Gundlach, the former head of its fixed-income department. It had fired Mr. Gundlach, one of the nation’s most prominent bond investors, in December 2009.

TCW subsequently sued Mr. Gundlach for breach of fiduciary duty and theft of trade secrets, accusing him and several members of his team of stealing confidential client data and proprietary trading systems to set up a new firm, DoubleLine Capital. More than 40 TCW employees eventually followed Mr. Gundlach to DoubleLine. Mr. Gundlach countersued, arguing that he was owed millions of dollars in unpaid fees for his work at TCW.

In September, a jury in Los Angeles delivered a mixed decision in the civil trial, finding Mr. Gundlach had breached his fiduciary duty to his former employer, but also awarding him $66.7 million in damages in the countersuit while awarding TCW no damages. The two sides settled their fight in late December.

To help replace the team that formed DoubleLine, TCW purchased Metropolitan West Asset Management in 2009.

Carlyle was advised by Bank of America Merrill Lynch, Sandler O’Neill Partners and the law firm Simpson Thacher Bartlett. It is receiving financing from JPMorgan Chase, Bank of America and Morgan Stanley.

TCW was advised by Morgan Stanley and the law firm Debevoise Plimpton, and Société Générale was advised by JPMorgan and the law firm Skadden, Arps, Slate, Meagher Flom.

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