Abrupt turn as FB battles suit

E-mails exchanged between Paul Ceglia and Mark Zuckerberg could become a major headache for Facebook

Aaron Sorkin may want to take notice. The script for a prequel to his hit movie The Social Network almost writes itself.

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

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

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 scepticism and scorn heaped on Ceglia’s claims turned to astonishment last week when he 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 Zuckerberg and that, if authentic, could become a major headache for Facebook.

So far, neither 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 Ceglia’s new legal team, which also includes a former attorney general of New York, are giving sceptics 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 Zuckerberg had not yet conceived the social networking site at that time.

Sceptics have also asked why Ceglia waited so long to come forward with his claims. Ceglia 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 Zuckerberg.

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

Ceglia’s new legal team includes Dennis C Vacco, a former New York attorney general. Brownlie said he was sceptical about 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 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.

©2011 The New York
Times News Service