Bloomberg News

Facebook Claimant Ceglia Must Produce Original Contract

July 01, 2011

(Updates with quotation from judge in 15th paragraph.)

July 1 (Bloomberg) -- A western New York man who claims a 2003 contract with Facebook Inc. co-founder Mark Zuckerberg made him a partner in the company must turn over the original contract and e-mails he claims support his case, a judge said.

U.S. Magistrate Judge Leslie Foschio in Buffalo, New York, yesterday ordered that Paul Ceglia allow forensic testing of the documents and produce his computers, hard-drives and computer storage media to Facebook by July 15. Facebook, which argued that Ceglia’s suit is a “fraud on the court,” will then have 30 days to test the documents.

At the end of a three-hour hearing, Foschio declined most of Ceglia’s requests, including that Facebook immediately turn over documents and e-mails relating to Facebook’s origins. Foschio did order Facebook to produce samples of Zuckerberg’s signature for examination by Ceglia’s experts. After Ceglia turns over the materials, Facebook will produce 176 e-mails retrieved from Zuckerberg’s account at Harvard University, where he studied as an undergraduate.

Both sides agree that Ceglia hired Zuckerberg, then a freshman at Harvard, to work on StreetFax.com, a company that offered a database of street photos to insurance companies and other subscribers, in April 2003. In a sworn statement, Zuckerberg said that Facebook wasn’t mentioned in the contract he signed with Ceglia. The company has called Ceglia a con man.

‘Fabricated E-Mails’

“This case is based on a fraudulent contract and fabricated e-mails,” Facebook’s lawyer, Orin Snyder, told Foschio.

Facebook said Zuckerberg’s Harvard account contains the genuine e-mails between Zuckerberg and Ceglia. The Harvard e- mails make no mention of Facebook and show Ceglia offering a series of excuses for not paying money he owed Zuckerberg, according to the company.

Snyder said that Ceglia paid Zuckerberg $9,000 and owed him more money, which he never paid.

A lawyer for Ceglia, Jeffrey Lake, yesterday complained to Foschio that Facebook has publicly attacked Ceglia’s character. He told Foschio that Zuckerberg is an admitted computer hacker who has been sued over the origins of Facebook.

Lake said that there’s no way to tell if Zuckerberg deleted e-mails on the Harvard server. According to the university, Zuckerberg accessed his Harvard e-mail account in October, Lake told Foschio.

“Mr. Zuckerberg and his team are the most capable in the world in manipulating electronic information,” Lake said. “We have no idea what he’s deleted. We can’t know that.”

‘Speculation and Nonsense’

After the hearing, Snyder said Lake’s suggestion that Zuckerberg deleted unfavorable e-mails from his Harvard account is “conjecture, speculation and nonsense.”

In an amended complaint filed in April, Ceglia quoted from e-mails he said he exchanged with Zuckerberg. In one of the disputed e-mails, Zuckerberg asks Ceglia if he could adapt the source code from StreetFax for use on “The Face Book” project.

Ceglia claims he cut and pasted his e-mails with Zuckerberg from a Web-based e-mail program into word-processing documents that he saved on floppy discs. He said the messages support his claim that the two men formed a partnership giving Ceglia half ownership of Facebook when it was started in 2004.

Ceglia hasn’t shown the original contract publicly or to representatives of Facebook. The two-page document is in a bank safe-deposit box in Hornell, New York, according to Ceglia’s lawyers. Foschio told the parties to develop protocols to test the contract and other materials, suggesting that Ceglia may want to hire an armed guard to supervise the examination of the contract.

‘A Lot at Stake’

“There’s a lot at stake here,” Foschio said.

Lake said that if the experts on both sides agree, after examining and testing the original contract, that it’s a forgery, the case will be over.

“Lights out. Ball game over. I get that,” Lake said.

Snyder told Foschio yesterday that Zuckerberg no longer has his copy of the contract he signed with Ceglia. Snyder said Facebook believes the second page of Ceglia’s contract, which includes Zuckerberg’s signature, may be authentic. The first page, which refers to “The Face Book” and includes Zuckerberg’s initials, is a forgery, Snyder said.

Ceglia’s lawyers had asked the court to order both sides to turn over evidence, including all of Zuckerberg’s documents, e- mails and instant messages relating to Facebook before July 30, 2004.

‘Scam Artist’

In addition to ruling in favor of most of Facebook’s requests, Foschio yesterday questioned whether Ceglia’s case is barred by a six-year statute of limitation and said his complaint may not state a viable claim under partnership law.

In court papers, Facebook’s lawyers have called Ceglia “a career scam artist.” Ceglia’s lawyers said in court papers that he showed no deception on a June 11 polygraph test in which he was asked if he’d forged or doctored the contract.

Three days ago, lawyers from the firms DLA Piper LLP and Lippes Mathias Wexler Friedman LLP told the court they were quitting the case after representing Ceglia for less than three months. The lawyers didn’t give a reason for the move.

DLA Piper, which has 4,200 lawyers in 30 countries, is one of the biggest law firms in the world. The Lippes Mathias lawyers representing Ceglia included former New York Attorney General Dennis Vacco.

Facebook, based in Palo Alto, California, is valued at as much as $71 billion, according to Sharespost.com, an online marketplace for investments in companies that aren’t publicly traded.

The case is Ceglia v. Zuckerberg, 1:10-cv-00569, U.S. District Court, Western District of New York (Buffalo).

--Editors: Peter Blumberg, Fred Strasser

To contact the reporter on this story: Bob Van Voris in U.S. District Court in Manhattan at rvanvoris@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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