Bloomberg News

Facebook Claimant Ceglia Loses Bid to Dismiss Fraud Charges (2)

March 07, 2014

Paul Ceglia, the man who claims he’s entitled to half of Facebook Inc. (FB:US), lost a bid to throw out charges he faked a contract, destroyed evidence and created phony e-mails in a suit against the company’s founder, Mark Zuckerberg.

U.S. District Judge Andrew L. Carter Jr. today rejected Ceglia’s argument that he can’t be prosecuted for fraud for using allegedly phony evidence to support his claim that he signed a contract with Zuckerberg in 2003 that gave him a share in what became the world’s biggest social network.

Ceglia, 40, sued Facebook and Zuckerberg in 2010, claiming he was due 84 percent of the company. He later reduced the demand to half.

A federal grand jury in Manhattan indicted Ceglia in 2012 on charges of mail fraud and wire fraud. Ceglia’s court-appointed lawyer, David Patton, argued that federal statutes for those crimes can’t be applied to false claims made in civil litigation.

In March 2013, a federal magistrate judge in Buffalo, New York, where the lawsuit is pending, found “clear and convincing evidence” that Ceglia forged the contract and recommended the case be thrown out. The judge overseeing the case hasn’t ruled on the magistrate’s report.

Facebook, based in Menlo Park, California, has said from the start of the lawsuit that Ceglia’s claim was fraudulent.

‘Intimidating Display’

In an e-mail after today’s court hearing, Ceglia said the case against him is part of “an intimidating display of power” by Zuckerberg, his lawyers and the Justice Department. Ceglia said the government is violating his right of access to the courts by prosecuting him for conduct in a pending lawsuit.

“I’m certain that the First Amendment right we all have in this country to petition should bar the feds from picking sides in civil cases, or every contract dispute is indictable,” Ceglia said in the e-mail.

The criminal case is U.S. v. Ceglia, 12-mj-2842, U.S. District Court, Southern District of New York (Manhattan). The contract case is Ceglia v. Zuckerberg, 10-cv-00569, U.S. District Court, Western District of New York (Buffalo).

To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net

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


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