More legal trouble could be in the cards for Mark Zuckerberg and Facebook. Old pal Paul Ceglia claims that Zuckerberg agreed to give him 50 percent ownership of the company. Ceglia claims he paid US$1,000 to help fund Facebook at Harvard in 2003.
Ceglia sued Zuckerberg last July, and in the weeks following the suit he presented a contract bearing Zuckerberg’s signature, which gave Ceglia a 50 percent interest in Facebook. Ceglia claimed it took seven years to file the suit because he forgot about the contract and stumbled upon it after being arrested for fraud in a separate incident.
Ceglia refiled the case on Monday with new evidence in his complaint. It now contains a slew of emails from 2003. The messages are a back-and-forth between Zuckerberg and Ceglia discussing ownership percentages of Facebook, deadlines for work on the site, and possible features that could go into it.
Ceglia has hired the high-powered law firm, DLA Piper, for representation.
Facebook reportedly told Business Insider that the emails and contract are fakes. Facebook called Ceglia a scam artist and a convicted felon. The social networking giant likely has forensic analysis of Zuckerberg’s hard drives left over from the suit with the Winklevoss twins, which could come into play.
Neither Facebook nor DLA Piper responded to the E-Commerce Times’ requests for comments by press time.
Full of Holes
Ceglia is complaining about events that go back eight years, and that length of time could have a bearing on his chances for success.
“Any lawsuit has to be field within a certain length of time, depending of the nature of the suit,” Peter S. Vogel, a partner at Gardere Wynne Sewell, told the E-Commerce Times. “This was brought way past the legal statute in the state of New York, so many people are very skeptical about the suit.”
Another problem for Ceglia is his other legal troubles. He has a drug conviction in Texas and a past run-in with the New York attorney general.
“The plaintiff has been sanctioned by the Attorney General of New York for violating state laws,” said Vogel. “If that’s true, we’re dealing with someone who is not the most ethical person on Earth, and that has a bearing on the court.”
Facebook hopes to move the case to federal court, since the two parties live in separate states. The fact that Ceglia didn’t originally file in federal court may say something about his resources.
“Zuckerberg moved to move this to federal court since he’s in California and the suit was brought in New York,” said Vogel. “The fact that it was brought in state court makes it look like Ceglia is doing a shakedown without spending a whole lot of money.”
More Legal Drama
Mark Zuckerberg’s success with Facebook has made him a huge public figure and a possible target.
“It’s a nuisance suit if you’re Mark Zuckerberg,” Laura DiDio, principal analyst at ITIC, told the E-Commerce Times. “He has a bull’s-eye on his forehead. Everybody wants a piece of him. If you’re Mark Zuckerberg and you become wildly successful, you get aimed at. It’s like he has sounded a giant tallyho for everyone to come.”
Zuckerberg settled with the Winklevoss twins, but they came back looking for more. High-profile suits like theirs can bring others out of the woodwork.
“The fact that Mark Zuckerberg settled with the twins and the other guy make this guy say, ‘I can get some too,'” said DiDio. “Anyone can come after him. A conversation can turn into someone’s claim. What the suits hopes to accomplish is to say, ‘I’ll go away if you give me this much money.'”
If Ceglia proves that his accusations are valid, then he could be looking at a windfall of cash — and there may be an army of Ceglias right behind him.
“Zuckerberg should gird for battle,” said DiDio. “The lateness of the suit doesn’t matter. Facebook is getting bigger and bigger. There’s a school of thought that says, ‘What’s a hundred million to Zuckerberg?'”