Business

Man accused of trying to cheat Facebook

Sunday, October 28, 2012    

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NEW YORK — A businessman who claimed in a lawsuit that Facebook founder Mark Zuckerberg had promised him half ownership in the then-fledgling company when he was still at Harvard was arrested Friday on fraud charges.

Paul Ceglia, 39, was arrested at his Wellsville, New York, home on charges of mail and wire fraud after an investigation by the US Postal Inspection Service. He was scheduled to appear in federal court in Buffalo later in the day.

Authorities said Ceglia doctored, fabricated and destroyed evidence to support the claims in a lawsuit he filed in Buffalo federal court in 2010.

In the lawsuit, Ceglia claimed that he and Zuckerberg in 2003 signed a software development contract that included a provision entitling Ceglia to half ownership of Facebook in exchange for US$1,000 in startup money for the budding company.

Investigators said in a release that Ceglia had replaced the first page of the real contract he signed with Zuckerberg with another page that was “doctored to make it appear as though Zuckerberg had agreed to provide Ceglia with an interest in Facebook.”

A criminal complaint in the case said a search of Ceglia’s computer hard drives uncovered the real April 28, 2003 contract, which Ceglia had emailed to an attorney in March 2004, years before his lawsuit against Facebook and Zuckerberg. Additional evidence included proof that spacing, columns and margins in the fake contract differs from the real contract and copies of actual emails in Harvard’s backup tapes, the complaint said. Authorities said Zuckerberg and another of Facebook’s founders have said the idea for Facebook did not arise until months after the contract with Ceglia.

Manhattan US Attorney Preet Bharara said Ceglia was seeking a “quick payday based on a blatant forgery”.

Bharara said 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. That is always intolerable. Dressing up a fraud as a lawsuit does not immunise you from prosecution.”

In a statement, attorney Orin Snyder praised the prosecution on behalf of Zuckerberg and the Menlo Park, California-based Facebook. “Ceglia used the federal court system to perpetuate his fraud and will now be held accountable for his criminal scheme,” the statement says.

If convicted, Ceglia could face up to 40 years in prison. It was not immediately clear who will represent Ceglia in court. A lawyer who has represented him in his lawsuit did not immediately return a message for comment.

— AP

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