Facebook, Once Again, Says That Ceglia's Claim To Own 84% Of Facebook Is A Fraud

from the strong-words dept

Fri, May 27th 2011 4:02am — Mike Masnick

Back in April, when Paul Ceglia refiled his lawsuit claiming to have a contract which gave him a huge chunk (up to 84%) of Facebook, some people pointed out that the refiled lawsuit sounded a lot more credible. There was additional email evidence and (mainly) the fact that a huge, extremely reputable law firm had taken on Ceglia as a client -- something they likely wouldn't do if they thought the whole thing was faked. However, Facebook is sticking to its claim that the whole thing is an elaborate fraud by "an inveterate scam artist whose misconduct extends across decades and borders." The response claims that the evidence was doctored or fabricated. It seems like this case is going to end up being a lot more interesting to watch than the Winklevii case. Someone alert Aaron Sorkin to the sequel possibilities...

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Filed Under: equity, mark zuckerberg, ownership, paul ceglia, scam
Companies: facebook

11 Comments

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Anonymous Coward, 27 May 2011 @ 5:31am

Can someone with more knowledge than me explain about financing rounds where you have to buy in more or have your shares diminished. There have been multiple investment rounds and I don't think he participated so he owns 84% of a $1000 chunk of the business?
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Christopher (profile), 27 May 2011 @ 5:57am

Re:
Apparently you don't understand that the contract in question gave him an 84% right to the business PERIOD.... not the amount of the business that he funded.

So, financing 'rounds' don't come into play here.... stupidity on the part of the people at Facebook does in that they left the contract open to this interpretation!
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Dark Helmet (profile), 27 May 2011 @ 6:00am

I like this guy's wiki page...
It reads like the start of a SNL sketch. Dude lives in an unpainted house, started an ice cream stand business in NYC, and was busted with four HUNDRED grams of psilocybin in '97.

With that much magic mushroom sauce in my blood, I'd probably think I founded Facebook too....
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Sean T Henry (profile), 27 May 2011 @ 6:11am

Re:
Its like if you own 50% of a company the person on the other side actually runs the company they get new investments in the company. When getting investments he only has up to 50% he can sell and you still own 50%.
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NullOp, 27 May 2011 @ 6:26am

FB
Y'know, It'd be interesting to see who would bring this kind of suit if whoever lost forfeited their life either through death or a gulag. I'd damn sure vote for the gulag. Oh, that would include the lawyers involved.
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Mike Masnick (profile), 27 May 2011 @ 6:33am

Re:
Can someone with more knowledge than me explain about financing rounds where you have to buy in more or have your shares diminished. There have been multiple investment rounds and I don't think he participated so he owns 84% of a $1000 chunk of the business?

It may very much depend on the details of any "contract," thought it sounds like there wasn't a clear one. It's possible that it could be interpreted that his shares were diluted as well, but if that's the case, it will be a *freaking mess* to unwind all the follow on financings. And, if I understand the other dealings properly concerning Eduardo Saverin, at some point FB started a new company and moved the old shares into the new company. Unwinding this would be a total mess.
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xs (profile), 27 May 2011 @ 6:56am

Re: Re:
Stupidity by Facebook people doesn't apply here. The alleged original contract was a very basic one between a college student and one man for a very small sum. Neither of them could have envisioned the extent of this little project expanded into, so there were no lawyers breaking down every word to make sure it's water tight.

Whether the whole thing is fake or not, it is very likely that it's out of statue of limitation. In both Connecticut and New York, the Status of limitation on contract is 6 years, and in California where facebook is based, the limitation is 2 years. The initial contract was allegedly made in 2003, the last date involved in the dispute as calculated by the 84% figure is Feb 4, 2004, and this guy filed in July 2010. So it's at least 5 months too late anyway.
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Gwiz (profile), 27 May 2011 @ 8:30am

Re: I like this guy's wiki page...
With that much magic mushroom sauce in my blood, I'd probably think I founded Facebook too....

Heck, with that many 'shrooms in my blood, I might think my ice cream stand WAS Facebook.
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JustSomeGuy, 27 May 2011 @ 4:11pm

Nitpick
It's neither a statue nor a status. It's a statute of limitation. We'll return now to your regular programming.
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FM Hilton, 27 May 2011 @ 6:11pm

To be honest, though-FB does have a valid point: that the guy waited for 8 years before suing them.

If one has a vested interest in some company of any reasonable size (50% or more is pretty reasonable) from some old piece of paper, one should check and see if the investment was paying off periodically-even calling the person with whom you made the contract once in a while.

"Hey, Fred, how's that business you and I signed on for?"

It came as a complete surprise to this guy that FB is so popular and valued now? Where was he in the past 8 years?

Does Mark Zuckerberg even know this guy that well?

Does Zuckerberg even have a copy of the alleged contract? He might have been in college, but he's smart enough to keep track of his records, I'm sure.

I'd say that the premise that it's out of statute of limitations is probably valid, and will undoubtedly get booted out of court for that one reason alone.

"You snooze, you lose."
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Anonymous Coward, 29 May 2011 @ 7:56pm

So if MZ loses this, does that make previous suits against him invalid?
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