Fresh Off Court Win, Facebook Faces Yet Another Founder Suit

Former Zuckerberg partner claims new evidence shows he owns half of social network giant

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Just when Facebook thought their legal troubles were over, an old suit against Mark Zuckerberg has resurfaced. Zuckerberg may have gotten the Winklevi off his back (for now, at least), but now erstwhile partner Paul Ceglia has resurfaced with new evidence to support an old claim that he is a co-owner of the social networking site.

Last July, Ceglia produced a copy of a contract created back in 2003 (before Facebook was even launched) that mentioned two payments made by Ceglia to Zuckerberg: the first for Zuckerberg’s work on a website owned by Ceglia called StreetFax, the second for an investment in “the face book” giving Ceglia 50% ownership of the company, which included penalties for late completion of the site that would increase Ceglia’s ownership percentage over time. Ceglia had cancelled checks that he said proved both payments.

The suit seemed pretty shaky from the start. Ceglia, a convicted felon, claimed that the reason he had waited seven years to file the suit was because he had forgotten about the contract, and only happened to stumble upon it while looking through old files after he was arrested for fraud in connection to his wood-pellet business. Facebook dismissed the whole thing, saying that the contract had been doctored to include the mention of “the face book.”

But now Ceglia is refilling his suit with new lawyers and new evidence. He has produced what he says are emails between him and Zuckerberg ranging from 2003 to 2004. The emails detail that Ceglia had funded “the face book”; that Zuckerberg was behind schedule in completing it; that after the site’s launch, Zuckerberg said it was not doing well; and finally, that Zuckerberg offered to return Ceglia’s investment, even though by that time the whiz kid had already moved out to California and was raising more funds for the site. The emails even mention how Zuckerberg had attempted to “stall” the Winklevoss twins’ similar site.

Ceglia is currently claiming that Zuckerberg lied to him about the site’s lack of success after its launch, since its popularity had actually exploded, that Zuckerberg had “misappropriated” his funds, and that he still deserves his share of the site as detailed in the 2003 contract.

Once again, Facebook is dismissing Ceglia, telling Business Insider that it is “confident in [their] assessment” that the emails are fake. This could be easily proven, since Zuckerberg’s email correspondences from the period most likely still exist (they were used as evidence in the Winklevoss case), although Zuckerberg might have deleted the messages exchanged with Ceglia. Ceglia’s new law firm, however, has analyzed the emails and the original contracts, and believes them to be authentic.

If this new evidence is legitimate, Facebook could have a major problem on their hands. The whole case might still seem a bit suspicious, but according to Business Insider, if the contract and the emails can’t be definitively labeled as fakes, there’s a good chance that Facebook will be making a big payout—and maybe we’ll end up getting The Social Network 2.


@adweekemma Emma Bazilian is Adweek's features editor.
Publish date: April 12, 2011 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT