Convicted felon claims he owns 50 percent of Facebook

Yesterday, an appeals court struck down an attempt by Facebook founder Mark Zuckerberg's archnemeses, the Winklevoss twins, to override their 2008 settlement with the company and sue for more money. Then just hours later, a new drama about the origins of the social media giant emerged: A man, who claims to be Zuckerberg's initial funder, presented evidence that he and his lawyers insist prove him to be the rightful owner of at least half of the multibillion dollar company. It's a batch of emails legitimate enough to have the tech world buzzing. Could a sequel to "The Social Network" be in order?

If one were, the latest Zuckerberg adversary would certainly have the potential to be just as captivating, if not moreso, than the twins. The character of Paul Ceglia (shown above), alleged co-owner of Facebook, is emerging as the delightfully shady antithesis of the moneyed, pedigreed, Charles River-rowing Winklevoss twins.

The new, big screen-worthy conflict dates back to 2003, when Ceglia -- a wood pellet salesman at the time -- invested $2,000 in a website Zuckerberg was developing called "the face book." Years passed, a movie was made. Then, just recently, Ceglia came forward with his claim that Zuckerberg had offered him a 50-percent stake in the company in exchange for his investment.

To most observers, the story seemed preposterous. After all, why would Ceglia, an average-Joe type -- who's already been convicted of felony fraud and possession of hallucinogenic mushrooms -- wait so long to make any ownership claims on such a lucrative company? Further, he had been able to produce only a few documents to support his cause, and those he did produce were deemed by many to be of questionable authenticity.



But Ceglia says that the reason he sat on his secret until 2011 was because he thought he'd lost the important documents pertaining to his investment. He claims he found these documents after a dig into long-forgotten files -- when authorities came after him for defrauding some of his wood pellet customers. Facebook has repeatedly and vigorously denied that Ceglia's claims hold any merit whatsoever.

Then yesterday, Ceglia produced a series of his early email exchanges with Zuckerberg that at least got the tech industry talking.

Business Insider's Henry Blodget obtained them and summarized them thusly:


In these purported emails ... Zuckerberg and Ceglia discuss "the face book" project in detail. They discuss how Ceglia will fund the project. They discuss how Ceglia has funded the project (proof of payment). They discuss how Zuckerberg has met some upperclassmen--the Winklevosses, presumably--who are pursuing a similar project, and how Zuckerberg is "stalling" them. They discuss how Zuckerberg has failed to complete the "face book" project on time. They discuss the launch of the face book, which Ceglia agrees looks great.


The emails then include Zuckerberg telling Ceglia that the Facebook site is not doing well. They include Zuckerberg telling Ceglia that the site has seen so little success that Zuckerberg is thinking of shutting it down. And, in the summer of 2004, they include Zuckerberg offering to send Ceglia his $2,000 of funding back--right at the time Zuckerberg had moved to California to continue to develop, incorporate, and raise money for Facebook.


Ceglia contends that most of what Zuckerberg told him after the launch of the site were lies. (Facebook, as we all now know, went gangbusters right from the beginning). And Ceglia contends that, in the summer of 2004, Zuckerberg "misappropriated" the assets of their general partnership and conveyed them to the corporation that became Facebook, Inc.

Blodget goes on to note that Ceglia has retained DLA Piper, a major international law firm specializing in tech industry legal issues, to represent him. It's doubtful that such a firm would take on Ceglia's cause if they didn't believe it had some merit. And by now they've surely had their own team of investigators analyze every document Ceglia has turned over to them for verification of authenticity.

Still, Facebook is standing firm, insisting that Ceglia is little more than a conniving opportunist and a mildly clever oddball.

"This is a fraudulent lawsuit brought by a convicted felon, and we look forward to defending it in court," Orin Snyder, the company's lead attorney, said in a strongly worded statement emailed to The Lookout. "From the outset, we've said that this scam artist's claims are ridiculous and this newest complaint is no better."



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