Paul Ceglia, who sued Facebook CEO Mark Zuckerberg for a 50 percent ownership stake in Facebook (NASDAQ:FB), was arrested Friday on charges of falsifying records and destroying evidence to defraud both Facebook and Zuckerberg, according to the U.S. Attorney’s Office.
The New York entrepreneur sued Mark Zuckerberg in 2010, claiming that he and Zuckerberg, then a student at Harvard University, signed a contract in April 2003, which entitled him to anywhere from half to 84% in the fledgling web venture that was to become Facebook Inc (NASDAQ:FB). Supporting his claims, Ceglia showed a two-page contract and emails, using his Harvard email account, between him and Mark Zuckerberg as evidence.
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Cegalia claimed that he entered into an agreement to pay Zuckerberg for programming work in April 2003 for his online business, called Streetfax.com, and as part of the deal Zuckerberg promised him at least 50 percent ownership in “The Face Book,” which was also referred to as “The Page Book.”
After a forensic examination of the evidence, authorities confirmed that Ceglia falsified the first page of the contract, and attached it to a second page containing both parties’ signatures. Also, the contract date, April 28, 2003, mentioned by Ceglia, is well before the date when Facebook Inc (NASDAQ:FB) founders conceived the idea for the site. The emails between Ceglia and Zuckerberg were also found to have been fabricated.
“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 immunize you from prosecution,” U.S. Attorney Preet Bharara, of the Southern District of New York, said in a statement.
After scanning Ceglia’s hard drive, authorities do agree on a contract for programming work between Ceglia and Zuckerberg, dated April 28, 2003, but the first page made no mention of Facebook or any ownership agreement.
The New York entrepreneur was arrested by U.S. Postal inspectors at his home in Wellsville, N.Y., Friday, and was to appear before a federal judge in Buffalo later in the day. Ceglia has been charged for one count of mail fraud and one count of wire fraud, with each count carrying a maximum penalty of 20 years in prison.
Orin Snyder, attorney for Mark Zuckerberg and Facebook Inc (NASDAQ:FB), praised the arrest, saying in a statement “Ceglia used the federal court system to perpetuate his fraud and will now be held accountable for his criminal scheme”.