Paul Ceglia sanctioned in Facebook lawsuit, has two weeks to pay

Summary:Paul Ceglia has so far been fined $97,617.70: $5,000 to the court and $92,617.70 to Facebook's lawyers. He now has two weeks to pay the amount, or show that he does not have the means.

Paul Ceglia, a man that claims he owns half of Facebook, was ordered this week to pay Facebook's lawyers another $16,851, bringing his total sanctions to $97,617.70. He has been previously ordered to pay the company's attorneys $75,766.70, as well as $5,000 to the court.

Ceglia has two weeks to either pay the sanctions and fines to the social networking giant's lawyers, or show U.S. Magistrate Judge Leslie Foschio why he can't by producing bank accounts, tax returns, and other financial documents. Failure to comply may result in even more sanctions, including the lawsuit's dismissal. That last part is exactly what Facebook is hoping for.

Two months ago, Facebook called Ceglia's lawsuit "a fraudulent shakedown" and filed a motion to dismiss it. This was soon after Ceglia added new lawyers to his legal team, including Sanford Dumain, chairman of the executive committee of the Millberg law firm. A month later, by Ceglia's legal team countered Facebook's request by arguing the plaintiffs were not given comparable time for discovery. Both sides claimed there were happy, and essentially very little progress had been made.

Four months ago, Facebook uncovered at least four e-mail accounts belonging to Ceglia that the social networking giant claims he concealed from the court. This was right after Foschio ordered Ceglia to pay $75,766.70 in legal fees and said the fees were justified because the case required Facebook to hire forensic experts. On the flipside, the judge denied Facebook's request for an order preventing Ceglia from filing any additional motions in the case until those fees were paid. Five months ago, Foschio sanctioned Ceglia, and told him to pay $5,000 to the court for ignoring court orders.

Six months ago, Facebook said it had secured proof that Ceglia is lying and would try to file a motion to have his lawsuit thrown out of court early this year. Ceglia claims he signed a work-for-hire contract eight years ago, as did Facebook co-founder and CEO Mark Zuckerberg. Facebook acknowledges that Ceglia hired Zuckerberg to work for his StreetFax company on April 28, 2003 while Zuckerberg was a freshman at Harvard. Ceglia first legally attacked Facebook in July 2010, saying the contract also included $1,000 initial funding for Facebook, and that he's entitled to more than half of the social networking giant. That last part Facebook is obviously disputing. Experts determined that the ink on the document is less than two years old, according to Facebook attorney Orin Snyder.

Seven months ago, Ceglia was given 30 days to return to the U.S. because he had not complied with the order to provide details as to what happened to missing evidence. He was living in Galway, Ireland while his lawyers continued defending him. Ceglia was ordered to hand over all electronic devices and e-mail information related to the case, but he said he could not find some of the storage devices that were requested.

Nine months ago, Ceglia claimed Facebook violated his privacy by exposing passwords to his Web-based e-mail accounts in a court document filed on September 1 in federal court in Buffalo, New York. The papers were removed from the public file the next day, meaning the login credentials were visible to the public for 12 hours. Court documents showed, however, that Ceglia gave the passwords to Facebook in his own declaration, which he himself did not designate as confidential. Facebook countered by saying that Ceglia and his lawyers are to blame, since the document was not properly labeled.

10 months ago, Facebook charged that Ceglia has been withholding electronic devices from the court. The company asked Foschio to force Ceglia to turn computers, files, and e-mails.

11 months ago, Facebook said it found "smoking-gun evidence that the purported contract at the heart of this case is a fabrication." When Facebook's lawyers asked for a resubmittal of a document to the court due to improper redaction, it turned out the blacked out text referred to an "authentic contract" and "storage devices" that Facebook says Ceglia intentionally hid from the company, in violation of a court order.

Facebook said it found the original "authentic contract" between Mark Zuckerberg and Paul Ceglia. Facebook then produced said contract, noting it doesn't even mention Facebook at all. Not only did the social networking giant reportedly find this allegedly genuine contract on Ceglia's computer but on the e-mail servers of a Chicago-based law firm, Sidley Austin as well. Facebook alleges that Ceglia e-mailed the original contract to Sidely Austin back in 2004.

Originally, Ceglia's lawyers said the "authentic contract" is shielded from use in the lawsuit because it is designated as "confidential" under the rules of an agreement between the two parties. As a result, Facebook asked Foschio to overrule that designation; he agreed and ordered Ceglia to hand over documents Facebook says proves he forged the 2003 contract.

As for the "storage devices," Facebook said that forensic data shows evidence of six USB devices, which it argues were likely used to modify the authentic contract. The company's lawyers say at least one of those devices includes a folder called "Facebook Files" and an image called "Zuckerberg Contract page1.tif." Facebook believes that image is the page of the contract that was forged to include mention of an investment in the social network.

In an exclusive interview with ZDNet, Ceglia told me the original "authentic contract" Facebook says it found is really just a Photoshopped image the company planted on his computer. He says he and his lawyers reportedly knew about it for some time and willingly handed it over to Facebook. He told ZDNet that his team will prove the image in question "has no authenticating properties whatsoever."

Ceglia speculates it could have been Zuckerberg himself, or the U.S. law firm Orrick, Herrington & Sutcliffe that may have done the alleged dirty work. Ceglia called Zuckerberg "an admitted forger and an admitted hacker" and explained that Zuckerberg, or someone representing him, carelessly wrote his home address on the allegedly forged document that he didn't know about or move to until more than a year after the document was supposedly written. He has also claimed Zuckerberg deleted e-mails related to the case.

Last but certainly not least, Ceglia says he has conclusive proof that Zuckerberg is lying. He said that anyone with some legal expertise or technical expertise willing to help "nail him down for good" is welcome to join at PaulsCase.com, which requires registration. Via the PaulsCase wiki, Ceglia is trying to open source his lawsuit.

Facebook insists Ceglia is a known con artist. Since he first filed suit, Ceglia has been dropped by at least three law firms. When Ceglia called ZDNet from Ireland, he maintained he has been unfairly painted as a con artist.

See also:

Topics: Social Enterprise, Legal

About

Emil is a freelance journalist writing for CNET and ZDNet. Over the years, he has covered the tech industry for multiple publications, including Ars Technica, Neowin, and TechSpot.

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