Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

Summary: Facebook CEO Mark Zuckerberg won a legal victory over Cameron and Tyler Winklevoss and now the legal Whac-A-Mole continues. Paul Ceglia now claims he deserves 50 percent of Facebook because he fronted Zuckerberg $1,000 to launch the site while at Harvard.

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Facebook CEO Mark Zuckerberg won a legal victory over Cameron and Tyler Winklevoss, who were appealing to increase a $65 million settlement, and now there's another lawsuit on the horizon. Paul Ceglia now claims he deserves 50 percent of Facebook because he fronted Zuckerberg $1,000 to launch the site while at Harvard.

When Facebook does file for an initial public offering one of the risk factors will read like this: Everyone that has bought Mark Zuckerberg a cup of coffee at Harvard is now suing for a stake in the company.

Ceglia filed an amended complaint (PDF) in a federal court in Buffalo making his case vs. Zuckerberg. The most notable part of the complaint is that Ceglia produces a bevy of emails from 2003 that look legit. If Ceglia was completely making this complaint up he probably has a movie script in him. In any case, Ceglia paid Zuckerberg $1,000 to work on a site called StreetFax.com and another $1,000 to work on The Face Book.

In the emails, Ceglia had Zuckerberg almost agreeing to give away 80 percent of The Face Book. Ceglia had this stipulation that Zuckerberg would owe him 1 percent interest a day for each day the Face Book failed to launch. On Feb. 2, 2004, Zuckerberg wrote to Ceglia:

Paul, I have a rather serious issue to discuss with you, according to our contract I owe you over 30% more of the business in late penalties which would give you over 80% of the company. First I want to say that I think that is completely unfair because I did so much extra work for you on your site that caused those delays in the first place and second I don’t even think it is legal to charge such a huge penalty. Mostly though I just won’t even bother putting the site live if you are going to insist on such a large percentage. I’d like to suggest that you drop the penalty completely and that we officially return to 50/50 ownership.

On Feb. 3, Ceglia responded:

OK fine Mark 50/50 just as long as we start making some money from this thing. I’m looking forward to hearing how it goes but I am so busy right now with a few other projects that my time is very thin .. Let’s get it live and open up the store. Have you had a chance to inquire about getting a merchandizing license? We really will need that soon so we can start bringing in some money, everyone buys t shirts and mugs, especially the parents .. they deserve bragging rights at home with the tuition they have to pay. Also what about putting in something like a Christian corner? I’ve only been to Harvard a few times but the idea of being able to find other Christians online without having to do the un PC thing of asking someone face to face sounds to me like it would have some real value, if only the spiritual kind. :-) and the other thing is links to hotlines, why couldnt (sic) we have the rape crisis hotline, the suicide hotline, drug rehab and so on right there so when someone really needs something they could link over to the site they wanted? Same thing for local pizza and chinese (sic) or whatever, that way it could really be a resource that a person could use.

The two go back and forth and then on Feb. 6 Zuckerberg said he needs creative control.

Now that the sites (sic) live I feel I must take creative control and I just can not risk injuring my sites (sic) reputation by cheapening it with your idea of selling college junk, nor do I wish to spend my time shipping out coffee mugs to rich alumni. The site is cool as it is and I don’t care about making any money on it right now, I just want to see if people will use it. If I had the rest of the money I was owed by you for all that extra work I did I wouldn’t even need to make money at all on this site. That is money I am entitled to and is rightfully mine.

Ceglia goes off:

Mark, all I can think is your parents have handed you everything your entire life and after all this time and energy and MONEY that you think in your head that an Ok way to act is to just say- oh I’ve changed my mind I don’t think it’s cool to make money and that that should be that. Then you have the nerve to suggest that I should pay you more money if I get you right, so that you dont (sic) have to try to make money on the site we’ve built?? It’s one thing to say you don’t want to sell coffee mugs but I don’t see why since the margins are excellent and with minimal effort we could generate some decent revenue for us while keeping the site free to students. It’s one thing to say “I’d like to discuss with you other ways we could produce revenue for the site, like advertising, we could sell ads locally I am sure and to places that already sell alumni stuff (but we will be losing the margins) angel investors are just con men and until we have some decent revenue we aren’t going to get a dime from them without giving up the whole thing and anyway at this point it’s just a freaking harvard (sic) thing. I need to be able to get on the actual site and see where we can place some ads and we need to get some bike couriers to go around promoting the site so we can get some people using it FIRST!

The emails go on. It's unclear what the legal outcome will be, but for sheer entertainment, the complaint is worth a read.

cegliavszuck

Topics: Banking, Browser, Collaboration, Enterprise Software, Social Enterprise

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78 comments
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  • Looks Legit

    There's enough smoke there...
    arackal
  • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

    Classic - no deal will come from this though if the authenticity of the emails cannot be proven. Without that, it's just words on a paper... :-)
    phat_andy
    • But email can be proved

      @phat_andy <br><br>If you are not running the email server then it is possible to prove the veracity of the email.<br><br>An email send a lot of information concerning of the source and the destination but this information is not visible to the end-user.<br>In fact, some email client even send your machine name (ex. Desktop_of_JohnDoe) and the local ip.

      Even more, Zuck confirmed that he did some sort of pact with Ceglia, so he is somethat screwed.
      magallanes
      • but it needs a digital sig

        @magallanes It's fairly easy to forge an email. All you have to do is edit the mime heading . . . it can only legally be used if it has been digitally signed, or if there is some other mechanism proving nonrepudiation.
        rls_1128
      • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

        @magallanes : I think they will settle out of court. I think the man deserves at least a 5% stake on the final company, as the mail seem to imply that he acted on good faith, although the contract might be torn to pieces by Facebook lawyers using some kind of uneven unfairness clause.

        One last thing might also be the fact that it was only between him and Mark, and not the other angel investors. Since those signed real binding contracts, he is only contractually obliged by his current stock ownership.

        Last, but not, least. The emails give you an idea how not even the players knew how big this would finally get.
        cosuna
      • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

        @magallanes >>

        The assumption is that the originals exist in archive at Harvard and/or with Ceglia's provider at the time. Most emails get purged after a few months, so what is on his PC in the local archives can indeed be compromised/edited/forged easily.

        I highly doubt Ceglia is going to be able to get the originals from Harvard since he was never a student there.
        AbsolutelyNot
      • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

        @rls It's a civil case; all you need is the slightest inclination one way or the other. If the jury is 51% sure the emails are real that's enough for them to render a verdict. It's only criminal where there's a "beyond reasonable doubt" burden of proof. I've spent some time in small claims court and got watch a judge deliver his same pre-court lecture on this subject (complete with using his hands as a balance scale) to try to explain to people how things could easily go one way or the other. He was hoping to convince everyone to settle their cases before trial and actually did get every case to settle except one in the two weeks I was there.

        The e-mails read as real to me, and if there's already a partial admission regarding their existence that's probably enough to be over the 50% threshold. I don't think exotic issues regarding how e-mails *could* be forged have much weight in this civil case. I know it wouldn't matter much to me as a juror.
        jgm@...
      • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

        @magallanes

        I could in 5 minutes reduce a jury's view of email to the point where they would toss this out. I'm sure Facebook's lawyers have access to many people like me. An unsigned email is irrelevant in court of law as it proves nothing. Of course he could try Judge Judy she doesn't seem to take facts into cosideration.
        voska1
    • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

      @phat_andy
      Actually, if you discount the emails, it sounds like the guy owns 80% or more.
      jeverettk
  • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

    It looks like the movie "The Social Network" is due for a sequel
    mtifo@...
  • One right after the other

    Wow... I wonder how many more are waiting in line for their chance at facebook. It almost makes you wonder if they are just lawyer fodder or if we are starting to see a pattern from Mark Zuckerberg.
    Cnewmaz
    • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

      @Cnewmaz

      Zuckerberg admitted in the court that he "stolen" the code years ago but apparently the foul-play with other persons.
      magallanes
    • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

      @Cnewmaz
      I think a little from column A and a lot from column B.
      x I'm tc
  • &quot;Zuckerberg's morals&quot; is oxymoron, so the lawsuit might have merit; letssee

    The subject.
    DDERSSS
  • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

    Funny, Looking to make 25 billion on a $1000 investment. Sounds more like the $1000 was to build Ceglia's website more than pay for Facebook anyway and it also sounds like he didn't pay Zuckerberg for his work. This is going to get thrown out. Too hard to prove the legitamacy of these emails. Why wait for 5 years to produce them? I didn't even think the twins deserved what they got. This guy deserves even less.

    The legal system needs to force these leeches to see the light. Facebook is not their brain child and they didn't do one scrap of work to make it what it is today.

    What I read in those emails it extortion. This guy may actually be in more trouble than we think. Like witnessing a robbery in the course of committing murder and turning the robbers in at the expense of incriminating yourself. Zuckerberg has too much clout and money now.
    chethammer
    • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

      @chethammer
      This lawsuit has been going on for a few years at this point.
      x I'm tc
    • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

      @chethammer

      Huh? Did you read the emails? Did you read about the Winklevoss case? What extortion?

      As far as we can piece together, here's the story. Zuckerberg was hired (and paid) by the Winklevoss's to do some website front end and back end for a concept which the Winklevoss's originated and had been actively developing for (I think) more than a year. There was extensive code written by previous programmers before Zuckerberg entered the scene.

      Then, after getting some amount of pay, Zuckerberg took the idea AND a good chunk of the original code (written by other people) and got Ceglia to buy in as a 50/50 partner in a new business which, curiously, was identical to the Winklevoss project and used the same code.

      Ceglia, to protect his investment, required that Zuckerberg either produce a working site on time, or (eventually) forfeit his share of the enterprise. Zuckerberg essentially wanted to be paid additional money for his work on their mutual enterprise, despite the fact that Ceglia's investment was not "pay for services" but an investment in an enterprise. When Ceglia generously allowed Zuckerberg to reclaim his "lost" 30% share in the business, Zuckerberg basically complained he wanted to be paid for his extra work.

      People who seek investment capital do not complain to investors, "I'm working really hard, so I should be paid more."
      GreatZen
      • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

        @GreatZen : the problem here is basically of binding contracts.

        The Winklevoss claim had certain validity, in the fact that they had a working service ("ConnectU") and they filed claim that Zuckerberg had misappropriated IP from them.

        In this case, it's just a potential, non-binding agreement, which needs to have legal scrutiny as an unreasonable clause will be shot down on a Discovery session. Ironically, Facebook could counter sue for slander or even racketeering as the supposed contract feels illegal at all lights.
        cosuna
      • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

        @GreatZen >> EXCEPT...

        The project was not Facebook, but StreetFax. The original code the Winklevoss brothers allegedly provided was handed over to Zuckerberg per that contract they originally signed and then sued over. Happens all the time during development...
        AbsolutelyNot
  • RE: Paul Ceglia vs. Facebook's Mark Zuckerberg: Here's the complaint and it's a good read

    Sounds like he has a better case then the twins did.
    RAK5