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

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.
Written by Larry Dignan, Contributor

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.


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