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Monday, July 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

Man Accused of Facebook Fraud Scheme

(CN) - An entrepreneur who sued Mark Zuckerberg for a 50 percent stake in Facebook has been arrested and accused of falsifying evidence in a multibillion-dollar fraud scheme.

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Online businessman Paul Ceglia sued Zuckerberg and Facebook in June 2010, claiming Zuckerberg agreed years earlier, while a sophomore at Harvard University, to give him a 50 percent interest in Facebook if he helped fund the project.

Ceglia claimed he paid Zuckerberg $1,000 for programming work on Ceglia's fledgling business StreetFax.com and another $1,000 to help develop Facebook, then known as "The Face Book."

U.S. Postal Inspector Douglas Veatch, who investigated the claim, said the actual April 2003 contract "had nothing to do with Facebook and did not make any reference to Facebook, let alone give Ceglia an interest in it."

Veatch says Zuckerberg simply "agreed to perform certain programming work for Ceglia in exchange for a fee."

When Ceglia filed suit in a New York state court years later, he replaced the first page of the actual contract with one he had doctored to make it appear as if Zuckerberg had agreed to give him a 50 percent stake in Facebook, according to the criminal complaint in Manhattan Federal Court.

Ceglia also manufactured emails with Zuckerberg to support his false claim and destroyed evidence that would have contradicted his story, according to the complaint.

The scheme unraveled when U.S. postal inspectors searched Ceglia's computer and discovered the original contract, which made no reference to Facebook. They then compared the purported emails to copies on Harvard University servers and found those to be fake as well, the complaint states.

Veatch interviewed Zuckerberg, who said he didn't come up with the idea for Facebook until months after his contract with Ceglia. When he launched the Facebook website on Feb. 4, 2004, access was limited to students with a Harvard email address.

"Because he was not a Harvard student, Ceglia would not have had access to the Facebook website at that time - contrary to Ceglia's claim, in the purported emails, to have looked at the site on that date," the criminal complaint states.

Veatch says he spoke with another unnamed Facebook founder who backed up Zuckerberg's version of events.

Ceglia has been charged with one count of mail fraud and one count of wire fraud. He was taken into custody by U.S. postal inspectors Friday, and is scheduled to appear before a federal judge in Buffalo, N.Y., later in the day.

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