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Feds arrest Ceglia for trying to defraud Facebook, Zuckerberg

N.Y. man accused of billion-dollar scheme to cheat social network

The FBI has arrested Paul Ceglia for attempting to defraud Facebook and its co-founder Mark Zuckerberg in a scheme to grab a large stake in the company and billions of dollars.

Federal agents picked up 39-year-old Ceglia at his home in Wellsville, N.Y. this morning, according to a report in Forbes.

Ceglia first filed a lawsuit in June 2010, claiming he signed a contract with Zuckerberg that entitles him to 84% ownership of what is easily the world's largest social network. In an amended filing last year, though, Ceglia modified his claim, alleging he was owed 50% of Zuckerberg's stake in the social networking company.

According to a criminal complaint filed with the Southern District of New York, Ceglia is accused of using the U.S. Postal Service as part of a fraudulent scam against Facebook and Zuckerberg.

Ceglia is being charged with mail fraud and wire fraud.

"Ceglia filed a federal lawsuit falsely claiming that he was entitled to at least a 50% interest in Facebook," the complaint contends. "Ceglia has deliberately engaged in a systematic effort to defraud Facebook and Zuckerberg and to corrupt the federal judicial process."

Not surprisingly, today's arrest was met with excitement at Facebook.

"We commend the United States Attorney for charging Ceglia with federal crimes in connection with his fraudulent lawsuit against Facebook," Orin Snyder, a partner with Gibson Dunn, attorneys for Facebook and Zuckerberg, said in an email to Computerworld. "Ceglia used the federal court system to perpetuate his fraud and will now be held accountable for his criminal scheme."

The complaint also contends that Ceglia and Zuckerberg had signed a contract between them, but it had nothing to do with Facebook, did not reference Facebook and did not give Ceglia any interest in the social network.

And federal investigators allege that as part of his scheme, Ceglia manufactured and destroyed evidence, for instance replacing a page of the original contract with a fraudulent one that made it look like Zuckerberg had offered Ceglia interest in the company.

The complaint even has a section titled: The Founding of Facebook Did Not Involve Ceglia.

In 2011, Facebook attorneys filed court documents saying they had found evidence that Ceglia had concealed or destroyed relevant documents, including six missing USB drives.

The social network's lawyers said they had uncovered an "authentic" contract that showed that Ceglia wasn't owed any interest in Facebook.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is [email protected].

See more by Sharon Gaudin on Computerworld.com.

Read more about social media in Computerworld's Social Media Topic Center.


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