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Paul Ceglia Busted for Mega Facebook Fraud

Paul Ceglia Busted for Mega Facebook Fraud
October 27, 2012 9:18AM

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Innocent until proven guilty, yes, but lawyers for Paul Ceglia now have their work cut out for them. In 2010, Ceglia sued Facebook founder Mark Zuckerberg, claiming partial ownership of Facebook. But now, U.S. Attorney Preet Bharara says Ceglia was looking for a "quick pay day based on a blatant forgery," calling it a "massive fraud attempt."

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Remember Paul Ceglia? He's the former wood-pellet salesman who had claimed partial ownership to Facebook and had sued for billions. On Friday, he was arrested by federal authorities on charges relating to fabrication of evidence.

The specific charges were one count of mail fraud and one of wire fraud, connected to using those channels to relay what the feds say was fabricated evidence. In 2010, the 39-year-old resident of Wellsville, N.Y., had sued Facebook and its CEO, Mark Zuckerberg, on the grounds that a 2003 contract had granted him 84 percent of the company.

On Friday morning, Ceglia was arrested by Postal Inspection Service investigators at his home. He could face up to 20 years in prison for each of the charges.

Programming for StreetFax.com

In 2010, Ceglia had filed suit in federal court in Buffalo, N.Y., contending that Zuckerberg granted him partial ownership in exchange for $1,000 paid to Zuckerberg for programming work for Ceglia's company, StreetFax.com. But Facebook presented e-mails that it said proved Zuckerberg had not even conceived of the Facebook idea until December of 2003.

In March of this year, lawyers for Facebook made public e-mails Zuckerberg had sent relating to that engagement, which they contended showed that Ceglia has no basis for his claims. They also pointed to computer forensic experts, who said that Ceglia had used Microsoft Word to construct the alleged e-mails that he had used to substantiate his case.

In addition to the allegedly faked e-mails, prosecutors said Ceglia forged computer files and a 2003 contract he claimed to have made with Zuckerberg. Facebook's lawyers had contended that the original contract only related to the StreetFax work and did not mention Facebook. From the time Ceglia first went public with his charges, Facebook has said they were a scam.

'Quick Pay Day'

Facebook lawyers have also noted Ceglia's past, which included a guilty plea in 1997 for possession of hallucinogenic mushrooms and criminal charges brought by the New York state attorney general for defrauding customers of his wood-pellet business. Additionally, at least one of the several law firms representing Ceglia had withdrawn since the lawsuit was filed, and it had notified the then-involved law firms that the alleged contract was fake.

Federal authorities said they have searched Ceglia's hard drive and found the original contract, which had no reference to Facebook. It has also been reported there are no records on Harvard's e-mail servers of the Facebook-related correspondence that Ceglia claimed.

U.S. Attorney Preet Bharara in Manhattan issued a statement saying that Ceglia was looking for a "quick pay day based on a blatant forgery," adding that "dressing up a fraud as a lawsuit does not immunize you from prosecution." Bharara also said Ceglia's "alleged conduct not only constitutes a massive fraud attempt, but also an attempted corruption of our legal system through the manufacture of false evidence."

Neither Ceglia, nor his attorney, Dean Boland, has publicly commented on the charges.

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