Paul Ceglia arrested for alleged Facebook fraud

Investigators say the Internet entrepreneur fabricated documents to make it appear that he owned a majority share of the social networking site

For more than two years, Paul Ceglia has been waging a legal battle against Facebook founder Mark Zuckerberg in an effort to establish himself as the majority owner of the social networking site. Now the Internet entrepreneur has a new courtroom opponent: the federal government.

Authorities arrested Ceglia on Friday and charged him with fraud for allegedly manufacturing evidence to bolster his Facebook ownership claims.

Ceglia says he hired Zuckerberg in 2003 to develop his website, StreetFax.com. At the time, he purportedly agreed to pay Zuckerberg $1,000 to finance work on a project known as “The Face Book,” in exchange for a share of the company.

To support his claims, Ceglia produced a contract signed by himself and Zuckerberg. The problem, federal investigators say, is that the contract is a forgery. “Ceglia simply replaced page one of the real contract with a new page one doctored to make it appear as though Zuckerberg had agreed to provide Ceglia with an interest in Facebook,” according to a statement from the U.S. Attorney’s Office for the Southern District of New York.

Investigators uncovered the alleged deception when examinations of the contract revealed discrepancies in the spacing, columns and margins of the two pages. In their complaint, the feds also accuse Ceglia of deleting files related to the original contract and manufacturing emails between himself and Zuckerberg.

Ceglia faces one count of mail fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.

Read more at the Wall Street Journal.

For more InsideCounsel coverage of Facebook, see:

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Judge recuses herself in Facebook privacy suit

Facebook will pay $10 million to charity to settle suit

Investor sues Nasdaq over Facebook IPO

Facebook users sue company for $15 million

Contributing Author

Alanna Byrne

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