NY Man Claims 84% of Facebook, Gets Order Blocking Assets

A Western New York man who claims he owns 84 percent of Facebook Inc., the world’s biggest social networking service, sued and won a state court order temporarily restricting Facebook from transferring assets.

Paul Ceglia, of Wellsville, New York, sued Facebook and its founder and Chief Executive Officer Mark Elliot Zuckerberg in state court in New York’s Allegany County on June 30. In the suit, Ceglia claims that a contract he and Zuckerberg signed in April 2003 entitles Ceglia to ownership of most of the privately held company.

The day of Ceglia’s filing, without notice to Palo Alto, California-based Facebook, Acting New York Supreme Court Justice Thomas P. Brown signed an order blocking Zuckerberg and Facebook “from transferring, selling, assigning any assets, stocks, bonds, owned, possessed and/or controlled by the defendants,” at least until a hearing set for July 9.

Facebook transferred the case to federal court in Buffalo, New York, and is trying to get the order annulled. In court papers, the company points to the “outlandishness” of Ceglia’s claim to ownership of Facebook. The company also claims that a suit over a contract allegedly broken in 2003 is “almost certainly barred” by the statute of limitation for such claims.

Barry Schnitt, a Facebook spokesman, said the company believes the suit is frivolous and will defend itself vigorously.

The case is Ceglia v. Zuckerberg, 10-CV-00569, U.S. District Court, Western District of New York (Buffalo).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net.

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