Facebook Claimant’s Lawyers Quit After Judging Case a Fraud

A New York law firm that represented Paul Ceglia in his suit claiming to own part of Facebook Inc. (FB) quit the case last year after determining the contract on which he bases his case is a fraud, according to a letter from the firm that was cited by a judge.

The letter, by Kasowitz Benson Torres & Friedman LLP, informed two other firms on Ceglia’s team, DLA Piper LLP and Lippes Mathias Wexler Friedman LLP, that it was withdrawing from Ceglia’s case. U.S. Magistrate Leslie Foschio disclosed the subject of the April 13, 2011, letter, which wasn’t made public, in an order filed today in federal court in Buffalo, New York. He said he had reviewed the letter in chambers.

In his order, Foschio gave Ceglia three days to produce the document to Facebook and fined Ceglia and his current lawyer, Dean Boland, $1,000 each for failing to obey earlier orders to produce it. Foschio, who called their conduct “beyond disrespect,” ruled earlier that Ceglia had waived any claim of attorney-client privilege by disclosing the letter to a person outside his legal team.

Ceglia claims a 2003 contract with Mark Zuckerberg, Facebook’s co-founder and chief executive officer, entitles him to half of Zuckerberg’s Facebook holdings. Facebook is trying to get the suit dismissed, arguing that the contract is a forgery.

DLA Piper and Lippes Mathias withdrew from Ceglia’s case in June 2011, without giving a reason, after less than three months on the job. DLA Piper, which has 4,200 lawyers, is one of the biggest law firms in the world. The Lippes Mathias team was headed by former New York Attorney General Dennis Vacco.

Boland, of Lakewood, Ohio, didn’t immediately return a voice-mail message seeking comment on Foschio’s ruling and the Kasowitz Benson letter.

The case is Ceglia v. Zuckerberg, 1:10-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

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net

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