Facebook Claimant Paul Ceglia Pleads Not Guilty to Fraud

Paul Ceglia
Paul Ceglia, indicted on charges of mail fraud and wire fraud, exits federal court in New York on Nov. 28, 2012. Photographer: Peter Foley/Bloomberg

Nov. 28 (Bloomberg) -- Paul Ceglia pleaded not guilty to criminal charges that he faked evidence in his contract lawsuit against Facebook Inc. and its chief executive officer, Mark Zuckerberg.

Ceglia entered his plea today at a hearing before U.S. District Judge Andrew L. Carter Jr. in Manhattan federal court.

Ceglia, 39, sued in 2010 claiming he had a contract signed by Zuckerberg in 2003 that entitled him to a share of the world’s biggest social network. A federal jury indicted Ceglia on charges of mail fraud and wire fraud, alleging he faked the contract, destroyed evidence and created phony e-mails to support his case.

Prosecutors claim Ceglia doctored a legitimate contract with Zuckerberg, in which the future CEO agreed to perform coding work for Ceglia’s website, into a phony contract “in which Zuckerberg agreed to provide Ceglia with at least a 50 percent interest in Facebook,” according to the indictment.

Each of the fraud charges carries a maximum of 20 years in prison if Ceglia is convicted.

David Patton, the lawyer appointed to represent Ceglia, told Carter that he plans to ask the court to move the case from Manhattan. Ceglia lives in Wellsville, in western New York. His civil suit against Zuckerberg and Facebook is pending in federal court in Buffalo, New York. Patten declined to comment on the case outside court.

Ceglia originally claimed he was due 84 percent of the company. He later reduced the demand to half of Zuckerberg’s Facebook holdings. Facebook, based in Menlo Park, California, said from the start that Ceglia’s claim was fraudulent.

The criminal case is U.S. v. Ceglia, 12-mj-2842, U.S. District Court, Southern District of New York (Manhattan). The contract 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

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net