Zuckerberg Settles Fraud Suit for Promise Not to Sue Back

  • Suit amounted to harassment, extortion, billionaire says
  • Real estate dispute was set for trial next month in San Jose

A fraud lawsuit against Mark Zuckerberg that had lingered for almost two years came to a swift end Tuesday, six weeks before the billionaire would have had to explain his version of events to a jury.

The developer who sued the Facebook Inc. founder over a real estate deal agreed to drop the case in exchange for only a guarantee that Zuckerberg won’t sue him.

The settlement marks an abrupt change of course for Mircea Voskerician as lawyers for both sides were preparing for an April 25 state court trial in San Jose. The suit revealed through e-mails the household business of Zuckerberg and his wife, as well as their financial adviser and real-estate agent, among others. The messages showed Zuckerberg had met with Voskerician and, the developer argued, supported his claim that the billionaire reneged on a promise to help him build his business.

The real estate deal involved Zuckerberg paying for the rights to buy the property behind his Palo Alto, California, home for $1.7 million after Voskerician threatened to build a mansion that would have had a view of Zuckerberg’s home. Voskerician claimed that was a discounted price, saying he gave Zuckerberg a deal in exchange for introductions to a desirable pool of potential customers, Silicon Valley’s technology elite.

At the outset, the lawsuit was “a strong contracts-related claim against Zuckerberg for failing to live up to his promise to introduce Voskerician to valuable business contacts, a promise which seems to have been made by Zuckerberg to reduce the price for the option to buy the neighboring home,” said David Min, a law professor at the University of California at Irvine who’s been following the lawsuit.

“If that’s all there was to this case, then Zuckerberg is lucky to have avoided trial, although at most, he would probably just have had to pay out money that he can easily afford,” Min said. “But it seems that there was more than initially met the eye here.”

‘Doctored Evidence’

The case began to unravel last year as lawyers representing Zuckerberg pressed to learn how Voskerician would have paid for building the house. The lawyers seized on what they said was “doctored evidence” in a fraudulent bank statement Voskerician produced to prove his financial wherewithal to develop the property.

“Mr. Voskerician’s decision to abandon his lawsuit confirms what we have always maintained, that his claims lacked merit and his case was nothing more than a fraudulent attempt to extort millions of dollars from Mr. Zuckerberg,” Patrick Gunn, a lawyer for Zuckerberg, wrote in an e-mailed statement. “We are pleased this years-long harassment has come to an end and that the plaintiff will see no financial gain from his misconduct.”

With Tuesday’s developments, the lawsuit’s path from filing to dismissal roughly parallels one brought by Paul Ceglia, whose claim to have owned half of Facebook was thrown out by a federal judge in Buffalo, New York. Ceglia was charged with fraud in 2012 and remains a fugitive after the judge determined he had faked a contract and fabricated e-mails between himself and Zuckerberg.

New Lawyer

Voskerician’s first lawyer withdrew from the case in October, citing California’s ethics rules for lawyers without providing details about the conflict between him and his client.

His second lawyer, Guyton Jinkerson, filed a request for dismissal of the case Tuesday.

“My client and I have reviewed the factual and legal premises that his former counsel pursued,” Jinkerson said in an e-mail. “Upon careful reflection we determined that this case should be resolved and we worked with counsel for the defendants to reach an equitable settlement of this matter. We are pleased that the parties have been able to bring an end to this litigation.”

The final blow to the case came last month when Jinkerson revealed in a court filing that Voskerician faces a criminal probe by the Internal Revenue Service over the $1.7 million sale to Zuckerberg.

Voskerician invoked his constitutional right against self-incrimination to shield himself from answering whether he falsified the bank statement, a position Jinkerson said in a court filing was made on advice from attorneys in the criminal tax matter.

Zuckerberg’s lawyers pushed for a court order requiring Voskerician to answer questions about the bank statement. Jinkerson sought the dismissal before the judge handling the matter ruled on the request.

African Prince

As the case wore on, what Min described as “crazy elements” emerged. Voskerician testified that he once had a side business on EBay selling discarded medical equipment from trash cans and recycling bins while he worked at Stryker Corp. In another instance, Zuckerberg’s lawyers hired a private detective to learn details about a competing offer Voskerician said he had for the property behind Zuckerberg’s home from an unidentified African Prince.

“While we don’t know all the facts at this point, it seems clear that there was some shady dealing done by Voskerician, to the point where avoiding criminal prosecution rather than winning a civil trial against Zuckerberg seems to be his top priority,” Min said.

The case is Voskerician v. Zuckerberg, 1-14-CV-264667, Superior Court of California, County of Santa Clara (San Jose).

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