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

[SecularMotion]

Source: Bloomberg

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.

Read more: http://www.bloomberg.com/news/2010-07-13/new-york-man-claims-84-of-facebook-gets-court-order-restricting-assets.html

[MineralMan]

1. Six months later, the headline will read:

Man in Facebook Lawsuit Settles for $10 Million.

[KeepItReal]

4. You may want to add a zero...Facebook may have a valuation in the *billions* of dollars

(eom)

[unblock]

5. far more likely, "an undisclosed amount"

i.e., facebook will pay more for him to keep his mouth shut.

[onehandle]

2. Good. Zuckerberg is a dick. I hope he loses his shirt.

Die Facebook, Die!

[CLANG]

16. I'd also like to see Twitter disappear.

I's become a meeting place for right-wing wackos spewing their lies, like Ms. Sarah, and David Gregory.

[cbdo2007]

27. I dont' even understand how Twitter appeared to begin with.

Really, what is the point? At least with Facebook you get a semi-relationship with everyone you've ever known with the ability to "catch up" with them by just looking at their profile and without having to actually talk to them.

Twitter is just...people babbling all day.

[Hannah Bell]

31. it's ridiculous. nothing interesting to say in 15 words or whatever it is. but

it was promoted by the msm/news in such a blatant, obvious way that somebody important wants it.

it reminds me of 1984, the bit about newspeak reducing language to bites:

In the novel by Orwell, it is described as being "the only language in the world whose vocabulary gets smaller every year"... Newspeak is closely based on English but has a greatly reduced and simplified vocabulary and grammar. This suits the totalitarian regime of the Party, whose aim is to make any alternative thinking—"thoughtcrime", or "crimethink" in the newest edition of Newspeak—impossible by removing any words or possible constructs which describe the ideas of freedom, rebellion and so on. One character, Syme, says admiringly of the shrinking volume of the new dictionary: "It's a beautiful thing, the destruction of words."


http://en.wikipedia.org/wiki/Newspeak

[KeyWester]

39. The Iran uprising made it legit.

all communications were shut down except Twitter.

Gave it a reason to live.

[SunnySong]

32. Not to mention Chavez

:hide:

[Statistical]

40. Company ownership change wouldn't make facebook disapear. n/t

[damntexdem]

3. LOL!

Couldn't happen to a more-deserving social-networking site.

[liberalmike27]

6. Why so down on FB

You should get up with your circle of friends and be working on deprogramming the right-wingers.

Hell, if I can put up with Alabama people, you surely can do some work wherever you are from. It's just another avenue to get political. But I do get tired of the holy rollers posting bible verses, people posting fairly inane shit, like pictures of their kids. It's probably because I don't have any, but...

[CoffeeCat]

7. Why...

...is posting pictures of your kids "insane"?

[AtheistCrusader]

8. 'inane' not 'insane'.

[begin_within]

9. Posting pictures of your kids is both inane and insane.

Why in this age of child predators, ... oh well, whatever.

[MattSh]

10. The following people have Facebook pages...

Barack Obama

Howard Dean

Bernie Sanders

Sounds both inane AND insane to me...

Seriously, judging Facebook only by these standards is like judging DU only by what's posted in The DU Lounge. What about trying to find out if what you've heard about Facebook is true before posting inane bullshit?

[Historic NY]

11. I'd like to sell them a bridge too. Its worse than people with borg cell phone headsets in public.

[Gormy Cuss]

15. Judging DU by what's posted in the lounge....

Yeah, because the lounge has one Steinbrenner thread that involves no grave dancing, unlike LBN and GD.

[KamaAina]

33. Quit hatin' on Teh Longue!

Careful you don't get speared by a narwhal or smothered by kudzu or something! :P

[Trajan]

12. Facebook is no more onerous than DU

I have an opportunity to 'connect' with my kids, brothers, sisters, cousins, nephews, nieces .... Every day ...

Facebook 'hatred' seems just as irrational as any other superficial hatred ...

If Ceglia has a valid basis for his claim, then more power to him ...

[slampoet]

24. If you have no problem i will leak your real world identity to strangers like Facebook does.

[Trajan]

36. That's a different question ....

I use my real name on Facebook ... What am I hiding ?

Unlike DU, where political hatreds simmer endlessly ... My existence on FB is for interaction with family and friends ...

I did have to 'unfriend' my own sister, cause she is a hater ....

BTW: What power do YOU have to 'leak' anything ?

[slampoet]

37. I have found the identities of 7-8 DU members for my own curiosity.

it really isn't hard and can take just three Google searches for some.

[Trajan]

42. So what you are actually saying ?

1) Do not join DU ?
2) YOU are a hacker ?

[Xithras]

13. Holy shit! I just read the lawsuit. Zuckerman is SCREWED.

The lawsuit includes the contract.

In essence, it boils down to this: This guy paid Zuckerman $1000 in 2003 to develop a site called TheFaceBook.Com, and they were to be 50/50 partners. Zuckerman was supposed to have the site developed by a certain date, with a 1% per day penalty if he missed it. He missed the date, and by the time it was finished the guy owned 84% of the company.

Shortly after completing the site, Zuckerman registered a second domain name (FaceBook.Com), duplicated the site, and relaunched it as his own.

The original complaint contains the original contract, with Zuckermans signature and a description of "TheFaceBook.Com" project, along with the cancelled check that Zuckerman accepted to build it.

At the very minimum, Zuckerman will be paying this guy a LOT of zeroes.

[truebrit71]

17. Wow..if that is accurate Zuckerman is going to get nailed...

...

[Poll_Blind]

18. Oh holy crap, that IS screwed in the ding-ding! LOL!

Just goes to show you to keep track of all records like this, never know when they're going to come in handy!

PB

[Xithras]

20. Yep, it also schows that Zuckermans entire story of how Facebook was "invented" is a lie.

The story he's always told was that he invented FaceMash in his dorm room, and then Facebook shortly afterward as an outgrowth of that. The contract for TheFaceBook.Com was written, and the software written, before FaceMash was ever launched. It really sounds like Zuckerman wrote TheFaceBook.Com for this guy, wrote FaceMash for himself, and then relaunched FaceBook.Com using the idea and software from his former partner.

There are only two real questions here. 1) Is the statute of limitations going to get in the way? If he can prove that he's owned it all along, that could still be a very real question. And 2) How similar was the delivered code for TheFaceBook.Com to FaceBook.Com at launch time. If Ceglia still has Zuckermans original delivered code, it should be pretty simple to compare the two.

If Ceglia can show that Facebook.Com is simply a continuation of the same business he and Zuckerman founded in 2003, then there is statute of limitations issue here. Ceglia owned 84% of Facebook all along, but nobody realized it. The fact that Ceglia wasn't active in the business doesn't nullify his ownership.

[cbdo2007]

19. You are assuming this guy's lawsuit is valid.

Which seems like a stretch if you know about the history of Facebook.

It was founded by Zuckerman and his college roomies originally as "Facesmash" or something. He settled with them, I think, but it's odd then that this guy is in the picture all of a sudden when nobody has ever heard from him before and using a different name "TheFaceBook.Com" than what the site started as.

[Xithras]

21. He has, and has released, the contracts. They look real and binding.

Zuckerberg has himself stated that FaceBook.Com grew out of TheFaceBook.Com, and this guy has a binding contract with Zuckerbergs signature stating that he owns 84% of TheFaceBook.Com. He also has a cancelled check, written to Zuckerberg after the launch of FaceMash, showing that Zuckerberg was accepting money from him as stated in the original contract.

[Godhumor]

22. The guy filing the lawsuit has a dubious history

And is currently being pursued in NYS for defrauding customers of his wood pellet fuel company.

Doesn't mean there is any correlation with the Facebook lawsuit, but I wouldn't be asusming his documents are real or valid just yet.

[cbdo2007]

23. It's hard to pull off a scam without "contracts that look real and binding".

But even just off the top there are some things that don't add up. The most important being that not even the stupidest businessman in the world would give up 50% of their company for "some web design work" which is what the guy claims, and then give them 1% ownership for being late. That means at 1 day late the person has a majority ownership in the company which doesn't make any sense no matter how you look at it.

Zuckerberg is a pretty smart guy and has been pretty smart about things since he first started up Facebook or thefacebook or whatever. There is no way he is going to give someone else a majority ownership just for him being one day late and then give him 1% for each additional day. That isn't even logical.

It sounds like, maybe this guy worked for Zuckerberg at some point but it's odd with the known history of Facebook that his name has never been connected to Facebook at all until now, when we know the names of all of the other parties involved. It definitely sounds more questionable than valid.

and if Zuckerberg was accepting money from this guy for the work, how is it Zuckerberg's right to give up ownership in the first place. Who was working for whom?

[Xithras]

25. Actually, that's a very common startup scenario

I know, because I'm part owner of a startup RIGHT NOW that is using a similar scenario. I'm providing the seed funding and technical "experience" for four former students who are launching a startup. They are doing the work, without pay, for their percentage, and I get a 20% stake for making sure they do it right (documentation, business plans, code QA) and providing oversight into the startup world (I worked for several startups in the 90's, and have been the owner of a software consulting firm for most of the years since then).

Our contract, like the one here, includes performance penalties. With nobody pulling a paycheck, and no resources, those performance penalties transfer a percentage of their share to me. The 1% per day thing in Ceglia's contract is very steep (ours is 2% per week), but Zuckerberg agreed to it.

Ceglia's claim is that he was the funding partner, and his contract seems to support that. He doesn't claim that Zuckerberg was his employee, but that he was the technical, development oriented half of what was originally supposed to be a partnership. Zuckerberg accepted $1000 and a 50% stake to write the software, with penalties if he didn't deliver the software on time.

Look, this is pretty simple to prove one way or the other. Assuming that the contract isn't a complete forgery, it's clear that Zuckerberg agreed to create a website called "thefacebook.com" for his partnership with Ceglia. Where is the product of that partnership? If Ceglia can show that the product that was created for their partnership was substantially similar to the Facebook that launched in 2004, then he has a solid case. For Zuckerberg to win this, he needs to prove that A) Ceglia didn't live up to his side of the contract. Or B) the contract is a complete fabrication. Or C) the FaceBook.Com that exists today is unrelated to the "thefacebook.com" website that he and Ceglia originally and contractually agreed to create. If he can prove any of these three things, Ceglia will walk away empty handed. If he can't, Ceglia just became a billionaire.

[cbdo2007]

26. Thanks for your insight!

Wow, I couldn't imagine giving up 1% ownership per day, or 2% per week even on a startup. I work for a website as well and we've had offers from developers who wanted ownership and we always passed on the deals, thank goodness in our situation.

Maybe this thing is legit then.....assuming the contract is real.

[Xithras]

28. It's a protection for me.

Because the developers aren't pulling a paycheck, there is really nothing stopping them from walking away from it. I signed on because I thought they had a solid idea and that it has real potential to take off. Even if they walk away, I would hire additional paid developers to come in and complete it. I have that much faith in the idea. If they DO walk away, however, the performance penalties mean that they will eventually give up all ownership of the idea and company. It gives them an incentive to keep working on it, when parties or girlfriends may tempt them away.

For me, it provides protection for my investment. I've already financed more than $40,000 worth of servers and gear for the startup, and have paid all of the various taxes and incorporation fees accrued so far, and I don't want to be left hanging if they walk off or abandon the project. I am already paying for that gear, and have a real financial need to ensure that we keep this moving forward.

As I said, it's a very common seed funding arrangement, where both rewards and penalties are doled out using equity instead of cash.

[anigbrowl]

29. No. It will fail over laches

Laches is the concept of 'use it or lose It's as applied to contracts. Letting his claim gather dust for seven years with no explanation for the delay will almost certainly cause it to fail unless he was in a coma or something. He just wants a payoff.

[Xithras]

30. Would laches apply here?

I could see the application of laches to a damage claim, but his core claim is that he is, and has always been, an 84% stakeholder in the company. He is not claiming that Facebook owes him money, or that he wants the court to grant him 84% of the company as damages, but that as a founder of the company he already owns 84% of it and merely wants his rights recognized.

One of the core concepts behind laches is the notion that, by delaying suit, the plaintiff has deliberately acted to increase the amount of damages he can claim. That, by not suing in a timely manner, the plaintiff has willingly and deliberately attempted to increase his award.

That doesn't apply in this situation. Facebook has an estimated market valuation of $11.5 billion, making the 84% stake worth about $9.5 billion. Had the plaintiff sued in 2005 and won his 84% stake at that time, the stake would still be worth $9.5 billion today. Unless Zuckerberg can somehow show that losing the 84% stake would have caused the company to fail or be devalued, there really isn't a strong argument that delaying the suit has lead to increased damages. Because the value of a company is only rarely tied to the identity of its stakeholders, that is going to be a hard thing to prove in this case.

[anigbrowl]

34. i think so...

Remember the business has been restructured several times as more invest has gone in. Excuse brevity, I'm using my phone.

[Xithras]

35. But Zuckerberg would still need to prove that it was relevant.

While share dilution IS a real issue that would need to be addressed (Did Zuckerberg sell investors existing shares in the company, or dilute the value of existing shares by issuing new shares?), I don't know how relevant it is to this case. To mount an affirmative laches defense, Zuckerberg would need to prove that the investment, restructuring, and stock growth would not have occurred if his investors had been aware that Zuckerberg only owned 16% of the company. Zuckerberg will essentially need to argue that the company would have failed, or at least wouldn't have grown as quickly, if it had been owned by anyone other than him. He will need to prove that the companies value was inflated by the deception and delayed lawsuit. Considering the large number of successful companies that are run by people with zero ownership stake, that could be a hard case to prove.

[anigbrowl]

43. what i mean is that the cimpany itself has changed form

Facebook Inc. is not the same entity that Ceglia alleges ownership of. His failure to sue before now for breach has probably timed it out. The contact has been breached many many times by now - modification of product, disclosure to outside parties, etc..

[Statistical]

41. Statute of limitations in NY for contract breeches is 6 years. Suit is over before it began.

Even if real (which is very unlikely given this guys decade long history of scams, fraud, and cheating) he has exceeded statute of limitations.

His limit for compensation is 6 years due to NY law. 6 years from the time he had reasonable expectation that a material breach of the contract had happened.

Think any judge or jury is going to buy the idea that he developed facebook and somehow didn't notice as facebook became the number #1 social networking site on the planet. :rofl:

It is ging to get tossed, or maybe if he is lucky FB pays his a couple hundred grand to make it go away quickly and quietly.
He can use the couple hundred grand to repay the $200,000 he defrauded customers of his wood pellet business.

[rocktivity]

14. This story makes Ceglia sound like some kind of kook

without even suggesting a possible connection between him and Zuckerberg, which I found at SFGate.com:

Ceglia claims he and Mark Zuckerberg entered into a contract on April 28, 2003 in which Ceglia agreed to provide some web development work in exchange for 50% of the resulting entity, plus an additional 1% every day until the work was completed. He now says this means he owns 84% of Facebook. Ceglia has apparently produced a copy of the contract, which is 2 pages long...

Outside of the statute of limitations issue, which may put an end to the claim before any facts are considered, it seems unlikely that there's any claim here...

:headbang:
rocktivity

[DainBramaged]

38. NY man claims to have original birth certificate of President Obama

film at 11............


:eyes: