Paul Ceglia’s Case Against Mark Zuckerberg and Facebook Heats Up

Posted Dec 16, 2011

Facebook is asking a federal court to dismiss a lawsuit from Paul Ceglia, which claims that he is entitled to 50% of Mark Zuckerberg’s ownership in Facebook. Ceglia cites a contract that he had with Mark Zuckerberg from 2003.

Facebook attorney Orin Snyder said that the contract is fake since because experts found that the ink is less than two years old. “The ink is wet,” stated Snyder. Ceglia’s attorney said that the experts used a non-scientific test for determining the age of the ink on the contract and that they’ve ruined the document during the examination.

?This is the critical document in this case, and they damaged it,? stated Dean Boland, Paul Ceglia’s attorney.

According to the contract, Ceglia was supposed to receive a 50% stake of ownership in the project between him and Zuckerberg. He was also supposed to receive a 1% of the stake for each day the project was overdue — giving him 84% ownership.

Dean Boland maintains a blog and website where he writes updates about the case. Three of his latest blog posts are very interesting. In his latest blog post, he wrote about how Zuckerberg and his lawyers attempted to destroy evidence.

Was Zuckerberg’s Lawyers Destroying Evidence?
In a filing that is pending with the court, Ceglia said Zuckerberg used at least five computers while he was a freshman at Harvard. Facebook’s lawyers have supposedly been suppressing information about these computers.

That evidence consists of the forensic copies of at least five computers belonging to and used by Defendant Zuckerberg while a student at Harvard. Exhibit A at 19-21. Those computers are ?electronic media? also known as ?electronic assets? containing ?electronic evidence? as those terms have been used throughout this litigation. These electronic assets contain electronic communications by Zuckerberg from 2003-2004 while a student at Harvard. Those electronic assets potentially include an email server. Id. Doc. No. 232 filed on November 25, 2011.

Facebook’s lawyers admitted knowing the existence of these computers and of the forensic copies that a computer expect in the ConnectU case has possession of.

In court, Zuckerberg’s lawyers never informed the court in Ceglia’s case about the existence of these computers. A party to civil litigation has a duty to preserve relevant information, including Electronically Stored Information (ESI) when that party ?has notice that the evidence is relevant to litigation or ? should have known that the evidence may be relevant to future litigation.? When that duty is breached, a district court may have the authority to impose the appropriate sanctions.

Zuckerberg’s lawyers continuously argued that the e-mail exchanges between Zuckerberg and Ceglia was fake because none of Ceglia’s e-mails appeared in Zuckerberg’s Harvard e-mail account. However the lawyers never disclosed to the court that there were five other computers used by Zuckerberg to communicate electronically between 2003-2004.

The Orrick Law firm represented Zuckerberg in the ConnectU case and in the Paul Ceglia case. As of this past August, the Orrick Law Firm lawyers attempted to ensure that hidden evidence would be destroyed.

Orrick Law counsel Monte Cooper sent a couple of e-mails to have documents produced in the case destroyed. Below is a screenshot from those e-mails:

Facebook Contract Between Ceglia and Zuckerberg Gets Damaged
Here is a video of Facebook’s document expects receiving the Ceglia contract:

It appears that the contract has been damaged in the process of examination. Below are images of the Ceglia and Zuckerberg contract when the document experts received them:

This is what the contract looked like 24 hours later. It appears that the documents have been exposed to harsh ultraviolet light for hours:

On top of being exposed to harsh ultraviolet light, the Facebook document expert handled the evidence without using gloves, meaning that his fingerprints are now all over the contract:

The document was also placed on top of a desktop computer tower, which has been generating heat all day, for about an hour. It seems like that these document experts are very professional when it comes to dealing with high-profile cases:

The E-Mails Between Ceglia and Zuckerberg
Facebook’s lawyer Oren Snyder said that e-mails between Ceglia and Zuckerberg are fake. Supposedly the margins, type face, and spacing was inconsistent in the document that Ceglia claimed was a contract between him and Zuckerberg. However Ceglia has provided his lawyers with e-mails conversations between him and Zuckerberg that is proof that the contract is authentic.

Between 2003-2004, Ceglia used an e-mail client called Web Mail. Web Mail generally started to delete emails to prevent users from exceeding storage limits. To avoid having his important e-mails from being deleted, Ceglia had copied the texts and headers of those e-mails into Word documents. Those files were then saved to floppy disks that Ceglia kept.

Jerry Grant, a computer forensic expert analyzed the floppy disks. Grant works for the Federal Defender in the Western District of New York and is an independent forensic examiner. In the Ceglia case, he worked as an independent examiner. When examining the floppy disks, he found that Ceglia’s statements about how he had saved the e-mails between himself and Zuckerberg are consistent.

Here is a link from Boland’s website of Jerry Grant’s declaration that there isn’t any indication of fraud on the disks:

Now here is where it gets really interesting.

The e-mails between Ceglia and Zuckerberg have been made public. Here are some of the highlights from the e-mails between Zuckerberg and Ceglia:

This e-mail shows how Zuckerberg is working with Ceglia on the StreetFax project. Zuckerberg has admitted working with Ceglia on this project, but Zuckerberg said Facebook has nothing to do with the contract he entered with Ceglia:

The e-mails show that Ceglia has also been working a man named Jeff Kazen, who worked directly with Zuckerberg:

On August 15, 2003, Paul Ceglia indicated that he was frustrated by how long it was taking Jeff and Mark to finish the project (Note: start reading from where it says “Original Message” at the top):

Mark responded to Ceglia’s threat to cancel the check with this e-mail:

Jeff’s LinkedIn profile is consistent with Ceglia’s e-mails. For example, In August 2003, Jeff said that he had to start a new job, which is why he did have any time left to focus on the StreetFax project. On Jeff’s LinkedIn profile, it says that he started working as a Software Developer Software Developer at Citigroup Asset Management. Below is an e-mail that Jeff sent to Ceglia in response to the e-mail where he threatened to cancel a check:

Here is an e-mail that Ceglia’s colleague Karin Monsterus sent to Jeff out of frustration that he has not been communicating with her every day. Jeff replied by pointing out that he has been busy with work and pointed out that the project has been dragged on to the point where Mark will be returning to school again:

On August 28, 2003, Karin started getting frustrated with Mark about the project getting delayed. She started pointing out that the terms of their contract indicates that late fees are agreed to a 5% deduction for the seller if not completed by a due date and an additional 1% deduction for each day the project is late thereafter:

On August 29, 2003, Karin sent an e-mail to Mark Zuckerberg saying that they have been having a hard time communicating with Jeff so they will just focus on working with him directly going forward:

According to the e-mails, it sounded like Zuckerberg and Ceglia have been tossing an idea back-and-forth about how to work together on a website that is similar to Facebook in September 2003.

Around November 2003, Zuckerberg met the Winklevoss twins and it turns out that they pitched him a similar idea that he was already working on with Ceglia. But Mark ended up deciding to work with the Winklevoss twins anyway:

A few hours later, Ceglia indicated that he was worried about the Winklevoss twins having a similar idea. He also agreed to FedEx Zuckerberg a check:

About six days later, Zuckerberg sent Ceglia an e-mail saying that he has been using some of Jeff’s old code and admitted that the twins gave him a bunch of their code to read. Zuckerberg said that he will use some of the functionality from Winklevoss twins’ code. I laughed at the part where he called them two dumb ox. Who would have thought back then that the Winklevoss twins would become multimillionaires as part of the Facebook settlement?

Ceglia replied to the e-mail saying to be careful of the law because he has had experience in the past when dealing with the authorities. Ceglia said to ignore the “couple of dumb jocks” and spend their energy building their own website.

Zuckerberg appreciated the advice that Ceglia gave him and said that he will just stall the Winklevoss twins for the time being.

On January 1, 2004, Mark sent an e-mail to Paul saying that he should be exempt from late penalties for the StreetFax project and asked him for additional funding:

Five days later Ceglia started losing his trust in Zuckerberg and threatened to call his parents:

Zuckerberg said that his parents would just laugh at him, but requested for him not to do it:

On January 13, 2004, Ceglia suggested that Zuckerberg uses the database and search algorithm from StreetFax for their new idea:

On February 2, 2004, Mark Zuckerberg sent an e-mail to Ceglia saying that it was unfair that Paul would own 80% of the company based on the contract. He believed it was unfair and said that the penalty should be dropped. He said that they should officially return to a 50/50 ownership. Ceglia agreed as long as the website started making real money like from the sales of college-related merchandise.

Facebook went live on February 4, 2004:

Two days after going live, Zuckerberg decided to take creative control and said he refuses to cheapen his website with the idea of selling “college junk”:

Obviously Ceglia was upset at the response and suggested putting ads on the website instead of selling merchandise:

In April 2004, Mark said that he does not need Ceglia’s money any more and said that they can call it even on the rest of the money that was owed to him for the extra work. He also said that he was not able to work on Facebook until summer any way. In July, Mark said that he would mail Ceglia the $2000 back to him in order to “repair” their business relationship. He told Ceglia that he did not have time to build their website during that summer, which happened to be the same summer he moved to Palo Alto to open a small office for Facebook.

Given that Zuckerberg acknowledged that he worked with Ceglia on StreetFax, it means that he has agreed to having a prior business relationship with Ceglia. Does that mean that some of the above e-mails are real and some are “fabricated?” Why would he push the case this far unless there was some truth to the Facebook documentation when their could be dire consequences if Facebook’s lawyers can prove beyond a reasonable doubt that the e-mails are fake.

In a past or future court case, I’m wondering if they have considered calling in Jeff Kazen as a witness to testify whether these e-mails are authentic are not (at least the ones he was sent).

Facebook’s lawyer pointed out that Ceglia has a shady past as a convicted felon when it comes to business deals. If I learned anything from the movie, The Social Network, it is that Mark Zuckerberg isn’t Mr. Nice Guy when it comes to screwing people out of deals either. Even though Eduardo Saverin is rich now, I felt bad for him in the movie.