New York man claims 84 percent stake in Facebook

Last Updated 13 July 2010, 15:37 IST

Acting on Paul D Ceglia's lawsuit, judge of Allegany County in New York, Thomas Brown, has issued a temporary restraining order restricting the transfer of Facebook Inc.'s assets.

Ceglia, claims that a 2003 contract he signed with Facebook founder and CEO Mark Zuckerberg entitles him to ownership of the company and monetary damages, the Wall Street Journal said.

In his suit, Ceglia claims he signed a contract with Zuckerberg on April 28, 2003, to develop and design a website, paying a USD 1,000 fee but getting a 50 per cent stake in the product, the report said.

The contract also stipulated that Ceglia would get an additional 1 per cent interest in the business for every day after January 1, 2004, until it was completed.In a statement, a spokesman for closely held Facebook said, "We believe this suit is completely frivolous and we will fight it vigorously."

A copy of the contract seen by WSJ says it is "for the purchase and design of a suitable website for the project Seller [Zuckerberg] has already initiated that is designed to offer the students of Harvard university access to a website similar to a live functioning yearbook with the working title of 'The Face Book."

In 2009, New York's Attorney General Andrew M Cuomo accused Ceglia of defrauding customers of his wood-pellet fuel company, according to a news release from the Attorney General's office.

The state claimed that he took more than USD 200,000 from consumers and then failed to deliver any products or refunds, The Journal said.The wood-pellet case is ongoing.
Victor P Goldberg, a contracts professor at Columbia University, said the Facebook contract lawsuit may suffer from the statute of limitations, which is six years in New York.
Goldberg also noted the contract itself was unusual, because it doesn't stipulate what else Zuckerberg would have gotten from Ceglia aside from USD 1,000.

The social networking service, Facebook, is growing rapidly around the world and even catching up with Orkut in India where, along with Brazil, the Google creation has dominated the scene for a longtime, another media report in the New York Times said, last week

(Published 13 July 2010, 15:22 IST)

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