Facebook founder may have given up ownership stake

mark_zuckerberg_gi.top.jpg By Stacy Cowley, tech editor


NEW YORK (CNNMoney.com) -- A seven-year-old contract signed by Facebook founder Mark Zuckerberg granting a New York businessman an ownership stake in Zuckerberg's then-fledgling Web project may be real, a Facebook lawyer acknowledged Tuesday in federal court hearing.

"Mr. Zuckerberg did have a contract with Mr. Ceglia," Facebook lawyer Lisa Simpson told U.S. District Judge Richard Arcara in Buffalo, N.Y., according to a Bloomberg report.

But Facebook isn't convinced that the document plaintiff Paul Ceglia submitted to the court is an authentic copy of that contract. "Whether [Zuckerberg] signed this piece of paper, we're unsure at this moment," she said.

Wellsville, N.Y., resident Ceglia sued Facebook and Zuckerberg in a local court late last month, claiming he hired Zuckerberg in 2003 to work on two separate business ventures.

The first was to develop and maintain Web software for "the StreetFax Database," according to a copy of a contract Ceglia filed with the court. The second venture was "continued development" of an already-in-progress project "designed to offer the students of Harvard university access to a wesite [sic] similar to a live functioning yearbook with the working title of 'The Face Book.'"

A local judge granted Ceglia's request for an unusual and sweeping restraining order temporarily preventing Facebook from transferring or selling any of its assets. Facebook responded by having the case transferred to federal court, where Judge Arcara on Friday suspended the restraining order.

Both sides agreed Tuesday to let the injunction lapse for the time being.

Ceglia's attorney, Terrence Connors, said that his client hired Zuckerberg -- then an 18-year-old Harvard freshman -- to work as a coder on a street-mapping database Ceglia hoped to create. The contract they drew up covered both that work and an investment in a side project Zuckerberg said he had in the works, according to Connors.

That side project grew into Facebook, the world's largest social networking site. Ceglia agreed to pay Zuckerberg $2,000 for the job.

In a series of legal filings, Facebook has challenged both the facts of Ceglia's case and the timing of it. Ceglia's alleged contract is dated April 23, 2003 -- several months before Zuckerberg is believed to have started work on Facebook's predecessor projects. The domain name "thefacebook.com" was first registered in January 2004.

But Ceglia's attorneys maintain that their client's case is a strong one. "The contract is real -- as is plaintiff's entitlement to at least a 50% ownership interest in Facebook," they wrote in court filing submitted Friday.

Facebook maintains that Ceglia's suit is "completely frivolous," a spokesman said Tuesday following the court hearing in Buffalo.

"The plaintiff has not produced the original of the alleged agreement for anyone, including the court," he said. "We have serious questions about the authenticity of the document and, assuming an original exists, we look forward to expressing our opinion about it once we see it." To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.