Aug 15, 2011 8:56 PM

Facebook Files Evidence It Says Proves Half-Ownership Suit is a Sham

Facebook says it has found the original contract between Mark Zuckerberg and purported half-owner Paul Ceglia — and it doesn’t mention Facebook at all. That, Facebook says, proves that Ceglia’s evidence is an “outright fabrication” and means that his suit seeking half-ownership of the social networking giant should be immediately tossed. Both parties agree that Mark […]

Facebook says it has found the original contract between Mark Zuckerberg and purported half-owner Paul Ceglia -- and it doesn't mention Facebook at all.

That, Facebook says, proves that Ceglia's evidence is an "outright fabrication" and means that his suit seeking half-ownership of the social networking giant should be immediately tossed.

Both parties agree that Mark Zuckerberg signed a contract in 2003 with Paul Ceglia, the would-be-heir-apparent to Facebook, to do some freelance programming work on Ceglia's company StreetFax. But in 2010, Ceglia filed suit, producing a copy of the contract (.pdf) that showed Ceglia made a $1000 investment in “The Page Book,” entitling him to half of Facebook. Facebook charges that Ceglia, who has a checkered past, forged a page of the contract.

Facebook made its evidence public Monday evening via court filings, producing what it says is the original contract (.pdf) between Ceglia and Zuckerberg. The company said it found the document on Ceglia's hard drives and that Ceglia tried to keep it out of the lawsuit by claiming attorney-client privilege.

But a New York federal magistrate judge rejected that claim of privilege on Thursday, leading Facebook to file the "smoking gun" document publicly. Not surprisingly, Facebook is simultaneously moving to have the case dismissed (.pdf).

"The court-ordered forensic testing has uncovered the authentic contract between Mark Zuckerberg and StreetFax that Ceglia attempted to conceal," Facebook's lawyers wrote. "This smoking-gun evidence confirms what Defendants have said all along: the purported contract attached to the complaint is an outright fabrication. The authentic contract — which mentions only StreetFax and has nothing to do with Facebook — was found embedded in the electronic data from 2004 on Ceglia’s computer."

Here's the relevant portion of the contract filed with the court by Ceglia, ostensibly showing an investment in Facebook:

By contrast, here's he corresponding portion of the contract that Facebook says it found on Ceglia's computer, dating to 2004.

Additionally, Facebook says that forensic data shows evidence of six USB devices that Ceglia now claims to have lost. And it says that forensics show that at least one of those devices includes a folder called "Facebook Files" and a image called "“Zuckerberg Contract page1.tif.” That's the page of the contract that Facebook says was forged to include mention of an investment in Facebook. That language is not included in the scan (above) that Facebook filed with the court Monday.

Facebook charges that it's likely these devices that were used to modify the authentic contract.

Ceglia now claims — incredibly and outrageously — that he is “unable to locate these devices.” Opp. 11. It is very likely that Ceglia used these removable devices to manipulate and store documents, including the purported “Facebook contract,” in the belief that this evidence would not be discovered — or that the devices could easily be discarded if necessary, as Ceglia has now apparently done. This is the digital equivalent of throwing critical evidence into Lake Erie. Ceglia’s willful and bad-faith spoliation warrants severe sanctions, up to and including dismissal.

Ceglia's attorney Jeffrey Lake could not immediately reached for comment as he was travelling to New York, according to his office in San Diego.

UPDATE: 8/16 11:43 a.m. Eastern: Lake did not respond to our request for comment, but in a filing with the court, he asked the judge to reconsider his decision to deny attorney-client privilege to the copy of the contract, which Lake acknowledged differs from the one used as evidence in the suit. The filing makes it clear that Ceglia has an explanation for why the two contracts are different, though the filing doesn't hint at what that explanation will be. A hearing on the case is scheduled for Wednesday in New York City.