Magistrate Judge Says Facebook Contract Is Fake

Three years after New York businessman Paul Ceglia first alleged that a contract with Mark Zuckerberg entitled him to a 50 percent ownership stake in Facebook, a federal magistrate judge has agreed with the defense that the case is a fraud. In a 155-page March 26 decision, Western District Magistrate Judge Leslie Foschio in Buffalo (See Profile) recommended dismissal of the case in Ceglia v. Zuckerberg, 10-CV-00569A. Facebook’s lawyers at Gibson, Dunn & Crutcher, Foschio said, have established that Ceglia’s purported contract was faked.

Ceglia’s case first gained attention because of its improbable content: He claimed that Zuckerberg agreed to hand over a half-interest in what eventually became Facebook in lieu of payment for some minor programming services. The purported 2003 contract with then-Harvard student Zuckerberg stood to make Ceglia a billionaire. And at least for a while Ceglia was able to enlist some top legal talent. At different points Milberg, DLA Piper, and Kasowitz, Benson, Torres & Friedman took turns by Ceglia’s side.