Could This Email to Paul Ceglia Cost Mark Zuckerberg 50% of Facebook?

By Catharine Smith, The Huffington Post
04.12.11

Facebook creator Mark Zuckerberg scored a major victory on Monday, when a U.S. appeals court ruled that the Winklevoss twins could not appeal their previous settlement with Facebook over claims that Zuckerberg had stolen their idea for a similar site. But the victory may prove to be short-lived.

Another of Zuckerberg's former challengers, Paul Ceglia, has again reared his head.

Ceglia, a New York state businessman, has produced new evidence in his case against Facebook. Last year, Ceglia filed a lawsuit claiming that Zuckerberg had signed a contract in 2003 that awarded Ceglia $1,000 and a 50-percent stake in the fledgeling social network. In return, Ceglia said that he worked as a designer and developer on Zuckerberg's site, while Zuckerberg worked as a coder for Ceglia's StreetFax.com.

Facebook denied Ceglia's initial claims, and many wondered why Ceglia had waited seven years to come forward. In addition, Ceglia had been arrested in 2009 and charged with criminal fraud.

While Ceglia's allegations seemed far-fetched in 2010, Business Insider reports that he has refiled his case and has brought forward more than a dozen emails allegedly written by Zuckerberg in 2003 and 2004.

In one purported email from 2003, Zuckerberg bounces around ideas for renaming the site and suggests that a good way to monetize would be to charge alumni $29.95 a month. In another, he mentions a pair of Harvard classmates [presumably the Winklevoss twins] who have a similar website idea. As the launch of Zuckerberg's website is delayed into 2004, the email correspondences begin to break down. Ceglia reminds Zuckerberg that their contract entitles him to a larger percentage of Zuckerberg's company the longer the site is delayed.

In an alleged email dated February 2, 2004, Zuckerberg mentions his contract with Ceglia explicitly, writing,

Paul, I have a rather serious issue to discuss with you, according to our contract, I owe you over 30% more of the business in late penalties which would give you over 80% of the company. First I want to say that I think that is completely unfair because I did so much extra work for you on your site [StreetFax.com] that caused those delays in the first place and second I don't even think it is legal to charge such a huge penalty. [...] I'd ike to suggest that you drop the penalty completely and that we officially return to 50/50 ownership.  

Ceglia agrees, according to later emails. Then, Zuckerberg backs out of the deal, writing to Ceglia that students have not shown much interest in the site and that he is considering ending the project.

If these emails are real, Ceglia stands to earn a huge payout from Facebook.

Facebook, on the other hand is flatly denying their authenticity. "This is a fraudulent lawsuit brought by a convicted felon, and we look forward to defending it in court," a Facebook lawyer told Bloomberg.

At the time Ceglia filed his first suit, Facebook was valued as high as $22 billion. Now, the site is believed to be worth over $50 billion.