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Wednesday, 21 July 2010 14:03

Facebook founder in hot water over 2003 contract

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Controversial businessman produces damning documents
As Facebook prepares to welcome its 500 millionth user, there is a chance that its founder Mark Zuckerberg could have to appear in court over a legal dispute with his former employer.

New York businessman Paul Ceglia sued Facebook last month, alleging that he owned a sizable chunk of the social network. Although many successful businesses are faced with frivolous lawsuits on a daily basis, but Zuckerberg apparently acknowledges that he did indeed work for Ceglia at some point.

According to CNN, Ceglia has produced documents which indicate that he hired Zuckerberg in 2003 to develop two unrelated projects. The first was a web database dubbed StreetFax Database, but the second venture sounds a bit more interesting. It is described as a project designed to “offer the students of Harvard university access to a website [sic] similar to a live functioning yearbook with the working title of 'The Face Book.'"

Mind you, Ceglia doesn’t really appear to be a model citizen. He currently runs Alleganyl Pellets LLC and he was arrested last year on four counts of grand larceny for failing to supply a shipment of wood pellets or reimburse the customers.

Facebook lawyers claim they are uncertain whether Zuckerberg actually signed the contract. Ceglia’s representatives claim that their client hired then 18-year-old Zuckerberg to work on a street-mapping database, but that the contract also included an investment in Zuckerberg’s pet project, which eventually became Facebook. They stated that the first Facebook domain was registered in January 2004, while the contract was signed in April 2003.

Although Facebook representatives claim that the suit is completely frivolous, Ceglia’s legal team believes they have a strong case and that their client is entitled to at least a 50 percent ownership stake in Facebook. We have to wonder why Ceglia waited for six years before filing suit against Facebook, but despite his checkered past it appears that Facebook is taking the matter quite seriously.

Things could turn quite ugly if Ceglia manages to produce enough evidence to mount a successful case against Facebook. Zuckerberg is respected by most punters and the media like to portray him as a whiz kid who managed to put together a massive and innovative business while in his early twenties. However, the judiciary has no such feelings, or feelings of any kind for that matter.

More here.

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