Judge: Facebook Case Documents Can’t Be Kept Confidential

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Facebook Says Ceglia Computers Show ‘Smoking Gun’ of Fraud

Andrew Harrer/Bloomberg

Facebook Inc. said its inspection of computers turned over by Paul Ceglia, the western New York man who claims he’s entitled to half of Chief Executive Officer Mark Zuckerberg’s holdings in the social-networking company, shows “smoking gun” evidence of fraud.

Facebook Inc. said its inspection of computers turned over by Paul Ceglia, the western New York man who claims he’s entitled to half of Chief Executive Officer Mark Zuckerberg’s holdings in the social-networking company, shows “smoking gun” evidence of fraud. Photographer: Andrew Harrer/Bloomberg

Paul Ceglia, the western New York
man who claims he’s entitled to part-ownership of Facebook Inc.,
can’t keep dozens of documents found on computers he owned
confidential, a judge ruled.

U.S. Magistrate Judge Leslie Foschio in Buffalo, New York,
ruled yesterday that Ceglia’s lawyers improperly designated all
120 of the documents, including versions of the contract Ceglia
claims he signed with Facebook co-founder Mark Zuckerberg in
2003, as confidential.

Foschio removed the confidential designation from 85 of the
documents. He gave Ceglia’s lawyers until Aug. 17 to turn over
four copies of the contract, which they claimed were subject to
attorney-client privilege.

Foschio last month ordered Ceglia to let Facebook run
forensic tests on his computers, hard drives and electronic
storage media, as well as on the contract and the e-mails he
says support his claim. In court papers filed last week, Palo
Alto, California-based Facebook said its inspection, by the
computer forensics firm Stroz Friedberg LLC, turned up “smoking
gun” evidence of fraud.

Ceglia, 38, sued Facebook and Zuckerberg last year,
claiming that a two-page contract Zuckerberg signed in 2003 gave
Ceglia half of the company when the service was started the
following year. Facebook has grown to become the world’s biggest
social-networking site, valued at as much as $69.2 billion,
according to Sharespost.com, an online marketplace for
investments in companies that aren’t publicly traded.

27 E-Mails

In the order yesterday Foschio left in place
confidentiality designations that Ceglia’s lawyers placed on 27
e-mails between Ceglia, Zuckerberg and people involved with
developing the website for StreetFax, a company Ceglia was
trying to launch at the time.

Zuckerberg agrees he signed a contract with Ceglia to do
computer coding on the StreetFax project. The contract he
signed, when he was a student at Harvard University, had nothing
to do with Facebook, Zuckerberg said in court papers. Ceglia
claims he and Zuckerberg signed an agreement that gave him part
ownership of Facebook in exchange for providing some of the
early funding.

Facebook lawyer Orin Snyder had no immediate comment on
Foschio’s ruling. Jeffrey Lake, a lawyer for Ceglia, didn’t
return a voice-mail message seeking comment.

The case is Ceglia v. Zuckerberg, 1:10-cv-00569, U.S.
District Court, Western District of New York (Buffalo).

To contact the reporter on this story:
Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net.

To contact the editor responsible for this story:
Michael Hytha at mhytha@bloomberg.net.

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