Judge recommends dismissal of Ceglia's ownership lawsuit against Facebook

Paul D. Ceglia claimed a stake in Facebook based on a contract he claimed he had signed with Mark Zuckerberg

A judge in New York has recommended that a lawsuit filed by Paul D. Ceglia, claiming half ownership of Facebook, should be dismissed.

Magistrate Judge Leslie G. Foschio of U.S. District Court for the Western District of New York wrote in a recommendation on Tuesday that "clear and convincing evidence establishes" that the Work For Hire document, on which Ceglia based his claim, was a "recently created fabrication," while the StreetFax document was the authentic contract.

In a 2010 suit, Ceglia claimed that Zuckerberg signed the Work for Hire document in 2003 in which Facebook founder Mark Zuckerberg agreed, in return for monetary payments, to provide programming and coding services for a search project called StreetFax, and to give Ceglia one-half interest in Facebook, which Zuckerberg was working on as a student at Harvard.

Zuckerberg had stated under oath that he did not sign the Work for Hire document that Ceglia attached to his complaint, but had signed only an agreement to do website development work for a now-defunct company named StreetFax, and the agreement said nothing about Facebook or any other social networking website. Zuckerberg stated that he did not even conceive of the idea of Facebook until months later.

Facebook and Zuckerberg alleged that Ceglia had created the Work for Hire document by doctoring the text of the first page of the StreetFax Contract, and then adding it to the authentic second page of the contract, or facsimile, that had Zuckerberg's signature. During expedited discovery, Ceglia initially tried to conceal the hard drive containing the StreetFax contract, but later asserted that Zuckerberg and his lawyers had created a forged document themselves and somehow planted it on his hard drive, according to the court filing.

Facebook also cited evidence from a forensic chemist and document dating specialist that ink from the handwritten notations purportedly made when the Work for Hire document was signed in 2003 was less than two years old.

Judge Foschio recommended on Tuesday that Facebook's motion to dismiss should be granted. "The exercise of the court's inherent power to protect the integrity of its processes and judgments against purposeful fraud is a well-recognized exercise of judicial power predating adoption of the Seventh Amendment," the judge wrote. The Seventh Amendment to the U.S. Constitution refers to the right to jury trial in certain civil cases.

The recommendation goes to District Judge Richard Arcara who will decide whether to accept it.

The office of the United States Attorney for the Southern District of New York said in October that Ceglia was arrested by federal agents for allegedly attempting to defraud Facebook and Zuckerberg of a stake in the company. Ceglia was charged with filing a federal lawsuit falsely claiming to have been promised a 50 percent share in Facebook, and then doctored, fabricated, and destroyed evidence to support his false claim. He was charged with one count each of mail and wire fraud.

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