A businessman who claims Mark Zuckerberg scammed him out of a $2,000 controlling interest in Facebook has amended his federal lawsuit, in an attempt to cash in on a company now valued at $65 billion.

Paul Ceglia, a New York businessman with a sketchy past, says he owns half of Facebook after having paid Zuckerberg $2,000 to fund the site. In his new complaint, he alleges that Zuckerberg tried to weasel out of the contract by lying about how well the site was doing.

Ceglia is now offering up what he calls damning e-mails in pursuit of what he says is rightfully his, after agreements and understandings with a young Zuckerberg. Some might think it's all a sour-grapes-grab in the fashion of a failed suit by the Winklevoss twins, who also crossed paths with Zuckerberg at Harvard in the earliest days, and whose legal attempt to prove they were wronged was snidely dismissed by a judge only Monday.

Indeed, one would be tempted to dismiss Ceglia's suit as ridiculous – except that Zuckerberg did do work for him, Ceglia purportedly has e-mails from Zuckerberg confirming the signed contract, and Ceglia is now represented by DLA Piper – one of the nation's most well-respected law firms.

Which is to say, this is either an elaborate con job or Ceglia has proof of the biggest corporate thievery since Bernie Madoff.

The updated complaint includes purported snippets of e-mails showing Zuckerberg using portions of the code he was paid to create for Ceglia's venture "StreetFax," as part of what was then called "TheFacebook." After Ceglia relented on some contractual penalties that put his ownership at 80 percent, Zuckerberg finally launched the site in 2004. Zuckerberg then grew testy with Ceglia, telling him the site was failing, that he was planning to quit, and offering to give Ceglia his money back in exchange for the equity.

Facebook says the suit is bogus, and the e-mails are fake.

"This is a fraudulent lawsuit brought by a convicted felon, and we look forward to defending it in court. From the outset, we’ve said that this scam artist’s claims are ridiculous, and this newest complaint is no better," said Orin Snyder of Gibson, Dunn & Crutcher, a law firm representing Facebook.

When Ceglia filed the suit in July 2010, Facebook also dismissed it out of hand, saying "Mark has made it clear that Ceglia’s claims are absurd, and we strongly suspect the contract is forged."

But now Ceglia, who was indicted in 2009 for allegedly defrauding people who prepaid him for heating supplies, is back – either with a scam that could land him in prison, or with a fantastic story that shows that Facebook was founded not just by screwing over Harvard jocks, but by flat-out fraud.

Part of Ceglia's new proffer are e-mail exchanges Facebook already says are not real. After some back-and-forth about business models, Zuckerberg allegedly sent this e-mail with the subject line "Urgent! Let's Talk" on November 22, 2003.

Harvard that are planning to launch a site very similar to ours. If we don’t make a move soon, I think we will lose the advantage we would have if we release before them. I’ve stalled them for the time being and with a break if you could send another $1000 for the facebook [sic] project it would allow me to pay my roommate or Jeff to help integrate the search code and get the site live before them. Please give me a call so that we can talk more about this

When the site finally launched on February 4, 2004, Zuckerberg quickly turned on Ceglia, who was pushing the site to sell Harvard-branded mugs and sweatshirts. Two days later, he allegedly wrote:

Sorry it’s taken me a few days to respond, [sic] Now that the sites [sic] live I feel I must take creative control and I just can not risk injuring my sites [sic] reputation by cheapening it with your idea of selling college junk, nor do I wish to spend my time shipping out coffee mugs to rich alumni. The site is cool as it is and I don’t care about making any money on it right now, I just want to see if people will use it. If I had the rest of the money I was owed by you for all that extra work I did I wouldn’t even need to make money at all on this site. That is money I am entitled to and is rightfully mine.

Ceglia shot back:

Mark, all I can think is your parents have handed you everything your entire life and after all this time and energy and MONEY that you think in your head that an Ok way to act is to just say- oh I’ve changed my mind I don’t think it’s cool to make money and that that should be that. Then you have the nerve to suggest that I should pay you more money if I get you right, so that you dont [sic] have to try to make money on the site we’ve built?? It’s one thing to say you don’t want to sell coffee mugs but I don’t see why since the margins are excellent and with minimal effort we could generate some decent revenue for us while keeping the site free to students. It’s one thing to say “I’d like to discuss with you other ways we could produce revenue for the site, like advertising, we could sell ads locally I am sure and to places that already sell alumni stuff (but we will be losing the margins) angel investors are just con men and until we have some decent revenue we aren’t going to get a dime from them without giving up the whole thing and anyway at this point it’s just a freaking harvard [sic] thing. I need to be able to get on the actual site and see where we can place some ads and we need to get some bike couriers to go around promoting the site so we can get some people using it FIRST! But we need to get some advertising on the site right away if you like that route better so alumni are used to seeing some ads from the beginning.

Then, the suit alleges, Zuckerberg hacked into and sabotaged Ceglia's StreetFax site, as revenge for money he felt he was owed. Zuckerberg also allegedly hid from Ceglia that Facebook was taking off and that he was headed to Silicon Valley for the summer to work full time on Facebook.

April 6, 2004, as asserted by Ceglia:

Paul, I have become too busy to deal with the site and no one wants to pay for it, so I am thinking of just taking the server down. My parents have a fund that I can tap into for my college expenses and I would just like to give you your two thousand dollars back and call it even on the rest of the money you owe me for the extra work. At this point I won’t even really be able to work on the facebook until Summer.

Ceglia allegedly responded:

You’ve got some nerve talking about me owing you with the CRIMINAL stunts you’ve pulled [sic] Reasonable people go to court to resolve their differences they don’t go stealing things dude, you stole code, not once, not twice but THREE TIMES! Do you have any idea the damage you’ve done??? Grow up, take a fucking ethics class, choke yourself with that silver spoon of yours.

Months later, while building out Facebook and learning the Silicon Valley ropes from Sean Parker, Zuckerberg allegedly sent this fence-mending e-mail that attempts to buy back Ceglia's stake – as an olive branch, without mentioning how the site had taken off:

Paul,

I am guessing that you don’t want to talk to me but I wanted to say happy birthday and that I hope to resolve our differences. I see that what I did was wrong and I am really sorry that I behaved as I did. Please give me your address and I will mail you back the $2000 for your trouble, more if it will repair our business relationship.

Another summer is here and I still don’t have any time to build our site, I understand that I promised I would, but other things have come up and I am out in California working during break. I just don’t want the obligation of having to answer to you for not following through and I won’t be able to.

Best,

Mark

At the time, Facebook was seeking investment for his company, and a week later incorporated Facebook in Delaware, ahead of landing Peter Thiel as an investor. The suit alleges Ceglia never accepted a repayment of investment in The Face Book project and never relinquished his 50 percent interest.

Ceglia's suit does not however explain why it took him so long to file suit, which came nearly after the statute of limitations expired. Ceglia has claimed that he hadn't heard of Facebook's success and only found the contracts when going through his papers.

Ceglia's attempt to get half of Facebook – a company now estimated to be worth somewhere between $55 and $85 billion – also faces the difficult problem of the doctrine of laches. That's a legal principle that says if a person sleeps on their rights, it's unfair for them to show up later and demand everything.

Ceglia's case is nearly textbook example of this, so it's unlikely that even if all of the allegations are true that Ceglia could win half of Facebook now. But if even some of this evidence is true, Ceglia's going to get a chunk, a decent chunk. And probably a movie deal as well.

Photo: Gavel sculpture (Andrew Scott/Flickr)

See Also:- Zuckerberg ‘Quite Sure’ He Didn’t Sign Away Facebook Control