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7/23/2010
10:13 PM
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Facebook Suspects Ceglia Contract Was Forged

A contract entitling a New York web designer to an 84% stake in the online social network has been denounced as "absurd" by Facebook.

Facebook says it suspects a contract that allegedly entitles a New York web designer to an 84% stake in the company is a forgery.

Facebook, which typically doesn't discuss pending litigation, issued the unusual statement to media Friday. The world's largest online social network is battling a lawsuit filed by Paul Ceglia, who claims Facebook co-founder Mark Zuckerberg signed the contract in April 2003.

"Mark Zuckerberg has made it clear that Ceglia's claims are absurd and we strongly suspect the contract is forged," the statement released by Facebook spokesman Andrew Noyes said. "However, we have not seen the original -- no one has, including the court. "Thus, we're focusing on the things that are not open to interpretation and are indisputable. Mark could not have given interest in a company that didn't exist or an idea he had not thought of yet. And, even if he could, the statute of limitations has expired."

Zuckerberg registered thefacebook.com domain in January 2004 and launched the site a month later as an online social network primarily for college students. In August 2005, the site officially became Facebook.com after the URL was purchased for $200,000. About a year later, the site expanded beyond schools to a more general audience.

Ceglia is asking a New York federal court to rule that he is entitled to an 84% stake in the site, which has an estimated value of between $6.5 billion and $11 billion. That would make Ceglia's alleged stake worth between $5.6 billion and $9.24 billion.

Ceglia recently convinced an Allegany, N.Y., judge to issue a temporary restraining order preventing Facebook from transferring assets while the case continues. Facebook is appealing the order.

The latest court scuffle is not the first for Facebook or Ceglia.

A 2007 lawsuit filed by co-founders of the site ConnectU claimed Zuckerberg took Facebook's software code and business plan from them. The parties eventually reached an agreement that granted ConnectU $65 million in Facebook stock and cash.

Ceglia, on the other hand, has been accused with his wife Iasia of defrauding customers of their wood-pellet fuel company, Allegany Pellets. According to the New York attorney general's office, the company took more than $200,000 from customers, but failed to deliver products or refunds. The case is ongoing.

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