Facebook, Zuckerberg say ownership suit a "fraud"

CHICAGO Thu May 26, 2011 9:28pm EDT

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CHICAGO (Reuters) - Calling the case a "brazen and outrageous fraud," Facebook founder Mark Zuckerberg urged a federal court on Thursday to dismiss a lawsuit by a New York man claiming he owns a huge stake in the social networking website.

In a filing with the U.S. District Court in Buffalo, New York, Facebook and Zuckerberg said the lawsuit by Paul Ceglia is based on a "doctored contract and fabricated evidence." They also called the plaintiff "an inveterate scam artist whose misconduct extends across decades and borders."

Ceglia, a wood pellet salesman from Wellsville, New York, has contended that he contracted in 2003 for 50 percent of Zuckerberg's interest in what became Facebook.

Facebook is privately held, but analysts have said it could be worth $70 billion should it go public. Forbes magazine in March estimated Zuckerberg's net worth at $13.5 billion.

Ceglia originally sued last July, saying he had contracted with Zuckerberg for an 84 percent Facebook stake. In an amended complaint Ceglia outlined what he called emails between himself and Zuckerberg to support his case.

In their response, Facebook and Zuckerberg said they "specifically deny any liability" to Ceglia, and called the lawsuit "a brazen and outrageous fraud on the court."

They also questioned why Ceglia waited seven years to sue, saying he had long been "utterly silent" as Facebook "grew into one of the world's best-known companies."

A lawyer representing Ceglia declined immediate comment.

According to published reports, Ceglia pleaded guilty in 1997 to possession of hallucinogenic mushrooms in Texas. In 2009, he was accused of fraud and had his business shut down.

In a separate case, Cameron and Tyler Winklevoss are appealing to the U.S. Supreme Court a court ruling that upheld their $65 million cash-and-stock settlement with Facebook.

The twin brothers have accused Facebook and Zuckerberg of stealing their idea for the website.

The battle between the Winklevoss twins and Zuckerberg was dramatized in the 2010 Oscar-nominated movie "The Social Network".

(Reporting by Jonathan Stempel in Chicago; Editing by Tim Dobbyn, Phil Berlowitz)

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