Man Who Sued FB's Zuckerberg Must Face Fraud Charges

Image: Mark Zuckerberg
A judge says that the man suing Facebook founder and CEO Mark Zuckerberg must face criminal fraud charges for trying to claim a billion-dolllar stake in the company.EPA, file

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/ Source: Reuters

A New York businessman must face criminal fraud charges for trying to claim a billion-dollar stake in social media company Facebook., a federal judge ruled Friday.

Paul Ceglia, 40, is accused of forging a 2003 contract with Facebook CEO Mark Zuckerberg that supposedly entitled him to part ownership of the company.

After an hourlong hearing in New York, U.S. District Judge Andrew Carter rejected Ceglia's request to throw out the charges, finding he had failed to meet the "high standard" needed to dismiss a grand jury indictment.

Ceglia sued Zuckerberg and Facebook in 2010 in a federal court in Buffalo, N.Y., claiming that he and Zuckerberg had signed a contract while Zuckerberg was a freshman at Harvard University for Ceglia to invest $1,000 in a planned social networking website.

Zuckerberg had previously done some programming work for Ceglia's company, Facebook has argued that the only contract between the two men was related to that company and accused Ceglia of faking various documents as part of his lawsuit.

Last year, a magistrate judge in Buffalo recommended that Ceglia's lawsuit be dismissed, finding that it was "highly probable and reasonably certain" that the contract was fabricated in order to pursue the lawsuit. The federal judge overseeing the case has not yet ruled on that recommendation.

Prosecutors in New York charged Ceglia in 2012, accusing him of forging documents as part of the Buffalo litigation.

Ceglia has since filed a separate lawsuit against Manhattan U.S. Attorney Preet Bharara, whose office is prosecuting Ceglia, and U.S. Attorney General Eric Holder seeking to halt the criminal case.

Following the hearing, Ceglia vowed to press forward with his claims against Facebook.