Federal agents arrested Paul Ceglia at his home in Wellsville, New York, this morning and charged him with mail and wire fraud as part of a multi-billion dollar scheme to defraud Facebook and its founder Mark Zuckerberg. If convicted, he faces up to 40 years in prison.
The New York-based entrepreneur filed a lawsuit against Facebook in 2010 claiming he was owed a 50 percent share in the social networking site stemming from an alleged investment and contract between himself and Zuckerberg.
Ceglia reportedly hired Zuckerberg off Craigslist in 2003 to write code for a project called StreetFax. Zuckerberg was paid $1,000 for his work but Ceglia says the deal didn’t end there and that he invested an additional $1,000 into The Face Book. Because of this, he believes he is the rightful owner of 50 percent of the site.
Facebook spent the past two years playing defense to Ceglia’s claims. Attorneys for the social network released emails swapped between the two and highlighting historically impossible scenarios, such as Ceglia congratulating Zuckerberg on Facebook before the site even went live.
Preet Bharara, United States Attorney for the Southern District of New York, says Ceglia added a page into a document signed by the two that appears to give him ownership in the company. Investigators combed over Ceglia’s hard drive, uncovering the original contract between the two parties. There was no mention of Facebook or Ceglia owning half of it to be found.