Ceglia Arrested; Charged with Defrauding Facebook and Zuckerberg

8:06 PM, Oct 27, 2012   |    comments
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Video: Ceglia walking out of Federal Court Speaks to Media

Video: Ceglia Arrested; Charged with Defrauding Facebook and Zucker

Paul Ceglia being led out of Federal Court in handcuffs. October 26, 2012

BUFFALO, NY - The Wellsville man who filed a lawsuit against Facebook and its CEO Mark Zuckerberg for majority ownership of the social networking site, is now charged with fraud in the case.

Paul Ceglia, 39, was arrested Friday by US Postal Inspectors.  Ceglia is accused of falsely filing a federal lawsuit claiming to have been promised 50% share in Facebook.

Almost since the time Ceglia first filed his lawsuit two years ago, lawyers for the social media giant and its founder, Zuckerberg, have claimed not only was the lawsuit bogus, but that Ceglia had fabricated much of his evidence purporting to back his claim.

Now, a criminal complaint alleges he did just that.

The complaint states Ceglia "doctored, fabricated, and destroyed evidence to support his false claim.

Specifically, it alleges parts of a contract between Zuckerberg and Ceglia which Ceglia claims proves his ownership stake, was forged.

In addition, the complaint alleges e-mails --which Ceglia claimed existed on servers at Harvard University-- and which would further prove his case, were either manipulated, backdated, or in some cases non-existent.

WEB EXTRA: Click here to read the Federal complaint against Ceglia

Ceglia is charged with one count of mail fraud and one count of wire fraud.

Under federal sentencing guidelines, he could face up to 30 years in prison if convicted, due mostly to the size of the fraud he allegedly attempted to perpetrate.

As he was marched in handcuffs by postal inspectors toward a Buffalo federal courtroom for his initial appearance on the charges Ceglia, who was arrested Friday morning at his home in Wellsville, said if there any injustice, it's being done to him...by Facebook's attorneys who he inferred were influencing the Justice Department.

"Gibson Dunn, the world's dirtiest law firm, seems to be able to pull any strings they want to get their grimy corporate clients out of any situation," Ceglia told WGRZ-TV. 

"It's an Orin Snyder hatchet job, is what this is," said Ceglia's father, Carmen Ceglia, referring to Facebook's lead defense attorney in the civil suit.

The elder Ceglia, who accompanied his son's wife to court, concurred with his son's opinion that corporate influence is at the root of the criminal charges his son now faces.

"They're trying to generate more bad publicity, to try and make it look bad for Paul," Carmen Ceglia said.

At times Paul Ceglia appeared agitated in court, as Assistant U.S. Attorney Aaron Mango laid out the allegations against him in his attempt to convince Federal Magistrate Jeremiah McCarthy to detain Ceglia without bail, pending his transfer to the federal court's  Southern District of New York, where the ultimate disposition of the case will occur. 

Mango called Ceglia an extreme flight risk due in part to his having dual citizenship in Ireland, a country from which it would be, according to Mango, very difficult to extradite Ceglia should he return there.

"With the rare exception of cases involving homicide, terrorism, or crimes against children extradition from Ireland is virtually impossible," Mango told the judge.

Mango also revealed in court, that Ceglia had been living in Ireland since early November of 2011, and that he had only returned to the U.S. through Philadelphia on Wednesday. He also noted that federal agents were made aware of Ceglia's return, and acted quickly to arrest him, indicating the possibility that Ceglia had been on a watch list. 

In furtherance of his argument to have Ceglia detained, Mango pointed to the severity of the sentence which could await Ceglia should he ultimately be convicted.

"That's a very big incentive to flee," Mango told the court.

Ceglia seemed noticeably disturbed when Mango alleged that there was evidence gleaned from electronic devices owned by Ceglia, indicating Ceglia may have been attempting to produce false identification and currency.

As he began to protest, Ceglia was hushed by lawyers from the Federal Office of the Public Defender, who appeared on his behalf for Friday's court proceeding, and who noted to the court that those allegations were not contained in the complaint.

Mango also mentioned Ceglia's prior criminal history, which he said included Ceglia being placed on probation for ten years for Possession of a Controlled Substance, and a misdemeanor trespassing charge.

However, when Mango began to describe an additional crime Ceglia committed when he was 16, saying it resulted "a very large sentence..." McCarthy cut him off, noting the crime (which was never detailed) had occurred more than 20 years ago, had nothing to do with the current case, or the matter of detention which was before him. 

Ceglia, against the advice of the federal public defenders seated next to him, expressed a desire to speak. McCarthy granted his request after warning him that anything he said could ultimately be used against him.

"This complaint relates completely to the civil action which I am a party to," Ceglia said. "It seems the judge (who issued Ceglia's arrest warrant) read only one side of their (Facebook's) expert opinions and no one read the opinions of our renowned experts which directly contrast what is alleged. They (Facebook) are clearly attempting to fight the civil case with every means possible, including these criminal charges." 

From the bench, Magistrate McCarthy conceded, "this is the first time I've seen anyone charged criminally for what might be interpreted as frivolous allegations in a civil case," before adding, "given that these are hotly contested issues in a civil case, I do not find the weight of the evidence overly compelling as to detain him."

McCarthy also cited the facts that Ceglia has a wife and two children, a home in Wellsville, a terminally ill relative in Western New York, and that he has surrendered his passport, in determining that Ceglia did not pose an immediate risk of flight.

However, McCarthy ultimately determined that Ceglia would be held in custody at least until noon on Monday at which time, unless he hears more compelling evidence from prosecutors in the Southern District of New York or an order is produced from the presiding judge in the case, he would be willing to release Ceglia on $21,000 cash bail to be posted by family and friends.

"I think that would reasonably assure his future appearance." 

In a statement, U.S. Attorney for the Southern District of New York Preet Bharara said:  

"By marching into federal court for a quick payday based on a blatant forgery, Paul Ceglia has bought himself another day in federal court for attempting a multi-billion dollar fraud against Facebook and its CEO. Ceglia's alleged conduct not only constitutes a massive fraud attempt, but also an attempted corruption of our legal system through the manufacture of false evidence. That is always intolerable. Dressing up a fraud as a lawsuit does not immunize you from prosecution."

USPIS Inspector-in-Charge Randall C. Till said, "When Mr. Ceglia allegedly decided to take advantage of Mark Zuckerberg and Facebook, he underestimated the resolve of the Postal Inspection Service to bring him to justice for illegal use of the U.S. Mail."

 

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