Oct 27, 2012 (04:10 AM EDT)
Ceglia To Face Facebook Fraud Charges

Read the Original Article at InformationWeek

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Wellsville, New York resident Paul Ceglia, who sued Facebook two years ago claiming to own a majority of the company, was arrested at his home on Friday for alleged mail fraud and wire fraud.

Ceglia's arrest was announced by Preet Bharara, United States Attorney for the Southern District of New York, and Randall C. Till, the Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service.

In his lawsuit, Ceglia claimed that a contract he had signed with Mark Zuckerberg in April 2003, for programming work on his StreetFax website, gave him ownership of half of Facebook.

Calling Ceglia's claim "blatant forgery," Bharara said in a statement, "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."

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A deposition from U.S. Postal Inspector Douglas Veatch says that "Ceglia manufactured evidence, including purported emails with Zuckerberg, to support his false claim to an interest in Facebook" and that "Ceglia destroyed evidence that was inconsistent with his false claim."

Facebook has denied the legitimacy of Ceglia's claim since it was filed. In March, the company's attorneys asked to have the case dismissed. Facebook's legal filing opens by stating simply, "This lawsuit is a fraud," and proceeds to make claims consistent with those made by the government about forged documents and deceit.

The motion to dismiss asserts that Zuckerberg didn't even conceive of Facebook until December 2003, eight months after Zuckerberg did contract work for Ceglia.

According to the government's complaint, evidence of Ceglia's fraud includes: a hard drive containing the original contract between Zuckerberg and Ceglia, which differs from the one Ceglia submitted in his claim; spacing, formatting, and margin differences that indicate the contract was manipulated; the absence of purported emails between Zuckerberg and Ceglia from Harvard's tape backups of Zuckerberg's messages when he was a student there; and signs that hard drives with documents that purportedly supported Ceglia's claim had been tampered with.

There's also evidence that Ceglia practiced altering files using a hex editor, according Veatch.

This is not Ceglia's first brush with the law. In 2009, Ceglia and his wife Iasia, as the owners of a wood-pellet fuel company, Allegany Pellets, were barred from doing business by the Office of New York Attorney General Andrew Cuomo for defrauding customers.

If Ceglia is convicted, he faces up to 20 years in prison for each of the two fraud counts.