Yesterday, we provided a quick analysis of the alleged contract between Facebook CEO Mark Zuckerberg and upstate New York wood-pellet salesman Paul Ceglia — the contract that Paul says gives him an 84% ownership stake in Facebook.
We noted that, unless the document is a forgery or Facebook can get the lawsuit dismissed on statute-of-limitations or some other technicality, Paul Ceglia willl likely soon become a very rich man. (If Facebook concludes the contract is or could be genuine, Facebook would almost certainly settle for a few tens or hundreds of millions of dollars rather than litigating or risking a declaratory judgement, which would be devastating).
But of course all that depends on whether the document is genuine. And, to that end, we have some questions for Paul Ceglia and his attorneys:
Where is the original contract (and has a judge seen it)? The document we have all now seen appears to be an electronic copy of paper-based contract. Electronic documents are vastly easier to forge or doctor than paper-based documents. The first order of business, therefore, is for both parties to examine the original contract to assess whether it is genuine. This analysis will eventually likely include ink testing and other forensic analysis.
It is possible, of course, that Paul Ceglia is claiming that the digital document that we have all now seen IS the original contract–that he and Mark Zuckerberg emailed it back and forth, appending digital signatures–or that this is a copy of another digital document. If so, this should be simple to verify with some forensic analysis of email accounts, hard-drives, etc. There is no way Facebook will pay Paul Ceglia a cent until it has done this.
Why did Paul Ceglia wait 7 years to make this claim? Facebook’s vast value has hardly been a secret for the past few years. In 2007, Microsoft invested in the company at a valuation of $15 billion. It seems beyond bizarre that, if Paul Ceglia remembered this contract existed, he would wait until now to file this lawsuit. The most plausible explanation might be that he forgot about the contract and then stumbled upon it. But “why now?” would seem a simple and reasonable question for him to answer, especially in light of the fact that he and his wife were arrested for grand larceny last year for allegedly defrauding customers of his wood-pellet company. (That doesn’t mean he’s guilty of defrauding customers or that he’s now trying to defraud Facebook, but it certainly makes this a reasonable question.)
Where is the payment-trail evidence? If Paul Ceglia gave Mark Zuckerberg $1,000 to fund “The Face Book” in exchange for 50% ownership in the entity, there is presumably a simple payment trail we can follow that proves this. This would take the form of a canceled check, perhaps, or a wire transfer. It is presumably possible that Ceglia made the payment in cash, but this would be highly unusual, even for a payment this small (normally, when you make an investment in a company, you WANT a payment trail). It is even less likely that Ceglia would have paid Zuckerberg $1,000 via check for the work Mark did for Ceglia’s company, StreetFax, but paid for the Facebook investment via cash, so if Mark Zuckerberg can produce some bank statements showing a payment for StreetFax but not The Face Book, this will quickly nuke the claim. It’s also possible that Ceglia paid Mark $2,000 in one lump-sum check, but, if so, this will weaken his case, especially if there’s no mention of “The Face Book” on the check.
So those are three obvious questions for Paul Ceglia, all of which get at whether the document we’ve all now seen is genuine or fake. And until the questions are answered satisfactorily, common sense would suggest that Ceglia is just a serial fraudster and the document is almost certainly fake.
As a final qualitative note, we will add that these questions are so obvious that we hope/assume that Paul Ceglia has some persuasive answers for them. There is no chance he’ll get a cent out of Facebook until these questions are answered, and becoming famous for trying to defraud the company probably won’t help his case on the grand larceny charges (or his future reputation).
We assume that any lawyer who was willing to take this case on contingency (agreeing to be compensated via a percentage of any settlement or judgement rather than paid by the hour) would understand how preposterous this claim seems on its face, especially given Ceglia’s recent felony charges, and would therefore demand satisfactory answers to all of the above questions before proceeding. And we therefore assume, perhaps idiotically, that there are some good answers here.
So we look forward to hearing them…
Meanwhile, there’s one person other than Paul Ceglia who almost certainly knows for certain whether this document is real or fake and that’s Mark Zuckerberg. If Mark signed this document, it’s certainly possible that, in the intervening years, he forgot he had done so, but the production of the document itself should now have jogged his memory. Therefore, by now, Mark should know without a shred of doubt whether the document is real or fake–and if it is fake, he should say so unequivocally. (As in, “I have never seen this document before and I never signed it.” So far, Mark’s strongest statement on the matter is “I think we were quite sure that we did not sign a contract that says that they have any right to ownership over Facebook,” which is considerably more vague.)
If Mark knows the document is fake, Facebook and Mark should stop at nothing to prove that, and they’ll probably be able to do it (or at least they will be able to cast enough doubt on its authenticity that there is little risk of litigating the claim). If Mark can’t or won’t say unequivocally that the document was forged, however, it’s reasonable to ask why he won’t.