Facebook: Actually Owned by a Wood Pellet Businessman?

New York man sues Facebook, claiming he's entitled to a majority stake.

ByABC News
July 13, 2010, 1:54 PM

July 14, 2010 — -- The world's most powerful social networking site is fending off a lawsuit from a New York man who claims that he's owed a majority stake in the company.

In a complaint filed late last month, Paul Ceglia, the owner of a wood-pellet fuel company in rural Wellsville, N.Y., alleges that a contract he signed with Facebook founder and CEO Mark Zuckerberg in April 2003 entitles him to an 84 percent stake in the company. Ceglia said he was supposed to acquire a 50 percent interest in Facebook -- then known as "The Face Book" -- in an agreement to develop the site that also entailed Ceglia paying Zuckerberg $1,000.

The contract, Ceglia said in his complaint, also allowed him an additional 1 percent stake in the business for each day after Jan. 1, 2004 until the website was completed. The website thefacebook.com, according to the lawsuit, was finished on Feb. 4, 2004 -- a 34-day span that would entitle Ceglia to another 34 percent stake in the business, the lawsuit said.

Palo Alto, California-based Facebook, which last week moved to have the case transferred from New York state court to federal court, said in an e-mail to ABCNews.com that the lawsuit "is completely frivolous" and that the company "would fight it vigorously."

Before the case was transferred, a judge in Allegany County, New York, issued a temporary restraining order preventing Zuckerberg and Facebook from transferring or selling any assets.

Facebook said that while the order won't affect the company's ability to do business, it is nonetheless asking the federal court to dissolve the order because Facebook does "not believe it is legally supported."

Ceglia's lawyer, Paul Argentieri, did not return two calls for comment. Attempts to reach Ceglia were unsuccessful.

The contract Ceglia included with his complaint lists himself as a purchaser and Zuckerberg as a "contractor/seller" in an agreement for the "continued development of the software, program and for the purchase and design of a suitable website for the project Seller has already initiated that is designed to offer the students of Harvard university access to a wesite [sic] similar to a live functioning yearbook with the working title of 'The Face Book.'"