Facebook: Contract Giving Up Ownership Was 'Forged'

Social network says lawsuit over disputed ownership is "absurd."

ByABC News
July 23, 2010, 12:32 PM

July 23, 2010 — -- Facing a lawsuit from a New York man who says he's owed a majority stake in the $25 billion dollar company, Facebook now says it suspects that the contract at the heart of the suit is a forgery.

Paul Ceglia, the owner of a wood-pellet fuel company in rural Wellsville, N.Y., filed a complaint last month alleging that he signed a contract with Facebook founder and CEO Mark Zuckerberg in 2003 that entitles him to an 84 percent stake in the company.

But in an e-mail, the Palo Alto, Calif.-based Facebook said the ownership lawsuit is "absurd."

"Mark has made it clear that Ceglia's claims are absurd and we strongly suspect the contract is forged," Facebook said in a statement released to ABC News today. "However, we have not seen the original (no one has, including the court). Thus, we're focusing on the things that are not open to interpretation and are indisputable -- Mark could not have given interest in a company that didn't exist or ad idea he had not thought of yet and, even if he could, the statute of limitations has expired."

Since news of lawsuit broke last week, the blogosphere and tech media have bandied about alternating perspectives on the legitimacy of Ceglia's claim, which was made seven years after the contract was allegedly signed.

In an exclusive interview with ABC News Wednesday, Zuckerberg said, "I don't think we -- that -- if we said that we were unsure, I think that was likely taken out of context," he said. "Because I think we were quite sure that we did not sign a contract that says that they have any right to ownership over Facebook."

The copy of the contract that Ceglia submitted his complain states that he was supposed to acquire a 50 percent interest in Facebook -- then known as "The Face Book" -- in an agreement to develop the site and also stipulated that Ceglia pay 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.