NEW YORK, Oct 20 (Reuters) - Facebook Inc and Chief Executive Mark Zuckerberg have sued several lawyers who have represented Paul Ceglia, claiming they helped the upstate New York entrepreneur pursue a fraudulent lawsuit to extort a 50 percent stake in the social networking company.
Monday’s lawsuit was filed seven months after a federal judge dismissed Ceglia’s civil case, and two years after federal prosecutors in Manhattan charged Ceglia with criminal mail and wire fraud for allegedly forging documents underlying his claim. Facebook’s market value is now close to $200 billion.
Ceglia, a wood pellet salesman from Wellsville, New York, is not a defendant in Facebook’s lawsuit, which was filed with the New York state court in Manhattan.
Among the 13 defendants are DLA Piper, one of the world’s largest law firms; Paul Argentieri, Ceglia’s original lawyer; the law firms Milberg LLP and Lippes Mathias Wexler Friedman; and Dennis Vacco, a former New York attorney general.
Facebook seeks unspecified damages for harm to its reputation and business, all of which it wants tripled because of the lawyers alleged misconduct, plus punitive damages.
Peter Pantaleo, DLA Piper’s general counsel, in a statement said Facebook sued “to intimidate lawyers” to refrain from suing the Menlo Park, California-based company. “We will defend this meritless litigation aggressively and we will prevail.”
The other defendants did not immediately respond to requests seeking comment.
Ceglia had claimed in his June 2010 lawsuit that an April 2003 contract he signed with Zuckerberg, who was then a Harvard University freshman and had done programming work for Ceglia’s StreetFax.com, entitled him to a Facebook stake as high as 84 percent. He also offered alleged emails supporting his claim.
Facebook said Ceglia’s lawyers knew or should have known this lawsuit was a fraud, having been “based on an implausible story and obviously forged documents,” but plowed ahead “for the purpose of extorting a lucrative and unwarranted settlement.”
It also said that after lawyers for Ceglia at the law firm Kasowitz Benson Torres & Friedman found “smoking-gun” evidence of fraud and warned Ceglia’s other lawyers, those lawyers stayed with the case.
At the request of another of Ceglia’s law firms, the Kasowitz firm agreed not to report the “misconduct” it had found to the court, the complaint said.
The Kasowitz firm was not named as a defendant.
“We said from the beginning that Paul Ceglia’s claim was a fraud and that we would seek to hold those responsible accountable,” Facebook general counsel Colin Stretch said in a statement on Monday. “DLA Piper and the other named law firms knew the case was based on forged documents yet they pursued it anyway, and they should be held to account.”
Ceglia’s criminal trial is scheduled for May 4, 2015. He has pleaded not guilty.
The case is Facebook Inc et al v. DLA Piper LLP (US) et al, New York State Supreme Court, New York County, No. 653183/2014. (Reporting by Jonathan Stempel in New York; editing by Andrew Hay)