Ceglia v. Zuckerberg et al

Filing 581

CONTINUATION OF EXHIBITS to 579 MOTION to Withdraw as Attorney NOTICE OF MOTION, 580 Memorandum in Support . (Boland, Dean)

Approved:
JANISNBERG/CHRISTOPHER D~ FREY
Assis ant United states Attorneys
Before:

THE HONORABLE Hm'Ja:U B:-- PH'f*A:N
United States Magistrate Judge
Southern District of New York

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SEALED COMPLAINT
UNITED STATES OF AMERICA
Violations of 18
U.S.C. §§ 1341, 1343,
and 2

- v. -

PAUL CEGLIA,
COUNTY OF OFFENSE:
NEW YORK

Defendant.

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SOUTHERN DISTRICT OF NEW YORK, ss.:
DOUGLAS VEATCH, being duly sworn, deposes and says that he
is a Postal Inspector with the United States Postal Inspection
Service ("USPIS"), and charges as follows:
COUNT ONE
(Mail Fraud)

1.
From at least in or about June 2010 up to and including
in or about October 2012, in the Southern District of New York
and elsewhere, PAUL CEGLIA, the defendant, willfully and
knowingly, having devised and intending to devise a scheme and
artifice to defraud, and for obtaining money and property by
means of false and fraudulent pretenses, representations and
promises, for the purpose of executing such scheme and artifice
and attempting so to do, would and did place and caused to be
placed in a post office and authorized depository for mail
matter, matters and things to be sent and delivered by the Postal
Service, and would and did deposit and cause to be deposited
matters and things to be sent and delivered by private and
commercial interstate carriers, and would and did take and
receive and cause to be taken and received therefrom, such
matters and things, and would and did cause to be delivered by
mail and such carriers, according to the direction thereon, such
matters and things, to wit, CEGLIA filed a lawsuit against
Facebook, Inc. and Facebook's founder and Chief Executive
Officer, Mark Zuckerberg falsely demanding a significant

ownership stake in Facebook, Inc. and caused legal pleadings and
other items to be delivered by mail to Washington, D.C., among
other places, from the Southern District of New York and
elsewhere, including on or about April 11, 2011.
(Tit17 18, United States Code, Sections 1341 and 2.)
COUNT TWO

(Wire Fraud)

2.
From at least in or about June 2010 up to and including
in or about October 2012, in the Southern District of New York
and elsewhere, PAUL CEGLIA, the defendant, willfully and
knowingly, having devised and intending to devise a scheme and
artifice to defraud, and for obtaining money and property by
means of false and fraudulent pretenses, representations, and
promises, did transmit and cause to be transmitted by means of
wire communication in interstate and foreign commerce, writings,
signs, signals, pictures, and sounds for the purpose of executing
such scheme and artifice, to wit, CEGLIA filed a lawsuit against
Facebook, Inc. and Facebook's founder and Chief Executive
Officer, Mark Zuckerberg falsely demanding a significant
ownership stake in Facebook, Inc. and CEGLIA caused others to
send interstate electronic communications in connection with the
lawsuit, including on or about July 14, 2011, November 1, 2011
and December 8, 2011.
(Title 18, United States Code, Sections 1343 and 2.)
The bases for my knowledge and the foregoing charges are, in
part, as follows:
3.
I am a Postal Inspector with the USPIS, and I have been
involved in the investigation of this matter. The information
contained in this affidavit is based upon my personal knowledge
and my review of documents and records gathered during the course
of this investigation, as well as information obtained, directly
and indirectly, from other sources and law enforcement agents.
Because this affidavit is being submitted for the limited purpose
of establishing probable cause, it does not include all of the
facts I have learned during the course of the investigation.
Where the contents of documents and the actions, statements and
conversations of others are reported herein, they are reported in
substance and in part, except where otherwise indicated.

2

BACKGROUND ON FACEBOOK

4.
Based on my review of publicly available records and
publications regarding Facebook, Inc. ("Facebook") and my
interviews of various witnesses, among other things, I have
learned the following:
a.
Facebook is a social networking service and
website which launched in or around February 2004. At present,
Facebook represents it has over one billion active users. Users
must register before using the website, after which they may
create a personal profile, add other users as friends, and
exchange messages, including automatic notifications when they
update their profiles. Additionally, users may join
common-interest user groups organized by workplace, school or
college, or other characteristics, and categorize their friends
into lists. Facebook, Inc. has over 3,000 employees, and offices
in 15 different countries.
b.
Facebook was founded by Mark Zuckerberg
("Zuckerberg"), together with his college roommates and fellow
Harvard University students, Eduardo Saverin, Dustin Moskovitz
and Chris Hughes. Facebook officially launched at Harvard in the
afternoon on or about February 4, 2004. At that time, the
website was available on the Internet at the domain name,
"thefacebook.com," but its membership was limited to Harvard
students and only accessible by those with a Harvard email
address. Over time, the website's membership expanded to other
colleges in the Boston area, the Ivy League, and Stanford
University before it eventually was made available to anyone aged
13 and over.
c.
Mark Zuckerberg has served as the Chief Executive
Officer and a member of the board of directors of Facebook since
in or about July 2004. Beginning in or about January 2012, Mark
Zuckerberg also became chairman of the board of directors at
Facebook.
d.
On or about May 18, 2012, Facebook, Inc. held its
initial public offering (the "IPO"). Zuckerberg's interest in
Facebook is presently considered to be worth billions of dollars.
OVERVIEW OF THE DEFENDANT'S SCHEME TO DEFRAUD

5.
Based on my review of documents, interviews with
witnesses, and materials obtained pursuant to search warrant,
among other things, and as set forth in greater detail below,
there is probable cause to believe that PAUL CEGLIA, the
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defendant, an online businessman, has engaged in a multi-billion
dollar scheme to defraud Facebook and Mark Zuckerberg. CEGLIA
filed a federal lawsuit falsely claiming that he was entitled to
at least a 50% interest in Facebook. Specifically, as set forth
below, in April 2003, Zuckerberg entered into a contract with
CEGLIA in which Zuckerberg agreed to perform certain programming
work for CEGLIA in exchange for a fee; that contract had nothing
to do with Facebook and did not make any reference to Facebook,
let alone give CEGLIA an interest in it. Years later,' CEGLIA
filed suit against Facebook and Zuckerberg alleging that the
contract gave him a 50% interest in Facebook. To support his
lawsuit, CEGLIA replaced page one of the actual contract with a
new page one doctored to make it appear as though Zuckerberg
agreed to provide CEGLIA with an interest in Facebook; CEGLIA
manufactured evidence, including purported emails with
Zuckerberg, to support his false claim to an interest in
Facebook; and CEGLIA destroyed evidence that was inconsistent
with his false claim. Through these and other deceitful acts,
and together with the numerous material misrepresentations that
CEGLIA has made under penalty of perjury, CEGLIA has deliberately
engaged in a systematic effort to defraud Facebook and Zuckerberg
and to corrupt the federal judicial process.
CEGLIA'S CIVIL ACTION
6.
Based on my review of publicly available documents
filed in Paul D. Ceglia v. Mark Elliot Zuckerberg, et al., a
civil action pending in the united States District Court for the
Western District of New York before the Honorable Richard J.
Arcara, United States District Judge, and referred to the
Honorable Leslie G. Foschio, United States Magistrate Judge (the
"Civil Action"), I have learned the following, among other
things:
a.
On or about June 30, 2010, PAUL CEGLIA, the
defendant, through counsel, filed a two-page complaint (the
"Complaint") in the Supreme Court for the State of New York,
Allegany County against Zuckerberg and Facebook.
The Complaint
alleges, in sum and substance, and among other things, that
CEGLIA has an 84% interest in Facebook pursuant to a purported
contract, dated April 28, 2003, between CEGLIA and Zuckerberg.
b.
On or about April 11, 2011, after the case was
removed to federal court, CEGLIA, through counsel, filed a 25page amended complaint (the "Amended Complaint"), alleging, in
sum and substance, that CEGLIA was entitled to a 50% interest in

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Facebook.l On or about June 12, 2011, CEGLIA signed and filed a
declaration, under penalty of perjury, in which he affirmed the
truth of the allegations in the Amended Complaint (the "June 12
Declaration").
In the Amended Complaint and the June l2
Declaration, CEGLIA alleges, in sum and substance and among other
things, that:
(1)
In 2002 and 2003, CEGLIA, who was living and
working in upstate New York at the time, was developing an online
business called StreetFax.com. StreetFax.com compiled into a
database photographs and other information related to traffic
intersections that were intended to allow insurance adjusters to
obtain information to assist them in handling claims.
(2)
In connection with his development of
StreetFax.com, CEGLIA occasionally hired programmers and web
developers, posting advertisements for such positions online. In
early 2003, Mark Zuckerberg responded to one such advertisement.
(3)
During certain telephone conversations
between Zuckerberg and CEGLIA in April 2003, Zuckerberg told
CEGLIA that he was working on his own project involving an
online, interactive yearbook, which initially would be targeted
at students attending Harvard University and later would be
expanded beyond the school, and whose working title was "The Face
Book." Zuckerberg told CEGLIA that if CEGLIA hired him to work
on the StreetFax.com project and helped fund the development of
his own project, Zuckerberg would give CEGLIA a 50% interest in
"The Face Book" project.
(4)

CEGLIA accepted Zuckerberg's offer and agreed

According to a certificate of service signed by
CEGLIA's counsel, the Amended Complaint was served via electronic
notification and by mail on various attorneys located in New
York, New York; Buffalo, New York; and Washington, D.C. In
connection with the ongoing litigation between CEGLIA, Zuckerberg
and Facebook, attorneys for CEGLIA located in various states,
including California and Ohio, have served various legal
documents via interstate email communication. On or about July
22, 2011, counsel for CEGLIA located in San Diego, California,
filed a declaration electronically, and served it by email, on
counsel for Facebook located in New York, New York. On or about
November I, 2011 and December 8, 2011, counsel for CEGLIA located
in Lakewood, Ohio, filed electronically a notice of motion,
memorandum of law and several declarations, among other things,
and served them by email on counsel for Facebook located in New
York, New York.
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to pay Zuckerberg $1,000 for his work on StreetFax.com and an
additional $1,000 for work to be performed in developing "The
Face Book." The two also made plans to meet at a hotel in
Boston, Massachusetts on April 28, 2003 to sign a written
contract.
(5)
In advance of meeting with Zuckerberg, CEGLIA
prepared a contract that covered both the work Zuckerberg agreed
to do for StreetFax.com and the agreement concerning uThe Face
Book." CEGLIA drafted this contract by cutting and pasting from
two different forms that were provided to him by two different
people.
{6}
On April 28, 2003, CEGLIA met Zuckerberg in
the lobby of a hotel in Boston, Massachusetts.
CEGLIA provided a
contract he had prepared and titled "Work For Hire Contract" to
Zuckerberg, who asked for one change on the first page of the
agreement, an edit that was subsequently handwritten on the first
page of the document and initialed by both Zuckerberg and CEGLIA.
Zuckerberg and CEGLIA then signed the second page of the
contract.
(7)
CEGLIA attached, as an exhibit to the Amended
Complaint, a copy of what he alleges to be the contract between
himself and Zuckerberg signed on April 28, 2003 (the UAlleged
Contract").
In the Alleged Contract, CEGLIA agreed to pay
Zuckerberg $1,000 "for work to be performed for Streetfax and
$1,000 for work to be performed for 'The Page Book"t -- a term
CEGLIA alleges was another working title for what became
Facebook. The Alleged Contract gave CEGLIA "a half interest
(50%) in the software, programming language and business
interests" derived from the expansion of Facebook to a larger
audience.
In addition, the Alleged Contract provided that "The
Face Book" project would be completed by January 1, 2004, and
that CEGLIA would gain an additional 1% interest in the business
for each day that the website was delayed from that date.
(8) According to CEGLIA, after signing the
Alleged Contract, Zuckerberg and CEGLIA began to communicate with
each other concerning both the StreetFax.com project and "The
Face Book" project by telephone and by email.
In the Amended
Complaint, CEGLIA cites a number of purported email exchanges
between himself and Zuckerberg occurring from on or about July
30, 2003 through on or about July 22, 2004 (the "Purported
Emails"). CEGLIA alleges that he retained copies of the
Purported Emails, and that he did so by copying emails from his
email account into Microsoft Word documents, which were then
saved on to floppy disks.
(As set forth in more detail below,
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electronic evidence produced by CEGLIA in connection with the
civil litigation shows that the Purported Emails were sent to and
from Zuckerberg using his Harvard email address.)
According to
CEGLIA, he and Zuckerberg communicated with each other concerning
the design and functionality of "The Face Book" website, various
ways they could generate income from "The Face Book" website,
various ways they could expand "The Face Book" website to a
larger audience beyond Harvard University, and technical and
other challenges in developing "The Face Book" website.
In one
such purported email, dated February 4, 2004, the day Facebook
launched,
CEGLIA claims to have written that he looked at the
Facebook site and told Zuckerberg, "it looks great."
(9)
After several months of continued
communication from the end of 2003 through the early part of
2004, and following a purported additional $1,000 investment by
CEGLIA in November 2003, CEGLIA alleges that Zuckerberg
intentionally attempted to sour their business relationship in
order to convince CEGLIA to abandon his involvement with "The
Face Book" project, which had launched successfully, unbeknownst
to CEGLIA.
CEGLIA alleges Zuckerberg misrepresented to CEGLIA
that he was not continuing to work on further development of "The
Face Book," further expanding "The Face Book" to a larger
audience, or commercializing "The Face Book" for profit. CEGLIA
cites emails to support these claims.
For example, in a
purported email dated April 6, 2004, zuckerberg told CEGLIA that
he was too busy to work on the Facebook site and was thinking of
taking it down, and offered to return CEGLIA's $2,000 investment.
In another purported email dated July 22, 2004, Zuckerberg again
offered to return CEGLIA's investment to "repair [their] business
relationship." On or about July 29, 2004, Zuckerberg
incorporated Facebook, Inc. and failed to provide CEGLIA with 50%
of the capital stock of Facebook, Inc.
c.
In the Amended Complaint CEGLIA makes several
claims for relief, including that he is entitled to 50% of the
total equity interest in Facebook, Inc. received by, and promised
to Zuckerberg, including but not limited to, stock, stock options
and restricted stock units.
CEGLIA FALSIFIED EVIDENCE TO SUPPORT
HIS CLAIM AGAINST ZUCKERBERG AND FACEBOOK
The Alleged Contract Is Fraudulent On Its Face
7.
In connection with this investigation, I have reviewed
the publicly available scan of the Alleged Contract that PAUL
CEGLIA, the defendant, attached to the Amended Complaint and upon
7

which CEGLIA bases the civil Action. Based on my review of this
scan, I have observed the following, among other things:
a.
The Alleged Contract is a two-page document. Page
two of the Alleged Contract appears to contain the signatures of
"Paul Ceglia and "Mark Zuckerberg" as well as the date "April
ll

28, 2003."

.

b.
All references to "The Face Book" and/or "The Page
Book" in the Alleged Contract appear only on page one of that
document.
c.
There are significant differences between the
widths of the columns, margins, and the space between columns on
pages one and two of the Alleged Contract. Specifically, the
column widths are wider on page one than on page two, while the
widths of the margins and the space between columns are narrower
on page one than on page two.
d.
The spacing between paragraphs on page one of the
Alleged Contract appears to be different than the spacing on page
two of the Alleged Contract. Specifically, the spacing between
the numbered items varies between single, double, and triple
spacing on page one, while the spacing between the numbered items
on page two is uniformly single.
e.
On page one of the Alleged Contract, there is a
reference to "Street Fax LLC." Based on my review of certain
records maintained by the New York Department of State, I have
learned that "Street Fax, LLC" was formed on or about August 26,
2003, approximately four months after the Alleged Contract
appears to have been signed by "Mark Zuckerberg" and "Paul
Ceglia."
The Real Contract
8.
In or about early February 2012, I executed a search
warrant that had been issued in the United States District Court
for the Southern District of New York at Stroz, Friedberg LLC
("Stroz") to obtain forensically-sound copies of the images made
by certain Stroz employees of the computers and other electronic
media that PAUL CEGLIA, the defendant, made available for
examination in the Civil Action (the "CEGLIA Electronic
Devices").
Thereafter, I provided the forensically-sound copies
that I obtained from Stroz to an expert in computer forensics
(the "Computer Forensics Expert"). Based upon conversations I
have had with the Computer Forensics Expert, who has examined the
Ceglia Electronic Devices, I have learned the following, among
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other things:
a.
When reviewing the CEGLIA Electronic Devices,
specifically, one of CEGLIA's hard drives, the Computer Forensics
Expert found, in a Microsoft Outlook Express sent box, two emails
which appear to have been sent on March 3, 2004, approximately
two minutes apart, from the email address [e-mail] to
the email address of an attorney at a law firm.
(1) The subject of the first email is "page 1
of 2 for Streetfax contract with mark." Attached to the first
email is what appears to be the first page of a contract entitled
"STREET FAX," which outlines a generic contract for programming
work between the purchaser, "StreetFax, Inc" and the
contract/seller, who is not identified by name. Although page
one of the Alleged Contract contains references "The Face Book"
"The Page Book," and "StreetFax, LLC," page one of this contract
contains no such references nor does it contain the word
Facebook.
(2) The subject of the second email is "2 of 2
for streetfax contract." Attached to the second email is what
appears to be the second page of the same contract. The contents
of this document -- including what appear to be the signatures of
Mark Zuckerberg and PAUL CEGLIA, the defendant, and handwritten
dates -- appear to be identical to the second page of the Alleged
Contract.
(3)
The margins and spacing are consistent
between page one and page two of the STREET FAX contract attached
to the two emails.
The Emails Attached To The Amended Complaint Are Fake
9.
I have received and reviewed copies of all existing
emails maintained by Harvard University associated with the
Harvard email address registered to Mark Zuckerberg. More
specifically, I have received and reviewed copies of those emails
as they existed on the Harvard University computer servers in or
about February 2012, as well as on back-up tapes from on or about
November 3, 2003 and in or about October 2010 (collectively, the
"Harvard Emails"). Based upon my comparison of the Harvard
Emails to the purported Emails, I believe PAUL CEGLIA, the
defendant, fabricated the existence of the emails cited in the
Amended Complaint for the following reasons, among others:
a.
None of the quoted Purported Emails appear in
Zuckerberg's Harvard emails as Zuckerberg's emails existed in
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February 2012. Further, none of the Purported Emails is in the
back up tapes from October 2010, prior to the filing of the
Amended Complaint. And none of the Purported Emails occurring
before November 2003 is in the Harvard back-up tapes from
November 2003.
b.
In addition, there is no discussion of Facebook,
"The Face Book," or "The Page Book," in any of the Harvard
Emails. And contrary to the emails cited in the Amended
Complaint, indicating that Zuckerberg attempted to return $2,000
to CEGLIA to repair their business relationship, the Harvard
emails reflect that Zuckerberg was asking CEGLIA for money CEGLIA
owed Zuckerberg for programming work Zuckerberg did for StreetFax
in or around late 2003 and 2004. As late as on or about May 7,
2004, CEGLIA wrote an email to Zuckerberg acknowledging that he
still owed Zuckerberg money and offering to pay $500 per month
until Zuckerberg was paid in full.
There Is Evidence Of Manipulation And
Backdating On The CEGLIA Electronic Devices
10. Based upon further conversations I have had with the
Computer Forensics Expert, I have learned the following, among
other things:
a.
The Computer Forensic Expert identified several
inconsistencies within the file system and embedded document
metadata2 which were indicative of intentional, organized and
methodical alteration, tampering and backdating.
b.
For example, the Computer Forensic Expert found,
on a floppy disk, three Microsoft Word files, entitled "work for
hire SF template," "Work for Hire Contract MZ," and
"Streetfaxworkforhire randy," which were last accessed on or
about February 18, 2011 (approximately two months before the
Amended Complaint was filed). These three files were
overwritten by new files, entitled "SFWebWorkForHireMZ," and
"SFWebWorkForHire randy." Notwithstanding the fact that the
metadata indicates these new files were created on or after
February 11, 2011, the documents reflect purported creation dates
in 2003. This, combined with the other activity on the disk, is
inconsistent with known file behavior and is consistent with
tampering and manipulation such as altering the computer system
2
Embedded metadata is additional data (such as last
saved date and time, last saved by, last ten authors, etc.)
stored within the file and automatically recorded by various
types of applications such as Microsoft Office.

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clock, also known as "backdating." The "SFWebWorkForHireMZ" file
contains an unsigned contract entitled "Work For Hire," which
contains the same language, but slightly alternative formatting,
as the A~leged Contract.
c.
On a CD-ROM, the Computer Forensic Expert found
versions of a Microsoft Word document entitled "Work for Hire
ContractMZ.doc." Embedded metadata indicated these files were
last printed on February 15, 2011. As the last printed date is
stored within the document (i.e. embedded), these files should
reflect last written and last saved dates of 2011; however,
instead they have purported dates of 2003, again suggesting
backdating. Additionally, the file naming convention suggests a
progression of the document alteration and merging process with
folder and file names such as "Maybe got it," "Page I," "merged,"
"pagelfeb4twotenpm.doc," "MPl," "MPland2.doc," "Zuck
Contract.doc," and finally "A:\Work for Hire ContractMZ.doc."
d.
In addition, review of another floppy disk
revealed Microsoft Word documents containing the Purported Emails
between CEGLIA and Zuckerberg at Zuckerberg's Harvard email
address. The floppy disk contains deleted files that were last
accessed on or about February 18, 2011 and overwritten by files
with purported creation dates of July 23, 2004. Again, this is
inconsistent with known file behavior and is consistent with
tampering and manipulation such as backdating.
e.
Review of another CD-Rom revealed several
documents with titles including the word "test." These documents
show testing of document manipulation, including practicing
copying and pasting text and the use of a hexeditor, which is a
type of computer program that allows a user to manipulate the
fundamental data that makes up computer files. Metadata on the
"test" documents shows a purported creation and last written date
of November 26, 2003, but there is also metadata showing this
date has likely been manipulated.
The Founding of Facebook Did Not Involve CEGLIA
11. From speaking with Mark Zuckerberg, I have learned the
following, among other things:
a.
While a freshman at Harvard University, Zuckerberg
had a contract with PAUL CEGLIA, the defendant, related to
certain programming work for the StreetFax website. His business
relationship with CEGLIA did not involve Facebook in any way.
b.

Despite CEGLIA's claim that their contract
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involved both Zuckerberg's work on StreetFax and CEGLIA's
investment in Facebook, Zuckerberg had not conceived of the idea
of the Facebook website as of April 28, 2003, the date of the
Alleged Contract referring to The Face Book.
It was only in or
about September and October 2003 -- months after the Alleged
Contract was purportedly signed, while in his sophomore year at
Harvard University, that Zuckerberg worked on certain projects
that ultimately were precursors for the Facebook website.
It was
only when those tools were in place that Zuckerberg began to
think about the concept of the Facebook website, which was
inspired by paper face books and his high school's online face
book.
c.
The Facebook website launched at Harvard
University on or about February 4, 2004. At that time, the
Facebook website was only accessible to Harvard University
students, who needed to use a Harvard University email address in
order to register for the website. Because he was not a Harvard
student, CEGLIA would not have had access to the Facebook website
at that time -- contrary to CEGLIA's claim, in the Purported
Emails, to have looked at the site on that date.
d.
Zuckerberg has never used the term "Page Book" in
referring to the Facebook website.
e.
In communicating with CEGLIA by email, Zuckerberg
used the email address provided to him by Harvard University.
f.
Zuckerberg did not write or receive any of the
Purported Emails that CEGLIA cites in the Amended Complaint in
the Civil Action.
12. I also spoke with another founder of Facebook, who
recounted the timing of the formation of Facebook consistent with
Zuckerberg's statements above.
13. In addition, I spoke to an individual who assisted
Zuckerberg with work for StreetFax in or around 2003 and whose
email communications regarding StreetFax I found in the Harvard
Emails. During his time working with Zuckerberg on the StreetFax
project, Zuckerberg did not discuss Facebook with this
individual.

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WHEREFORE, deponent respectfully requests that a warrant
issue for the arrest of PAUL CEGLIA, the defendant, and that he
be arrested and imprisoned, or bailed, as the case may be.

DOUGLAS VEATCH
Postal Inspector
United States Postal
Inspection Service
Sworn to before me this
25th day of October, 2012

HONORABLE H~Plil~
UNITED STATES MAGI-STRATE JUDGE
SOUTHERN DISTRICT OF NEW YORK

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