Facebook is battling a lawsuit filed by a New York man who claims he owns 84 percent of the social-networking company.
Paul D. Ceglia of Wellsville, N.Y., claims in a lawsuit (see below) that he entered into a contract with Facebook founder Mark Zuckerberg in 2003 to design and develop a Web site that would ultimately become the social-networking giant. In the contract, Ceglia allegedly paid Zuckerberg $1,000 and entitling Ceglia to a 50 percent stake in the final product, which eventually launched as TheFacebook.com, according to the suit, which was filed in the Supreme Court of New York's Allegany County on June 30.
The suit also claims Zuckerberg agreed to pay Ceglia an additional 1 percent stake per day until the Web site is completed, giving Ceglia an 84 percent stake in the company as of February 4, 2004.
Judge Thomas Brown issued a temporary restraining order blocking any transfer of assets earlier this month after Facebook requested the case be dismissed.
Privately held Facebook dismissed the suit as frivolous.
"We believe this suit is completely frivolous and we will fight it vigorously," Facebook spokesman Barry Schnitt said in a statement.
The company, which has nearly 500 million users, is estimated to be worth $6.5 billion after receiving a $200 million investment from the Russian firm Digital Sky Technologies in 2009. Zuckerberg's fortune was estimated by Forbes magazine earlier this year to be $4 billion.
In 2009, New York Attorney General Andrew M. Cuomo obtained a restraining order against Allegany Pellets, a western New York wood pellet company owned by Ceglia and his wife Iasia. Cuomo accused the company of defrauding consumers by taking $200,000 in orders but not delivering any products or issuing any refunds. That case is reportedly ongoing.
Ceglia did not immediately return a call requesting comment.
Updated at 9 p.m. PDT with Facebook comment.
Updated July 20 to correct who allegedly received the $1,000 payment. The suit claims it was Zuckerberg.