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Businesses Social Networks The Almighty Buck

Man Claims 84% of Facebook, Gets Order Blocking Assets 326

Posted by CmdrTaco from the trolls-are-everywhere dept.
Cyrus writes "According to a Bloomberg scoop, a New York man claiming to own a majority of Facebook has gotten a signed court order to block Facebook from transferring assets."
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Man Claims 84% of Facebook, Gets Order Blocking Assets More

Man Claims 84% of Facebook, Gets Order Blocking Assets

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  • That Must Be One Entertaining Contract (Score:5, Informative)

    by eldavojohn ( 898314 ) * <eldavojohnNO@SPAMgmail.com> on Tuesday July 13, 2010 @09:56AM (#32887524) Journal
    Found the complaint on Scribd [scribd.com] and man, judging by the complaints, that sounds like one entertaining contract:

    Under Paragraph 3 of the contract, the Seller and Purchaser agreed that for each day after January 1, 2004, the Purchaser would acquire an additional 1% interest in the business, per day, until the website was completed ... Upon information and belief, the website, thefacebook.com, was completed and operational on February 4th, 2004.

    Zuckerberg appears to be the Seller and Ceglia appears to be the Purchaser. I know this all happened before "thefacebook.com" had a massive user base but from what I can tell Ceglia dropped a grand to Zuckerberg under some agreement that if the website wasn't finished on a certain date then Ceglia would accrue a point of that business per late day? Is that a standard clause or was this some sort of loan shark that the Z-man found on campus after he stole the ConnectU code?

    And then, Ceglia waited past the six year mark for the statute of limitations to run out on a breach of contract in New York? He watched Facebook's rise to popularity past MySpace?

    Seriously, what kind of contracts do fledgling websites write? And where do they find people to borrow money from that apparently live under a rock in the Appalachians of New York state? Sure is entertaining one way or the other.

    • It was probably something signed between two students.

      • So? If they're both 18 then they are both able to enter into contracts.

        Sad to hear about the statute of limitations, but it would be quite entertaining if this guy could reproduce the original documents... and he in fact did own 84% of FaceBook.

      • For a contract to be valid it needs only two things: compensation, and to not violate any state or federal laws. On compensation, contract law follows what is known as the "Peppercorn Doctrine".

        That is, a peppercorn is good enough to count as compensation, so long as both parties agree to it. I.e. I could set up contract for you to paint my house for a peppercorn, and if you agree to it that contract is enforceable by law. You have to finish my house, and I have to pay you a peppercorn for it.

        For the se

    • The Pellet thief (Score:5, Interesting)

      by goombah99 ( 560566 ) on Tuesday July 13, 2010 @10:09AM (#32887774)

      The story gets even jucier:

      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.

      An odd detail is that 84% number is said to be as of 2004. Why 2004?

    • Re:That Must Be One Entertaining Contract (Score:5, Informative)

      by Anonymous Coward on Tuesday July 13, 2010 @10:11AM (#32887808)

      The statute of limitations is a red herring -- it only begins to run when a contract breach is discovered (or reasonable should have been), not when the contract is signed. You can have a contract signed 50 years ago, but if you breach it today, the statute of limitations start to run today.

      The purported breach was arguably only discovered by the plaintiff due to recent press accounts of potential selling of Facebook or portions thereof. Until some act is taken that indicates an intent to breach, a party to a contract has the right to rely on the expectation that the other party will fulfill his obligations under the contract.

      • Re: (Score:3, Interesting)

        by goombah99 ( 560566 )

        The statute of limitations is a red herring -- it only begins to run when a contract breach is discovered (or reasonable should have been), not when the contract is signed. You can have a contract signed 50 years ago, but if you breach it today, the statute of limitations start to run today.

        The purported breach was arguably only discovered by the plaintiff due to recent press accounts of potential selling of Facebook or portions thereof. Until some act is taken that indicates an intent to breach, a party to a contract has the right to rely on the expectation that the other party will fulfill his obligations under the contract.

        Yeah I guess he just didn't notice that he owned 50% of facebook when that's the second paragraph in the contract.

        • Re:That Must Be One Entertaining Contract (Score:5, Informative)

          by Attila Dimedici ( 1036002 ) on Tuesday July 13, 2010 @10:27AM (#32888050)
          NO, he could very well have known that he owned a big chunk of Facebook. His claim would be that he became aware of Zuckerberg's intention to not honor that ownership claim when he saw "recent press accounts of potential selling of Facebook or portions thereof". Whether or not any of this will hold up in court is another story. However, on the face of it, he has a claim.

    • Re:That Must Be One Entertaining Contract (Score:5, Informative)

      by Skilf ( 522124 ) <amommNO@SPAMyahoo.com> on Tuesday July 13, 2010 @10:15AM (#32887878)
      here is Facebooks reply (from the same user on scribd: http://www.scribd.com/doc/34240120/Ceglia-v-Facebook-Motion-for-Dissolution [scribd.com] snippets:

      Defendants Mark Elliot Zuckerberg and Facebook, Inc. (“Facebook”) respectfully submit this memorandum in support of their motion to dissolve the ex parte temporary restraining order (the “TRO”) issued by the Supreme Court of the State of New York, County of Allegany, in this matter. Plaintiff has utterly failed to meet the procedural and substantive requirements for such drastic relief, and the order issued by the state court is similarly flawed and woefully inadequate.

      In his Complaint, Plaintiff alleges that, as a result of a two-page contract purportedly entered into more than seven years ago (and approximately nine months before the founding of Facebook), he is entitled to an 84% ownership stake in the Company. (Id. at Ex. A 4, 8).

      • Re:That Must Be One Entertaining Contract (Score:5, Interesting)

        by Anonymous Coward on Tuesday July 13, 2010 @11:18AM (#32888822)
        Their response really doesn't seem to actually address the issue. If he wrote the original code for a different entity, and Zucker took that code and used it to create an exceptionally similiarly named company without compensating his 84% partner, he needs to address that.

        Among other things, the countersuit claims there's no need for urgent action (really? Pending sale of the IP doesn't make it urgent?)

        This sounds like a quick and poorly research counter while they circle the wagons and find out just what happened, sounds like Zucker may have "burned" the original company to elimate this little ownership problem, while taking all the assets. This little stunt may have actually sstarted the statue of limitations countdown, if he as CEO of "thefacebook" company wrote himself a severance package where he got the IP and the 84% owner said nothing because he was unaware, thinking he owned a silent but significant owner of "Facebook".

        Of course, odd that you would believe yourself even a 50% owner of a huge internet phenom and not ask for at least a board seat where you can find out what they are doing with your company...

    • Well,
      There are two parts to this- it was a fledgling website, and Zuckerberg was all of what? 23? I too started a website when I was in my early 20's as a side project with a friend- I was a bored programmer in a big bank, my partner a listless real estate agent looking for something more.

      We knew from the beginning that this was a for-profit e-commerce site, and so we incorporated and assigned shares and all that, and I initially funded our corporate bank account with some seed money to get us started to bu

  • His facebook account is so canceled! (Score:4, Funny)

    by goombah99 ( 560566 ) on Tuesday July 13, 2010 @09:59AM (#32887598)

    His facebook account is so canceled! But I bet he could do commercials for MySpace. "I designed the look and feel of facebook, but now I use MySpace."

    • Re: (Score:2)

      by Scaba ( 183684 )

      His facebook account is so canceled! But I bet he could do commercials for MySpace. "I designed the look and feel of facebook, but now I use MySpace."

      Why not? Even Myspace Tom has a Facebook page [facebook.com].

  • Scary (Score:5, Funny)

    by gmuslera ( 3436 ) on Tuesday July 13, 2010 @10:00AM (#32887618) Homepage Journal
    He owns Faceboo

  • Whats next???? (Score:5, Insightful)

    by evanism ( 600676 ) on Tuesday July 13, 2010 @10:02AM (#32887646) Journal

    given the "issues" Z-man has, one may wonder how many of these skeletons are in his closet? A bent sapling never grows straight.

  • Not going to matter (Score:5, Insightful)

    by dward90 ( 1813520 ) on Tuesday July 13, 2010 @10:07AM (#32887750)
    Regardless of whether or not the guy wins some money in the lawsuit, nothing will change. Zuckerberg might be slightly less rich. But he will still be rich, and an asshole. Facebook will still suck.

    • Re:Not going to matter (Score:5, Insightful)

      by bsDaemon ( 87307 ) on Tuesday July 13, 2010 @10:18AM (#32887912)

      Isn't Zuckerberg's money all on paper? And not the green, cash-y kind? My point is, if there is an injunction against transfer of assets, then can he sell his stock to get cash? Standard IANAL and all that, but this could prove to be more than just a passing amusement.

      • Re: (Score:2, Insightful)

        by Abstrackt ( 609015 )

        Isn't Zuckerberg's money all on paper? And not the green, cash-y kind? My point is, if there is an injunction against transfer of assets, then can he sell his stock to get cash? Standard IANAL and all that, but this could prove to be more than just a passing amusement.

        Unless expressly stated otherwise we already assume you're not a lawyer. ;)

        • Re:Not going to matter (Score:5, Funny)

          by bsDaemon ( 87307 ) on Tuesday July 13, 2010 @10:36AM (#32888204)

          Is it that obvious? I mean, I try to be a good person, but I didn't know how well it came across. Thanks for believing I'm not a lawyer.

        • Well you get a couple guys in here who go all defacto Tortalini with all their fancy latin words and you can never tell if they are a lawyer or not, so whenever someone mentions some Fianchetto Defense, its nice if they express if they are a lawyer or not.

          • I sometimes say IANALBMWI (I am not a lawyer but my wife is), and it gives me an air of authority, even though I'm still just making shit up that would totally cause my better half to do an extreme facepalm.

            Everything I know about the law I learned from Perry Mason.

    • Careful... (Score:5, Insightful)

      by dpilot ( 134227 ) on Tuesday July 13, 2010 @10:28AM (#32888070) Homepage Journal

      No matter how big an jerk you may think Zuckerberg is, and no matter how bad you may think Facebook is, it is practically always possible to get worse.

      Not knowing anything that I didn't learn in the last 5 minutes, upon seeing this article, this Ceglia guy certainly has a running start on both. The enemy of your enemy may not be your friend - just a different enemy.

      • Certainly true. I suspect that even if Ceglia takes over (which seems unlikely), he will make Facebook suck differently. Probably not better or worse, but differently.

      • Re: (Score:2)

        by dstar ( 34869 )

        "The enemy of my enemy is my enemy's enemy, nothing more, nothing less."

    • Re: (Score:2)

      by Dahamma ( 304068 )

      Actually (not that this contract has any hope IMO) if Zuckerberg had promised 85% of the company to some random guy and not told the VCs, you can bet they're not just going to say "that's ok Mark, we thought we owned a 60% share of the company but we can all just split what's left!" More like, "ok, his share comes out of YOUR share first, buddy..."

  • This could be a good thing for Facebook (Score:3, Interesting)

    by assertation ( 1255714 ) on Tuesday July 13, 2010 @10:19AM (#32887934)

    This could be a good thing for Facebook.

    I hate to put it this superficially, but about 60% of the trouble is in can be traced back to CEO Mark Zuckerberg's immaturity with handling people. If someone does indeed own 84% of Facebook they could simply order him to stop making public statements.

    In fact, he could take it a step further and put out spin how FB is under new derangement, with new policies and better tech coming down the road.

  • Before we get excited at the prospect of this guy winning against Facebook, it's worth reminding ourselves that Zuckerberg - founder/owner of Facebook - is heavily ingratiated with a number of high profile political figures.

    An example would be a video chat [pcr-online.biz] he held with UK Prime Minister David Cameron just a few days ago, the courteousness all too apparant. I can't remember a firm being seriously damaged through the legal system so soon after establishing itself as a ubiquitous and accepted tool by the esta

    • You know what politicians do when you ask them for help, especially when your primary source of income & political power is at stake, they RUN.

      • I know that making sweeping generalizations isn't wise, a lot of the time.

        If you're so right, how come so many politicians have found themselves in scandal over support for certain vested interests?

        What about the upper civil service both in the UK and US, which constantly holds meetings behind closed doors in order to consolidate their own power and incomes? Military-industrial complex has probably done quite a bit of beneficial hobnobbing with politicians; it has mostly led to beneficial outcomes...can't s

    • Re: (Score:3, Informative)

      by Animats ( 122034 )

      I can't remember a firm being seriously damaged through the legal system so soon after establishing itself as a ubiquitous and accepted tool by the establishment.

      Read more business history. Ones that come to mind immediately are Lehman Brothers, Barings, Enron, Lloyds of London, and Worldcom. Disputes over ownership and contracts happen all the time.

      For more details on the background, see this CNET story. [cbsnews.com]

  • Yes, your honor, it *is* on a bar napkin... (Score:3, Insightful)

    by RevWaldo ( 1186281 ) on Tuesday July 13, 2010 @10:33AM (#32888156)
    ...but it's a legally binding bar napkin!

    .

  • O-L-D (Score:3, Insightful)

    by IP_Troll ( 1097511 ) on Tuesday July 13, 2010 @10:42AM (#32888300)
    The order baring transfer of assets was only good until July 9th, it is now July 13th. So what happened?

  • It says the hearing was scheduled for july 9, what was the outcome?

  • This is a far out suggestion. But the autumn a movie about Facebook's rise called The Social Network [thesocialn...-movie.com] is coming out. Its supposed to talk about Zuckerbergs's naughty habits, if anyone cares.

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