Local Man Claims Contract Gives Him Major Stake in Facebook

July 20, 2010 Updated Jul 20, 2010 at 6:37 PM EDT

By Ginger Geoffery

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July 20, 2010 Updated Jul 20, 2010 at 6:37 PM EDT

BUFFALO, NY (WKBW) - Is the real owner of the social networking site "Facebook" a man who lives in Western New York? Paul Ceglia of Wellsville is suing Facebook and in his lawsuit he claims a 2003 contract gives him at least 50 percent ownership in the company. Billions of dollars are at stake in the case because Facebook has grown into the world's most popular social networking site in the years since the contract was allegedly signed and some financial experts say Facebook is now worth at least $40 billion.

Ceglia's attorneys presented copies in court on Tuesday of a "work-for-hire" contract allegedly signed by both Ceglia and then-18-year-old Harvard student and future Facebook founder Mark Zuckerberg.

Ceglia's attorney say the two men met through the internet in 2003 when Ceglia placed an advertisement in search of someone with computer experience who could help him build a website called "Street Fax". The teenage Zuckerberg responded and said he'd do the job for a thousand dollars, but in return he wanted the Wellsville man to invest in Zuckerberg's idea of a website called "The Face Book". Ceglia's attorney says the two men then agreed on a deal giving Ceglia at least 50 percent ownership in Zuckerberg's Facebook project. Ceglia's "Street Fax" site never took off, but Facebook did. Ceglia though claims he's never received any money from Facebook.

"One of the things we are looking at is whether or not there are a series of breaches that are involved," says Terrence Connors, Attorney for Ceglia, "We're looking into that and researching the case law as it applies to contracts that deals not only with breaches but specific performance as well."

Ceglia's legal team will have to deal with questions about why Ceglia waited so many years before coming forward with his claim. His attorneys say there is a reason but they're not ready to reveal it just yet. "We're going to wait until the proof develops and you're going to have an opportunity to hear the story as it moves forward. It would be way too premature to get into those discussions right now. I can tell you this: There's an answer," says Connors.

Attorney's for Facebook declined to comment after Tuesday's court proceeding. A federal judge in Buffalo is now deciding if the matter should be heard in U.S. District Court or if it should be sent back to the State level.