For two years Orin Snyder of Gibson Dunn & Crutcher has been hurling words like “fraud” and “scam artist” at Paul Ceglia, who claims to own half of Snyder’s client, Facebook Inc. The scorn kept coming even as law firms like DLA Piper and Milberg signed on to represent Ceglia. Now the U.S. Attorney’s Office in Manhattan has sided with Snyder, filing a criminal indictment against Ceglia that resulted in his arrest at his home in Buffalo on Friday. According to the indictment, which was also unsealed on Friday, Ceglia fabricated and destroyed evidence in his ownership dispute with Facebook and Mark Zuckerberg, the company’s CEO and founder. That dispute is still pending in U.S. district court in Buffalo. The criminal indictment charges him with mail fraud and wire fraud, for which he could face up to 20 years in prison. In a statement, Bharara said that Ceglia had sought “a quick payday based on a blatant forgery.” Ceglia first hired a Buffalo solo practitioner to file suit in July 2010. He alleged that he was entitled to a 50 percent ownership stake in Facebook because of an agreement that he entered into with Zuckerberg in 2003. At the time of the supposed agreement, Zuckerberg was a freshman at Harvard University and Ceglia was an internet entrepreneur. Ceglia says he invested $1,000 in an early version of Facebook, and in exchange Zuckerberg agreed to give him a stake in the project. Ceglia says he has a contract and e-mails to prove it. Zuckerberg acknowledges that he did business with Ceglia through Craigslist, but says they never worked together on Facebook. Ceglia’s claim was met with plenty of skepticism, but eventually won over DLA Piper. After his original lawyers dropped out for unknown reasons, DLA filed an amended complaint on Ceglia’s behalf in April 2011. “DLA would not have gotten involved if we had any doubts about the facts or evidence in the case,” partner Robert Brownlie told us at the time. Just four months later, however, the firm inexplicably dropped the case. In the months that followed, several other firms, including Milberg, signed onto the case, only to later drop out. The firms may have dropped out because of evidence uncovered by Gibson Dunn. At Snyder’s urging, U.S. district judge Richard Arcara ordered a search of Ceglia’s computer hard drive. The audit turned up emails and documents that Snyder says show that Ceglia’s purported contract is a fraud (click here for our story). According to Snyder, Ceglia has also turned over an email exchange between DLA and Kasowitz Benson Friedman & Torres, another firm asked to represent Ceglia. Snyder maintained that the e-mails suggest that Ceglia’s lawyers realized that his evidence was phony. As we reported here, Snyder has filed seven (!) different motions to compel production of a crucial attachment to that DLA/Kasowitz email, but Ceglia’s latest lawyer, Dean Boland of Lakewood, Ohio, has refused to turn it over. “We commend the United States Attorney for charging Ceglia with federal crimes in connection with his fraudulent lawsuit against Facebook,” Snyder said in a statement. “Ceglia used the federal court system to perpetuate his fraud and will now be held accountable for his criminal scheme.” Boland, who still represent Ceglia in the ownership spat, did not return a call seeking comment.
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