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Facebook sues the law firms that backed a fraudulent ownership claim against it

Back in 2010, New Yorker Paul Ceglia fraudulently claimed he owned 84 percent of Facebook, and took founder Mark Zuckerberg to court in order to prove it. After the case was dismissed, you’d have thought the story would have ended. Nope, it’s now Facebook’s turn to sue, and it’s going after law firm DLA Piper, plus a few others, who represented Ceglia during the battle.

Why? Facebook’s General Counsel, Colin Stretch’s statement sums it up pretty well. He says Facebook told everyone Ceglia’s claim was fraudulent, and “DLA Piper and the other named law firms knew the case was based on forged documents, but pursued it anyway.” He closes by saying, “They should be held to account.”

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Digging into the summons reveals some more detail. Facebook says “Ceglia’s co-counsel discovered the fraud, informed the other lawyers, and withdrew.” This fits in with stories circulating at the end of October 2012, that described Ceglia’s difficulty in retaining a lawyer, after Dean Boland became the eighth lawyer to walk away from the case. The summons states once DLA Piper came onboard, it used its “high profile in the legal community to further the fraudulent scheme, all in the hope of creating negative publicity to force a quick settlement in which the law firm would share.”

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The law firm didn’t help itself, and the co-chair of its Securities Litigation Practice is directly quoted in the summons. He told the Wall Street Journal in 2011 that he had “100 percent confidence that the documents are authentic,” and that the firm had spent “weeks investigating Ceglia’s claims.”

The fraud didn’t work, and the lawsuit was dismissed by federal court, where the documents used to support the claim were described as “fabricated for the express purpose of filing the instant action.” Ceglia went on to be indicted for mail and wire fraud.

Facebook is seeking damages from DLA Piper and other law firms for any harm caused to its reputation, plus attorney’s fees, and punitive damages “to punish defendants for their malicious and willful misconduct.”