

Here's the Email That Could Cost Mark Zuckerberg Half of Facebook - sasvari
http://www.theatlanticwire.com/technology/2011/04/heres-email-could-cost-mark-zuckerberg-half-facebook/36579/

======
kenjackson
The problem for MZ is he apparently did deal with this guy on StreetFax. MZ
and his attorneys have conceeded that point. So its not like this is some guy
who has never actually talked to MZ.

Second, MZ has a credibility problem. He has a reputation of duping people, or
at least not playing it straight. While a lot of people give him credit for
being able to use some good tactics to screw over people, those same tactics
can also end up biting you too.

I don't know if the emails are credible or not, but I'd take them seriously.

~~~
Kallikrates
I also doubt DLA Piper would file this without some due diligence

------
Construct
First, Ceglia (who was previously convicted of fraud) waits 7 years to file
this lawsuit. Now he releases a new batch of e-mails that bolster his story,
which were conveniently omitted from his first round of accusations?

This is enormously suspicious across the board. It should be ignored as an
annoyance and nothing else until a court finds otherwise.

~~~
joshfinnie
In another interview it was said that Ceglia found the facebook stuff while
reviewing paperwork for the fraud case. He might have honestly forgotten and
found the documents 7 years later.

~~~
wallflower
Who prints out emails? Besides my father, do people regularly print out
emails? Maybe just important ones? I print out emails but usually they are
e-Tickets. Call my cynical but I would rather trust an electronic copy on an
ISP (or the archived copy) somewhere.

~~~
samtp
Your second sentence answered your first sentence

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ohashi
As fascinating as it is, people from Business Week and Reuters commenting that
they 'look real' seems silly. Pure speculation, unless those guys and
linguists who have studied Zuckerberg's writing and style and compared it to
the email, their opinion means exactly nothing. I thought that really
detracted from the whole thing.

~~~
notahacker
Occam's razor time: Ceglia was according to that email full of ideas for
Facebook _until_ it started getting publicity, at which point he promptly
forgot about it for several years...

If you're not looking for an interesting story angle, the posted examples look
less plausible than the original contract.

------
ErrantX
_The emails don't read 'fake,' writes Henry Blodget_

Really. How exactly? Blodget appears to qualify this claim (in the Business
Insider article) by basically saying "well, they haven't been proven fake yet,
so we are suspicious that means they are real".

Ahem.

To me (bearing in mind I'm theoretically supposed to be good at this stuff :D)
they look like they are probably faked. The language similarities between the
two examples are _extremely_ telling; for example, the odd punctuation (or
lack of) visible in both emails strikes me as identical.

I think "suspicious until proven real" is the right approach here.

~~~
aresant
From the business insider article "[if they were fake] we imagine DLA Piper's
investigators would already have exposed it"

I agree w/Biz Insider - A big tech law firm that is almost certainly working
on contingency rather than billing $500/hr is a fair indication that there's
some meat to this case.

~~~
HardyLeung
Come to think of it this way. If there is even a 10% chance that this is true
and the settlement would be at least in the range of $200M to $1B (wild
guess), and the lawyer's fee is 30%, that's an _expected_ payoff of $60M to
$300M. Nothing to sneeze at.

Even if they lose, think about it, DLA probably already have some spin about
how they are just being "professional" about due diligence and doing the best
they could for their client. No loss in reputation.

~~~
freshfunk
I disagree. If these are proved to be fake, then DLA will have this reputation
of being ambulance-chasers. It would definitely hurt their reputation.

Plus, the legal costs of pursuing a case like this is likely to be extremely
high. If the evidence is so weak to be thrown out even before it comes to
court, then I don't think they would pursue it.

------
nomurrcy
I'm not saying that Mr. Ceglia is right, but the amount of people on this
thread outright dismissing his claims is laughable.

He has now had his claims vetted by at least one major law firm. I guarantee
you they looked closely at his claims (they have both a legal and financial
interest to do so) and found them worth pursuing.

The risk to Zuckerberg is probably a lot higher here than most people think.

~~~
gergles
Any "major law firm" will go after someone as long as your checks keep
clearing. The weight of a law firm is not related to the likely validity of
the claims. I mean, if you think you can get a 50% stake in Facebook, of
course you're going to pursue that heavily, even if your evidence is weak --
because you might be able to beat FB around until they give you money to make
you go away.

~~~
freshfunk
Yes, and based on this how much do you think the legal costs would be for a
firm like DLA Piper? You're easily talking about millions. If Ceglia has that
amount of money to throw around, I don't think he'd be spending his time with
frivolous lawsuits.

~~~
nomurrcy
I'm betting they took this on contingency and will take a cut of the winnings.
If so the firm is willing to risk their own capital.

------
brown9-2
Why is there a presumption of truth in regards to emails like this, especially
when coming from someone previously convicted of fraud?

~~~
lotusleaf1987
From the article: People now reading the emails are beginning to take them
very seriously. "The emails don't read 'fake,' writes Henry Blodget at
Business Insider. Felix Salmon at Reuters agrees. "The emails Facebook says
are fake don't seem that way to me." In any event, everyone agrees that, if
the emails are fake, it should be easy for Facebook to demonstrate that.
"Facebook almost certainly has a forensic analysis of Mark Zuckerberg's hard
drives and email boxes from this period, because these drives would have been
the same ones analyzed in the Winklevoss lawsuit," writes Blodget. "Perhaps
the drives show different versions of the emails in question--or no emails at
all."

~~~
brown9-2
This is precisely what I am referring to:

 _The emails don't read 'fake,' writes Henry Blodget_

 _Felix Salmon at Reuters agrees. "The emails Facebook says are fake don't
seem that way to me."_

Why does this matter? How it "seems" or "reads" to online commentators is
irrelevant. What are these opinions based on - gut feelings?

~~~
lotusleaf1987
|Why does this matter? How it "seems" or "reads" to online commentators is
irrelevant. What are these opinions based on - gut feelings?

The reason it matters to most is transitive trust. Most people trust
Reuters/Business Insider as more authoritative than themselves so if Reuters
and BI signal that they are suspicious, then the public will be. If people
begin to lose trust in Zuck, then they lose trust in FB then...

------
beeeph
It's weird to me that every other commenter on this thread mentions some point
about Paul Ceglia's fraud record, as if Zuckerberg is some angel with a clean
background. IMHO, Ceglia's fraud record is a completely separate incident and
shouldn't be mentioned at all, but if you are going to use it to defend your
stance, you should also mention Zuckerberg and his world-famous history of
lying, stealing, and screwing people out of what they were contractually
promised.

------
ajays
This is impossible! Zuck promised _me_ half of the company back in 2004.
Here's the email:

\--------------

    
    
        Dear Ajays,
        Thanks for the beers last night, and giving me all the
        ideas for "The Facebook". I feel your contribution is
        equal to mine, and so should your ownership. I hope
        50% ownership of The Facebook is acceptable to you?
    
        Mark
        PS: Don't mention this on HackerNews, they may not
        believe you.
    

\--------------

Damn you, Zuck!

------
pathik
Don't know if it's true or not, but if it is, Paul Ceglia could be the
greatest early investor of all time, at least in terms of returns.

------
sunchild
I remember seeing these emails when this story broke. IAAL, and it looked to
me like this is a colorable claim (without predicting its eventual outcome).
It was weird to me that journalists and tech commentators dismissed it so
readily at that time.

~~~
webwright
Seems pretty dismiss-able to me...

1) The guy said it took so long for him to come forward because he "forgot"
about the contract/emails.

2) Selling 50% of the company for $2k seems like an odd move... I don't know
my facebook history perfectly, but didn't Zuck have a business partner with a
lot of money already?

3) The guy has a history of fraud convictions.

~~~
mattdeboard
Being convicted of a felony does not make you forever an untrustworthy lout,
nor a compulsive, criminal liar. It means you committed a crime once and were
prosecuted for it.

~~~
webwright
That's what we call a "straw man argument"-- I never claimed otherwise. I
offered it up as a data point (among several) that caused people to dismiss
the claim. Statistically speaking, I imagine people who've been convicted of
fraud are liklier to commit fraud than those who haven't been.

~~~
mattdeboard
Past performance does not indicate future performance in statistics.

~~~
alxv
Uh, what!?

------
tedunangst
There's something about a lawsuit "building buzz" that disturbs me.

------
Gaussian
Somebody will package this whole thing--along with the rest the question marks
from Facebook's nascent days--into a banal biz school class: "How to avoid
squishy Facebook problems."

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jdavid
There are a lot of powerful people that probably do not want the control of
facebook to be questionable.

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lukeschlather
The Zuckerberg in that email sounds exactly like the Zuckerberg in "The Social
Network."

In other words, like a fabrication.

------
robryan
Even if they are real can someone really claim 50% ownership after this period
of time? Surely the ownership would have to be backdated to around his last
involvement with the company, which would be miniscule compared with
Facebook's valuation today.

~~~
ZachPruckowski
>"Surely the ownership would have to be backdated to around his last
involvement with the company, which would be miniscule compared with
Facebook's valuation today."

That would be a HUGE amount of money. Even if the subsequent investments are
still legit (despite not having the involvement of the main investor),
Zuckerberg owns like 30% of Facebook, so if you assume the primary investor
wouldn't have gotten diluted worse than Zuckerberg, you're looking at tens of
billions. Even if he gets diluted as bad as Saverin did (down to 1/7th),
that's still like $5 billion or so, right? That's shit-tons of money.

~~~
robryan
What I meant was the value of the company at the time, although I'm not sure
how that would work legally.

~~~
ZachPruckowski
Yeah, that's not how equity investing works. Even if you assume he had the
worst in terms of anti-dilution provisions, that's still gonna be like 5% of a
$50B company. If he gets Zuck's anti-dilution provisions, that's more like
20-25% of a $50B company.

~~~
robryan
I think what I said came out bad, what I mean is if the question of ownership
was at a certain value, as in the value at the alleged time of sale can you
really lay a challenge on it at any future point in the company for say that
5% diluted equity. Seems to leave the door open for people to create
technicalities in deals and then treat it as a risk free investment, if they
can challenge for it back at any time into the future.

~~~
ZachPruckowski
Why wouldn't you be able to? Zuckerberg didn't allegedly defraud the plaintiff
of cash, he allegedly defrauded the plaintiff of pre-Round-A Facebook shares.
If I steal a lottery ticket from you and that ticket subsequently wins the
Mega Millions or whatever, I don't just owe you the $5 ticket price, I owe you
the lottery winnings, right?

------
andjones
Mark Zuckerberg no longer owns 50% of the outstanding Facebook stock. He
personally couldn't lose half of Facebook even if he wanted to?

~~~
joshes
He could lose half of his share, I believe.

------
bretthopper
If only Facebook had implemented his Christian Corner(TM) idea. They'd be
worth billions by now.

Maybe Twitter can use it instead.

------
rgrieselhuber
Ridiculous. Did this guy ever show up in a cap table anywhere? He would be
diluted into obscurity by now.

~~~
Gaussian
Why would that be the case? If he had 50% back then -- same as MZ -- his stake
would still be worth billions.

~~~
rgrieselhuber
Zuck has probably (though I don't know for sure) been getting refreshed along
the way.

~~~
davidu
False.

------
pedalpete
Does any of this really matter? Since when is an email a legally binding
contract in ownership of a company?

------
EGreg
This is why you should use echosign. So you can prove things through a third
party that keeps records!

------
FreshCode
How do I downvote paparazzi stories with linkbait titles?

~~~
Terretta
Click "flag".

------
EGreg
How does this prove that the emails were about facebook, and not some other
site?

I guess facebook isn't going to use that angle, though.

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zyfo
_if the emails are fake, it should be easy for Facebook to demonstrate that._

How? It's easy for FB to demonstrate that the emails are real, but not the
opposite. Even if Zuckerberg didn't Delete the emails himself, it is in the
interest of FB to show no trace of emails.

Suppose FB shows no trace of emails, what does it matter? If Ceglia can show
that the emails are indeed real, then that trumps FB. Or am I missing
something here?

~~~
bantic
Honest question: How might one prove that an email is real?

~~~
ultrasaurus
My first startup tried to answer this. Basically you take a secure hash of
every email and store only the hash with a third party (which records the
date, that's the monetization) -- but it's really really hard to sell
companies on preventative technical solutions that involve math.

It works because you don't need to know which emails/files are important --
storing 250 bytes of hashes is practically free and tells you nothing about
the contents, it just authenticates the contents later in court.

~~~
aplusbi
Out of curiosity, how did you verify that the emails were actually sent before
storing the hash. What would prevent me from storing a hash on your server
without sending the email?

~~~
ultrasaurus
We didn't (this story isn't exactly our use case), but think of how much
easier this would be to arbitrate if Ceglia could prove that those emails
existed on Feb 4, 2004 instead of this year.

Now it's possible he could have had the foresight to make and hash fake emails
that he didn't send just in case, but you've still significantly raised the
bar for fraud from just "finding" emails from 2004.

------
shareme
The problem here is it is somewhat obvious that someone waited until FB was
worth something before putting out the legal claim(the lawsuit)..What?

Look at the tone of the emails back and forth between MZ and claimant...given
that tone would not a reasonable person make a legal claim when FB moved to
CA?

That means there is quite a bit missing in the story on both sides...so it
comes down to who has the most to loose...FB or claimant..

Since FB has the most to loose if this gets into full court hearings I see FB
making an attempt to settle..Why?

FB at several 100 billion dollars in valuation probably does not need the
disclosure that valuation may be in error due to past behavior of the
founder/CEO not to mention the obvious decrease in stakeholders values if the
claim is true.

~~~
freshfunk
Waiting until a company is worth something in order to file a lawsuit like
this is neither a problem nor illegal. In fact, it's great strategy.

If it's true, I don't think he deserves 50% or 80%. It's up to the courts.
Also, I think Facebook is what it is today solely because of Zuck and the FB
team.

But I don't see a problem with waiting to file a claim.

