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WNYer loses bid to move Facebook suit
Federal judge rejects Allegany County man's try to transfer case

A lawsuit filed by an Allegany County businessman who claims he helped start the Facebook social network site will not be moved to Allegany County Court but will remain in Buffalo's federal court, a judge ruled Monday.

The ruling from U.S. District Judge Richard J. Arcara sides with billionaire Internet entrepreneur Mark E. Zuckerberg, 26, a co-founder of Facebook, which reportedly has more than 500 million users throughout the world.

Arcara did not rule on the merits of the lawsuit filed last year by Paul Ceglia, who lives in Wellsville and claims to have a contract written in 2003 that gives him ownership of 84 percent of Facebook.

A spokesman for Zuckerberg's company labeled Ceglia a "scam artist" in a statement issued Monday afternoon to The Buffalo News.

The judge's ruling focused only on the issue of Ceglia's claim that the case should be heard in Allegany County Court because -- in Ceglia's view -- Zuckerberg is legally a resident of New York State.

Zuckerberg's attorneys argue that Zuckerberg is a legal resident of California, and because the two parties live in different states, the case is a federal court matter.

In a seven-page ruling, Arcara agreed with Zuckerberg.

According to the judge's view of evidence presented during a hearing in October, Zuckerberg's legal residence is an apartment that he rents in Palo Alto, Calif., where Facebook's corporate headquarters is located.

"Zuckerberg is the chairman and CEO of the company and runs its day-to-day operations," Arcara wrote. "He rents an apartment in Palo Alto that is within walking distance to Facebook headquarters. Zuckerberg has provided a sworn affidavit stating that he intends to live in California indefinitely."

Ceglia's lawyers tried to prove that Zuckerberg's legal residence is on Long Island, where he grew up and where his parents live. Arcara did not agree.

Zuckerberg's Facebook business, which he started after leaving Harvard University in 2003, is now reportedly worth $50 billion.

Ceglia claims that he owns 84 percent of the company because -- in April 2003 -- he gave Zuckerberg $1,000 to help start the business. Ceglia said Zuckerberg agreed to give him part of the business.

Ceglia's attorneys, Terrence M. Connors, James W. Grable Jr. and Paul A. Argentieri, say Ceglia has a legitimate contract that he and Zuckerberg signed.

Connors declined to comment Monday afternoon, saying his court papers speak for themselves.

Zuckerberg's attorney, Orin Snyder, has said that Ceglia is "a convicted felon" and that his claims of a binding contract with Zuckerberg are "a scam."

According to evidence presented in Arcara's court, Ceglia pleaded guilty to a felony in Texas about 16 years ago, in a case relating to possession of psychedelic mushrooms.

In 2009, the New York State Attorney General's Office charged Ceglia with defrauding customers of a wood pellet company that he ran with his wife. That case was adjourned in contemplation of dismissal last year and has since been dismissed, Connors said.

Zuckerberg's attorneys are trying to persuade Arcara to dismiss Ceglia's lawsuit.

"The Social Network," an Academy Award nominee for the 2010 best picture, focused on Zuckerberg's early career and another legal action filed by former Harvard University classmates who said they started Facebook with Zuckerberg. The film didn't mention Ceglia.

e-mail: dherbeck@buffnews.com

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