Mr. Ceglia. (facebook.com)

You've got to hand it to Paul Ceglia, the man who would own Facebook. Most people, when charged with criminal fraud by the U.S. government, would abandon the civil lawsuit that got them into trouble in the first place. Not Mr. Ceglia. This onetime wood-pellet salesman is continuing his quixotic quest to claim a slice of the social network.

The Wall Street Journal reports that he's now suing to stop the criminal proceedings against him, accusing U.S. Attorney General Eric Holder and New York U.S. Attorney Preet Bharara of violating his constitutional rights.

This is starting to sound less Law and Order, more junior varsity mock trial. 

Yesterday, Mr. Ceglia's representatives filed a complaint alleging that Misters Holder and Bharara are violating his first amendment rights, claiming they "intentionally, willfully and maliciously interfered with Plaintiff's enumerated protected right by commencing a federal criminal prosecution." He's well within his rights to file a lawsuit, the complaint argues, and the federal government has no right to prosecute him for doing so. (This of course ignores the fact that the case against him revolves around documents that the federal government says are false.)

As the complaint puts it:

Acting in their official capacities and under color of legal authority, with malice aforethought, Defendants commenced a federal criminal proceeding arising out of the proper and good faith filing of Plaintiff's civil lawsuit against a United States Citizen.

Mr. Ceglia and his representatives take their accusations a step further, playing up the fact that Mr. Bharara previously worked at Gibson Dunn, the firm representing Facebook in Mr. Ceglia's civil suit.

It's all in the service of attempting to get the criminal case tossed or, to put it in fancy lawyer talk, Mr. Ceglia "brings the instant action to restrain and enjoin the Government from continuing to violate Plaintiff's First Amendment rights."

Say what you will about Mr. Ceglia--the man sure knows how to stick to his story.

Mr. Ceglia. (facebook.com)

Paul Ceglia, the penny-ante hustler who once attempted to convince the world he was part owner of Facebook, has been indicted on counts of wire and mail fraud. Bloomberg reports that, after hearing the charges and evidence against Mr. Ceglia, a grand jury has deemed the U.S. attorney's case strong enough to go to trial.

Things aren't looking too good for Mr. Ceglia, who stands accused of faking both a contract with the wunderkind coder and emails to support his case. Turns out the federal government will not abide by (allegedly!) bullshit lawsuits (allegedly!) meant to wrest billion-dollar companies from their owners.

Nor has the man's luck exactly taken a turn for the better since his arrest. His lawyer wants to withdraw from the case for "personal reasons," and he might end up on the hook for Facebook's legal fees.

The indictment means that, unless Mr. Ceglia strikes some sort of a plea bargain, this case will go to trial. Presumably that means Zuck--a key figure in this drama--will have to testify. Presumably such an occasion is on the brief list of circumstances in which Zuck puts on a suit.

Mr. Ceglia. (facebook.com)

Paul Ceglia's lawsuit claiming partial ownership of Facebook is based, in part, on a purported contract between Mr. Ceglia and Mark Zuckerberg. Facebook's lawyers have said time and again that Mr. Ceglia's evidence was little more than forgery, and it seems the federal government concurs. In his complaint,  Postal Inspector Douglas Veatch suggests that Mr. Ceglia took an unrelated contract with Mr. Zuckerberg and simply replaced the first page with the supposed smoking gun.

But what surprised us was just how (allegedly!) sloppy his cut-and-paste job was.

Here's what Inspector Veatch had to say:

"There are significant difference between the widths of the columns, margins, and the space between columns on pages one and two of the Alleged Contract. Specifically, the column widths are wider on page one than on page two, while the widths of the margins and the space between columns are narrower on page one than on page two."

That's right: If the complaint is accurate, Mr. Ceglia couldn't be bothered to do the kind of basic margin tweaking that's practically a national art among America's teenagers. The paragraph spacing was similarly mismatched. And then there's this, the crowning insult to the intelligence of every single lawyer involved in this sorry case:

On page one of the Alleged Contract, there is a reference to "Street Fax LLC." Based on my review of certain records maintained by the New York Department of State, I have learned that Street Fax, LLC" was formed on or about August 26, 2003, approximately four months after the Alleged Contract appears to have been signed by "Mark Zuckerberg" and "Paul Ceglia."

Has any set of scare quotes ever dripped more heavily with contempt? Nor can we blame Inspector Veatch. If you're going to go after the hottest tech startup since Google, try to show a little professionalism in your execution.

Illustration by David Saracino.

For years, Facebook's lawyers have been arguing that Paul Ceglia's claim to at least half of Facebook was baseless. Even federal judges have been moved to strong language by Mr. Ceglia's lawsuit, which offered up a Microsoft Word document of cut-and-pasted emails between him and Mark Zuckerberg as proof that he helped fund Mr. Zuckerberg's work in the early days of development and was therefore entitled to a share of Facebook.

Today, Manhattan U.S. Attorney Preet Bharara has come out with a surprising complaint that screams "Team Zuck." In the complaint, the U.S. Attorney's office has charged Mr. Ceglia with an attempt to con Facebook to the tune of several billion dollars. Mr. Ceglia, 39, was arrested in Wellsville, N.Y., this morning on one count of mail fraud and one count of wire fraud. Each count carries a maximum sentence of 20 years in prison.

This isn't Mr. Ceglia's first brush with the law. In our profile of Mr. Ceglia, we covered his 2009 arrests on grand larceny charges related to his wood pellets company, which was shut down by the attorney general. In the Facebook case, the involvement of the U.S. Attorney's office appears to be triggered by what Mr. Bharara calls "an attempted corruption of our legal system through the manufacture of false evidence." The mail fraud charge comes from his sending those forged documents via the post office, and the wire fraud charge relates to his accused email fakery.

On the count of wire fraud, the complaint claims that Mr. Ceglia, having devised his scheme, "did transmit and cause to be transmitted by means of wire communication in interstate and foreign commerce, writings, signs, signals, pictures, and sounds for the purposes of executing such scheme and artifice." On the count of mail fraud, it also says Mr. Ceglia "would and did place and cause to be placed in a post office and authorized depository for mail matter, matters and things to be sent and delivered by the Postal Service" that were, in short, total bunk.

In today's press release, U.S. Postal Inspection Service Inspector-in-Charge Randall C. Till added: “When Mr. Ceglia allegedly decided to take advantage of Mark Zuckerberg and Facebook, he underestimated the resolve of the Postal Inspection Service to bring him to justice for illegal use of the U.S. Mail.”

Facebook also offered a statement to Betabeat through its attorney, Orin Snyder, a partner at Gibson Dunn: "We commend the United States Attorney for charging Ceglia with federal crimes in connection with his fraudulent lawsuit against Facebook. Ceglia used the federal court system to perpetuate his fraud and will now be held accountable for his criminal scheme."

This is breaking news, and we'll update as we learn more details. For now, here's the the press release from Mr. Bharara's office, and the complaint is below:

Years later, in April 2011, following an initial lawsuit in New York State court, CEGLIA, through counsel, filed a 25-page amended complaint in federal court in the Western District of New York claiming that Zuckerberg, in the April 2003 contract, had promised him at least a 50% interest in “The Face Book” project that ultimately became Facebook, Inc. In support of his claim, CEGLIA attached a copy of what he alleged to be the two-page April 28, 2003 contract between himself and Zuckerberg (“Alleged Contract”). The first page of the Alleged Contract contained language giving CEGLIA “a half interest (50%) in the software, programming language and business interests” derived from the expansion of “The Face Book” or “The Page Book.” The second page of the Alleged Contract contained the signatures of CEGLIA and Zuckerberg. Also in support of his claim, CEGLIA described emails he alleged to have exchanged with Zuckerberg beween July 2003 and July 2004 via Zuckerberg’s Harvard email account (“Purported Emails”). The Purported Emails reflected conversations between CEGLIA and Zuckerberg about the design and functionality of “The Face Book” website, as well as ways to generate income from its expansion. The Purported Emails also reflected conversations in which Zuckerberg offered CEGLIA money to “repair [their] business relationship.”

As alleged in the Complaint, however, CEGLIA’s claim to having a contractual right to 50% of Facebook was entirely false. CEGLIA simply replaced page one of the real contract with a new page one doctored to make it appear as though Zuckerberg had agreed to provide CEGLIA with an interest in Facebook. And CEGLIA doctored, fabricated and destroyed evidence to support his false claim. The evidence demonstrating CEGLIA’s lawsuit is a fraud included the following:

• A search of one of CEGLIA’s hard drives uncovered a copy of the real April 28, 2003 contract, which CEGLIA had emailed to an attorney in March 2004, years before his lawsuit against Facebook and Zuckerberg (“Real Contract”). Page one of the Real Contract does not refer to Facebook in any fashion, let alone give CEGLIA a 50% interest in it.
• The spacing, columns, and margins of page one of the Alleged Contract are different from the spacing, columns, and margins of page two of the Alleged Contract. No such differences exist as between the pages of the Real Contract.
• A review of Harvard University’s email servers reveals that none of the Purported Emails appears in Zuckerberg’s email account as of February 2012. Further, none of the Purported Emails appears in Harvard’s backup tapes for Zuckerberg’s emails as they existed in October 2010, nor do any of the Purported Emails appear in Harvard’s backup tapes for Zuckerberg’s emails as they existed in November 2003. The emails between Zuckerberg and CEGLIA that do exist in Zuckerberg’s email account do not show any discussion of Facebook and, contrary to Ceglia’s claim, show that Zuckerberg was asking CEGLIA for money he was owed in 2004, not offering to give CEGLIA money.
• A forensic expert examined CEGLIA’s hard drives and other electronic media and found evidence that in February 2011, CEGLIA deleted files relating to the April 2003 contract with Zuckerberg and replaced them with new files that supported his lawsuit but that were backdated to make it appear as if those the files had in fact been created in 2003 and 2004. Further, a CD Rom revealed that CEGLIA had done test runs on fabricating some of the documents, including the Purported Emails, upon which his lawsuit relied.

Jackin' ur clickz.

When NASA's computers get infected, government officials don't mess around.

In a 62-page indictment unsealed in the Southern District of New York today, a number of parties, including Preet Bharara's office, the New York office of the FBI, and NASA's Inspector General brought charges against six Estonian nationals and one Russian national for a "massive and sophisticated" Internet fraud scheme.

The clickjackers infected 4 million computers in more than 100 countries with malware, including at least 500,00 computers in the U.S. that belonged to NASA, educational institutions, businesses and non-profits.

The scheme, which included a fake advertising agency, altered settings on infected computers by letting the accused "digitally hijack" Internet searches and re-route them to certain websites and ads.  The indictment also says the men used the DNS Changer Malware and rogue DNS servers to replace legitimate ads on websites and got paid for it.

The defendants allegedly made $14 million on the scam, which began in 2007.

The indictment is full of juicy details of the scam, which involved searches for iTunes, Netflix, and the IRS and fraudulent ads on the Wall Street Journal, Amazon.com and ESPN.com. For example:

When the user of an infected computer visited the ESPN website, a prominent
advertisement for “Dr. Pepper Ten” had been fraudulently replaced with an ad for
a timeshare business.

Or:

When the user of an infected computer clicked on the domain name link for the
official government website of the Internal Revenue Service, the user was instead
taken to the website for H&R Block, a major tax preparation business.

The six Estonians were taken into custody yesterday, but the Russian national is still at large. In addition to the arrest, the U.S. seized computers, froze financial accounts, and disabled dozens of  "rogue DNS servers" in New York and Chicago.

Mr. Bharara, the Manhattan U.S. Attorney who never fails to pepper his indictments with amusing admonitions,  said: “These defendants gave new meaning to the term, ‘false advertising.’" Badum-bump.

Accused of dealing from the bottom of the digital deck.

Ok, this one is not about a New York tech company per say, but since its happening in our backyard and effects a ton of folks on the internet, we thought it was worth mentioning. The long and short of it, Preet Bharara of the Souther District says Full Tilt Poker and its board of directors defrauded players to the tune of $440 million.

The complaint names executives from Full Tilt alongside famous poker pros like Chris Ferguson and Howard Lederer. Mr. Bharara said in a statement that Full Tilt, "cheated and abused its own players to the tune of hundreds of millions of dollars" and that "insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited with the company."

The presser from the US Attorney's office is below.

PREET BHARARA, the United States Attorney for the Southern District of New York, announced today the filing of a motion to amend the forfeiture and civil money laundering complaint in the matter of United States v. PokerStars, et. al.  The proposed Amended Complaint alleges that Full Tilt Poker and its Board of Directors, including Raymond Bitar, Howard Lederer, Christopher Ferguson and Rafael Furst, defrauded players by misrepresenting that their funds on deposit in online gambling accounts were safe, secure, and available for withdrawal at any time.  In reality, Full Tilt Poker did not maintain funds sufficient to repay all players, and in addition, the company used player funds to pay board members and other owners more than $440 million since April 2007.  On April 15, 2011, the U.S. Attorney's Office for the Southern District of New York filed the original complaint against Full Tilt and two other Internet poker companies and unsealed a criminal Indictment charging eleven defendants, including Bitar, with bank fraud, illegal gambling and money laundering offenses.