Facebook has called a legal claim for half the company's stock based on a contract allegedly signed in 2003 a "brazen and outrageous fraud".
In a new court filing, the company said that the supposed contract signed between chief executive Mark Zuckerberg and convicted fraudster Paul Ceglia in 2003 to develop thefacebook.com, giving Ceglia half of the company for a $1,000 investment, is a "doctored contract and fabricated evidence".
"The purported contract was signed in 2003, yet the plaintiff waited until 2010 to file this action – a seven-year delay during which the plaintiff remained utterly silent while Facebook grew into one of the world's best-known companies," Facebook said. "The plaintiff has now come out of the woodwork seeking billions in damages."
Ceglia claims that he hired Zuckerberg, then a Harvard student, in 2003 to code for a web site called streetfax.com, which would provide Google Street View-type images for insurance companies.
He also claims to have hired Zuckerberg to develop a social networking site called thefacebook.com. He initially claimed more than 80 per cent of Facebook, citing development overruns, but has since offered to settle for half of the multi-billion dollar company.
The new court filing admits that Zuckerberg did sign a contract to work on streetfax.com after meeting Ceglia in a Boston hotel, but denies discussing any social networking sites.
"At no time did Zuckerberg enter into any agreement, written or otherwise, with the plaintiff or anyone affiliated with the plaintiff concerning Facebook or any similar social networking service or web site," Facebook said.
The case could be a serious impediment to Facebook's widely predicted initial public offering, which is expected within a year. A court has granted a limited freeze on Facebook's assets until the issue is resolved.
The case comes as Facebook buried a legal claim by the Winklevoss twins, who say that Zuckerberg stole their idea to launch Facebook.
The Winklevoss twins settled their suit in 2008 for $65m but have since sought to take their case to the US Supreme Court, a route considered by experts to be doomed to failure.
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