Two years ago federal prosecutors indicted Paul Ceglia for allegedly using forged documents and a sham lawsuit to claim a fifty percent interest in Facebook Inc., and now the social network company and its CEO Mark Zuckerberg have sued several law firms and lawyers -- including plaintiff's firm Milberg LLP and two of its partners -- who represented the scam artist as reported by Fortune Magazine.
The complaint was filed in a New York court, and alleges:
The Defendant lawyers and their client, Paul D. Ceglia, conspired to file and prosecute a fraudulent lawsuit against Facebook and its founder and CEO Mark Zuckerberg, based on fabricated evidence, for the purpose of extorting a lucrative and unwarranted settlement. The lawyers representing Ceglia knew or should have known that the lawsuit was a fraud -- it was brought by a convicted felon with a history of fraudulent scams, and it was based on an implausible story and obviously forged documents. In fact, Defendants' own co-counsel discovered the fraud, informed the other lawyers, and withdrew. Despite all this, Defendants vigorously pursued the case in state and federal courts and in the media. Ultimately, the federal court hearing the case dismissed it as a fraud and a federal grand jury indicted Ceglia for the same fraud. Plaintiffs Facebook and Zuckerberg bring this lawsuit for malicious prosecution and deceit and collusion with intent to deceive the court in violation of N.Y. Judicial Law section 487, to recover damages they incurred as a result of Defendants' fraudulent lawsuit.
Among those law firms and individual lawyers sued are Milberg LLP and its partners Sanford P. Dumain and Jennifer L. Young.
A few years ago an earlier incarnation of the Milberg firm was indicted for its alleged role in a decades-long conspiracy pursuant to which serial plaintiffs were paid kickbacks from court-approved attorneys' fees in the cases. Several former partners were sent to prison, and the firm avoided further prosecution after paying a $75 million fine and employing a compliance monitor for two years. At the time of the June 2008 settlement between Milberg and the feds Sanford Dumain said: "We can now say to courts and clients that we are not a firm under indictment," and "we needed an understanding from the government that no one currently at the firm had any knowledge of the wrongdoing."
Further reading that may be of interest: