A state judge has issued a temporary restraining order against social networking giant Facebook, preventing it from selling any assets in the wake of a lawsuit filed by a man claiming that founder Mark Zuckerberg owes him 84% of the company.
New York resident Paul Ceglia claims that in 2003, Zuckerberg contracted him to build a web site in exchange for $1,000 and 50% ownership of the final product. He would get an additional 1% stake for every day after Jan. 1, 2004 until the site was completed. That site, according to the complaint, was Facebook.
The complaint can be read online, and the included copy of the 2003 contract, which refers to “The Face Book,” reads “It is agreed that [Ceglia] will own a half interest (50%) in the software, programming language, and business interests derived from the expansion of the service to a larger audience.”
The temporary injunction issued by New York Allegany County judge Thomas Brown prevents Facebook from raising capital by selling shares.
Facebook is fighting to dismiss the restraining order. The company issued a statement saying, “We believe this suit is completely frivolous and we will fight it vigorously.”