Facebook Fugitive Ceglia Wins Reprieve to Stay in Ecuador

(Bloomberg) -- A New York man accused of trying to cheat Facebook Inc. founder Mark Zuckerberg out of half the company will remain out of the reach of U.S. authorities after Ecuador’s president issued a surprise order allowing him to remain in the South American country.

Paul Ceglia, 45, will be released from a Quito jail after President Lenin Moreno overruled his nation’s courts and denied a U.S. request that Ceglia be returned to New York. Ceglia has been locked up since he was arrested in August on the coast of Ecuador, after spending more than three years on the run from American law enforcement.

In his two-page order made public Friday, Moreno cited the past failure of the U.S. to extradite accused criminals wanted in Ecuador, without naming individuals. Ecuador has been trying for years to win the extradition of two former bankers, William Isaias and his brother Roberto Isaias, who were convicted there in 2012 in their absence. The U.S. arrested them in February, then released them.

Ceglia has a one-year-old son, Orayan, who was born to Ceglia and his wife Iasia while they were on the lam. Moreno also pointed to the welfare of the child, an Ecuadorian citizen by birth, in deciding to overrule his nation’s highest court. That court granted the U.S. extradition request in November and affirmed it in February in an appeal.

"After eight years of denial of justice, I finally found justice in Ecuador, a country I consider to be my home," Ceglia told his lawyer, Roberto Calderon, after receiving the news on Friday in Quito’s El Inca jail, where he’s been confined since August. Calderon said his client appeared "very thin and weak, but happy."

"That’s Paul Ceglia one, Facebook zero," said Calderon. The lawyer said it may take about 15 days for Ceglia to be released from jail. Ceglia has a pending claim for asylum in Ecuador.

Dawn Dearden, a spokeswoman for U.S. Attorney Geoffrey Berman in New York, declined to comment. A Facebook representative didn’t immediately return an email seeking comment.

Moreno’s office and Ecuador’s foreign and interior ministries declined to comment.

Ceglia sued Facebook and Zuckerberg in 2010, claiming that a contract he signed with Zuckerberg in 2003 gave him 84% of the company that would grow into the world’s biggest social network. Ceglia later reduced the demand to half. Zuckerberg, who in 2003 was a freshman at Harvard University, has said he signed an unrelated contract to do website coding for Ceglia.

U.S. prosecutors charged Ceglia with wire fraud and mail fraud in 2012, saying he forged the contract, destroyed evidence and created fake emails between himself and Zuckerberg to support his claim.

Moreno’s order comes just weeks after he removed the asylum status of WikiLeaks founder Julian Assange and forced him out of Ecuador’s embassy in London, where Assange spent almost seven years. Assange, accused of 17 counts related to endangering U.S. national security, is now fighting extradition to the U.S.

"It’s unusual for a country’s nationals to not be sent back," said Harry Sandick, a former federal prosecutor who’s now a partner in the Manhattan firm Patterson Belknap Webb & Tyler LLP. Sandick said Moreno’s decision may reflect unhappiness with U.S. foreign policy.

Ceglia fled his Wellsville, New York, home while on house arrest awaiting trial in March 2015. He removed an ankle bracelet and left with wife, their sons Joseffinn, then 11, and Leenan, then 10, and the family dog, Buddy. They headed south with a hired driver, disguised as an Amish family, Ceglia said in a jailhouse interview last year. The family hid in the U.S. for months before making their way to Ecuador.

Difficult Extraditions

Ecuador has had difficulties getting suspects or convicted people sent home from the U.S. under an extradition treaty that dates from 1872. When U.S. Vice President Mike Pence visited the country last year, he was asked to help in extraditing 44 people sought by Ecuador’s high court.

Ecuador has failed to win the return of people charged with or convicted of embezzlement and graft. Along with the Isaias brothers, who fled to Miami after a 1999-2000 banking crisis, Ecuador also wants the extradition of former central bank president Pedro Delgado, a cousin of former president Rafael Correa, former comptroller General Carlos Polit and people accused of embezzling from state-run oil company Petroecuador.

Moreno said that an extradition order isn’t binding on Ecuador’s president, who may overrule it on the grounds of reciprocity, national security or other reasons. Despite the earlier court order calling for Ceglia’s extradition, a different court ruling in an alimony case ordered him to remain in Ecuador to care for his young son.

“For the most part, I think it’s a good thing for him,” said Robert Ross Fogg, the Buffalo, New York, attorney who represented Ceglia in the U.S. criminal case. Fogg said he hopes Ceglia may one day return to fight the charges at trial.

“I think he has a solid case,” Fogg said.

To contact the reporters on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net;Stephan Kueffner in Quito at skueffner1@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth, Peter Jeffrey

©2019 Bloomberg L.P.