While this deals with art, the story is related...

F.B.I. Opens Investigation of EBay Bids

Suspicion of Shills Rises as Web Auctions Grow

By JUDITH H. DOBRZYNSKI

he Federal Bureau of Investigation has

opened an inquiry into whether several

eBay users, including the Sacramento

lawyer who almost sold a colorful abstract

painting for $135,805 after putting it up for sale

for 25 cents, committed fraud by bidding up the

prices of one another's online auction offerings.

Donald Vilfer, a supervisory special agent in the

F.B.I.'s Sacramento office, said the bureau

turned its attention to the case after reading a

June 2 article in The New York Times. That

article outlined how Kenneth A. Walton, the

Sacramento lawyer, and several other eBay

users had engaged in cross-bidding on one

another's items and offered glowing testimonials

to each other on the eBay site. Mr. Walton has

denied operating in concert with others.

The bureau's office in Sacramento has been

watching the episode since last month, when

eBay voided the sale and suspended Mr. Walton

for bidding on his own painting, whose price had

skyrocketed on speculation that it might be by the

renowned California artist Richard Diebenkorn.

Self-bidding, known as shill bidding, is forbidden

by eBay rules and is generally illegal in the

traditional auction world.

Participation in a shill-bidding ring would run

afoul of federal statutes prohibiting mail fraud

and wire fraud; each count could carry a

maximum penalty of up to five years in prison

and $1 million in fines.

F.B.I. headquarters in Washington acknowledged

that there have been other allegations of shill-bidding rings online, but

agency officials declined to say if any other cases are under investigation.

In addition to Mr. Walton, who used at least five Internet names to buy and

sell on eBay (including golfpoorly, cheesesix, and grecescu), eBay

suspended eight Internet names registered to other individuals after

investigating bidding patterns in Mr. Walton's and related auctions.

Last week, after using its proprietary "shill hunter" software to review

bidding by several additional Internet names at the request of The Times,

eBay warned two more users. All told, the company has disciplined 15

Internet names since Mr. Walton's auction.

(complete story and more links to related topics, below)

http://www10.nytimes.com:80/library/tech/00/06/biztech/articles/07ebay-fraud.html