yet another new york times ebay fraud article
Andrew Page
3 Men Are Charged With Fraud in 1,100 Art Auctions on EBay
By JOHN SCHWARTZ and JUDITH H. DOBRZYNSKI
Three men accused of trying to sell an abstract painting for $135,805 on the
eBay auction Web site last year were indicted yesterday on charges of taking
part in a bidding ring that cost hundreds of art buyers a total of $450,000.
The 35-page indictment charges the men with 16 counts of wire fraud and mail
fraud. It accuses them of placing "shill" bids in 1,100 auctions between
October 1998 and May 2000, including an auction involving the abstract
painting, which seemed to be the work of the artist Richard Diebenkorn.
Using more than 40 online user ID's, or screen names, like thrift- storebob
and big-fat-mamba-jambas, the indictment says, the bidders buoyed prices and
intended to trick other bidders into believing that the sellers were
respected users of eBay.
Shill bidding, or bidding on one's own auction, is forbidden by eBay rules
and is generally illegal in the traditional auction world. Each count of
mail fraud and wire fraud could, if proved in court, lead to a maximum
penalty of up to five years in prison and $1 million in fines.
Two of the men, Kenneth A. Walton of Sacramento, Calif., and Scott Beach of
Lakewood, Colo., have been contacted by investigators but have not been
arrested. The third, Kenneth Fetterman of Placerville, Calif., has not been
located, said Nick Rossi, an F.B.I. spokesman in Sacramento, where the
indictment was issued. Mr. Fetterman also faces six counts of money
laundering.
The F.B.I. has said that it opened its investigation after reading an
article that appeared in The New York Times on June 2, 2000. That article
outlined how Mr. Walton, a Sacramento lawyer, almost sold the "Diebenkorn"
for $135,805 after putting it up for sale for 25 cents. Mr. Walton paid a
fee to eBay to have the painting listed as a "Featured Auction" in the art
category on the Web site.
According to the indictment, the description of the work in a May 2000
listing said that Mr. Walton had bought the painting at a garage sale in
Berkeley, Calif., before he was married, "and that his child had punctured a
hole in it with a Big Wheel." A picture of the hole showed the initials
"R.D."
The indictment says that "these statements were misrepresentations designed
to deceive potential bidders." It added that Mr. Walton "had never been
married, and had never had a child," and that he bought the picture at a
secondhand shop in Littlerock, Calif.
The price of the painting skyrocketed on speculation that it might have been
created by Richard Diebenkorn. The three defendants made more than 50 bids
on the painting, the indictment says, and a man in the Netherlands placed
the winning bid. The auction company later nullified the sale and suspended
Mr. Walton for bidding on his own painting under at least five Internet
names.
According to the indictment, the bidding ring had eclectic tastes in art,
selling and bidding on hundreds of paintings that seemed to have been
created by artists like Edward Hopper, Alberto Giacometti and Clyfford
Still. The indictment states that Mr. Fetterman and Mr. Walton went so far
as to create user ID's that included the names "Giacometti" and "Still" to
give the impression that "a family member of the famous artists was bidding
in the auctions of those paintings."
The two men also created an e- mail account for Gerald Stone, a fictitious
expert on the art of Still, according to the indictment, and "Stone" sent an
e-mail message to the winning bidder of the sham Still painting,
congratulating the buyer for recognizing an "excellent example" of the
artist's work.
Online auctions remain one of the few raging successes of the faltering
Internet economy, and eBay is by far the largest of the companies offering
auctions online. In the fourth quarter of 2000, eBay had 22.5 million
registered users, more than double the number it had in December 1999; some
six million auctions are taking place at any time, adding up to more than
200 million auctions a year.
The site's visitors spend more than $5 billion a year on items that include
baseball cards and cars. Current auctions include the $5 million Florida
castle of the sculptor Howard Solomon, and 41,686 separate auctions of items
pertaining to the late Dale Earnhardt, the Nascar driver who died last month
in a crash at the Daytona 500.
Because auction sites like eBay are open to all - eBay allows anyone to list
an item for a fee of 25 cents to $2 - the sites have been used to commit a
wide range of swindles. Most of those turn on sellers receiving payment for
goods they never ship, or for products that are damaged or less valuable
than described. The number of auction fraud complaints to the Federal Trade
Commission has leaped to nearly 11,000 in 2000, from 107 in 1997. Last year,
"they accounted for 8 percent of all consumer complaints to the F.T.C.,"
said an agency spokeswoman, Claudia Bourne Farrell.
EBay's critics have long contended that the site could do far more to combat
fraud. But eBay insists that it has taken forceful action to reduce fraud.
It has sporadically used Shill Hunter, software developed by the company to
spot questionable bidding, before the "Diebenkorn" case arose, said Robert
C. Chesnut, deputy general counsel for the company. But in the months since
the case was publicized, the company has improved the software, Mr. Chesnut
said, and has added another software tool to help identify shill bids as
they happen.
Those tools cannot scan every auction, Mr. Chesnut said, but he compared the
software to police with radar guns on the highway: "It sends a message," he
said.
The company, he said, was pleased to hear of the indictments. "It helps send
a message, and educate our user base that this isn't proper," Mr. Chesnut
said. "If you do it, there can be serious consequences."
The United States attorney's office in Sacramento said eBay "provided
substantial assistance" in the investigation.
David J. Carlson, a California art dealer who employs three "e-pickers" to
search for authentic paintings on eBay that he might buy for resale, said
that he had seen a recent drop-off in obviously fraudulent activity on the
site. "Ring bidding is practically nil," he said. "It's as clean as I've
ever seen it."
One bidder in the auction for the "R.D." painting, Mark Hudnall, said that
he had bid $125,000 on the painting and, after being outbid, consulted Mr.
Carlson about the painting. "I was ready to go to $350,000," said Mr.
Hudnall, who lives in the San Francisco Bay area. Mr. Carlson raised doubts
about the painting, and Mr. Hudnall did not raise his bid. "I learned a
great big lesson," Mr. Hudnall said.
Mr. Fetterman's lawyer, Mary French of the federal public defender's office
in Sacramento, said that she could not comment on the case. Mr. Beach could
not be reached for comment.
A lawyer for Mr. Walton, Harold Rosenthal, said yesterday that his client
cooperated fully with the investigation. "He's a good guy, and this is a
dumb, juvenile thing that got out of hand," Mr. Rosenthal said. "It makes me
want to hit him over the head."
Tiffany
news:O5Zp6.49$BB5....@newsr1.maine.rr.com...
> March 9, 2001
>
> 3 Men Are Charged With Fraud in 1,100 Art Auctions on EBay
>
> By JOHN SCHWARTZ and JUDITH H. DOBRZYNSKI
>
> Three men accused of trying to sell an abstract painting for $135,805 on
the
> eBay auction Web site last year were indicted yesterday on charges of
taking
> part in a bidding ring that cost hundreds of art buyers a total of
$450,000.
>
> The 35-page indictment charges the men with 16 counts of wire fraud and
> fraud. It accuses them of placing "shill" bids in 1,100 auctions between
> October 1998 and May 2000, including an auction involving the abstract
> painting, which seemed to be the work of the artist Richard Diebenkorn.
>
> Using more than 40 online user ID's, or screen names, like thrift-
storebob
> and big-fat-mamba-jambas,
Why is "big-fat-mamba-jambas" still a registered user?
Tiffany
the quiet one
addresses for buyers within a week or two of signing up, using the mails.
It would cost them a little bit of money, but would stop this kind of
activity almost overnight.
You can bet though, Ebay won't do it until they're forced to do it.
However, stories like this make it clear that eventually they will be forced
to adopt these measures.
All the regulars on this NG know that shill bidding still occurs, and
everyone here also knows that when its reported, it quite often does NOT get
stopped.
However, very few people know that a class action is currently in the works
of being prepared to make sure that Ebay takes these necessary steps.
These indictments are only a first step in a long process.
Private Attorneys General have almost as much power as the Feds do,
sometimes more.
"Spotillius Maximus aka "Spot"" <*****@ix.netcom.com> wrote in message
news:98ah6q$urn$1...@slb3.atl.mindspring.net...
> x-no-archive: yes
>
> That is nothing. They ought to make deadbeat bidding a capital offense,
> excessive bid retractions a felony, and giving retaliatory feedback a
> misdemeanor.
> Spot
>
>
Kris Baker
Andrew Page wrote
>Three men accused of trying to sell an abstract painting for
>$135,805 on the eBay auction Web site last year were
>indicted yesterday on charges of taking part in a bidding
>ring that cost hundreds of art buyers a total of $450,000.
Aha! When the Diebenkorn issue came up last spring,
it did seem odd that someone would scam only once.
I remember even seeing this "art seller" on TV, bragging
about finding it in the garage.
Too much visibility, too much stupidity. Catches them
every time.
Kris
Acid Queen
aka \"Spot\"" <*****@ix.netcom.com> says...
> x-no-archive: yes
>
> That is nothing. They ought to make deadbeat bidding a capital offense,
> excessive bid retractions a felony, and giving retaliatory feedback a
> misdemeanor.
I'm in favour of bringing back the lash and walking the plank as the
punative measures for enforcing the latter.
AQ
Caroball
>of being prepared to make sure that Ebay takes these necessary steps.
Please tell us who is paying the attorneys????
I can't imagine any attorney worth his salt taking on a weak suit like this
with out a load of $$$$$$ up front.
John
The Avocado Avenger
>Using more than 40 online user ID's, or screen names, like thrift- storebob
>and big-fat-mamba-jambas
Just try and tell me that the journalists at the NY Times didn't giggle
like schoolgirls when they read that.
I'm glad the shillers got busted, but one almost feels sorry for them if
they felt "big-fat-mamba-jambas" was a userid to be identified with on a
national level.
>Two of the men, Kenneth A. Walton of Sacramento, Calif., and Scott Beach of
>Lakewood, Colo., have been contacted by investigators but have not been
>arrested. The third, Kenneth Fetterman of Placerville, Calif., has not been
>located
And remember, folks, when you find Fetterman, address him as
"big-fat-mamba-jambas", just to let him know how much you care.
>A lawyer for Mr. Walton, Harold Rosenthal, said yesterday that his client
>cooperated fully with the investigation. "He's a good guy, and this is a
>dumb, juvenile thing that got out of hand," Mr. Rosenthal said. "It makes me
>want to hit him over the head."
Indeed.
Stacia * The Avocado Avenger * Life is a tale told by an idiot;
http://www.io.com/~stacia/ * Full of sound and fury,
There is no guacamole anywhere. * Signifying nothing.
Simon Jester
"The Avocado Avenger" <sta...@io.com> wrote in message
news:XZdq6.10752$E57.4...@news4.aus1.giganews.com...
> >A lawyer for Mr. Walton, Harold Rosenthal, said yesterday that his client
> >cooperated fully with the investigation. "He's a good guy, and this is a
> >dumb, juvenile thing that got out of hand," Mr. Rosenthal said. "It makes
me
> >want to hit him over the head."
>
> Indeed.
Yes....fraud for over $100,000.00 was just a "dumb, juvenile thing"..."
He should have fun explaining that one to the jury.
Richard Ward
tends to make it look even worse. Judges as a rule tend to come down
pretty hard on attorneys who come before them involved in criminal
activity.
Richard Ward