3 Indicted in Shill Bidding in Online Art Auction

Three men have been indicted on charges of using 40 online user IDs to pump up the bidding on eBay auctions in a series of scams that cost art buyers $450,000, according to a published report last week.

In one case, the men tried to sell a fake painting purportedly by abstract artist Richard Diebenkorn for $135,000, according to the indictment. The men made 50 bids on the painting before a Dutch buyer offered $135,000, the winning bid. The fake was later discovered and the sale nullified.

Indicted were Kenneth A. Walton, 33, of Sacramento, CA; Kenneth Fetterman, 33, of Placerville, CA; and Scott Beach, 31, of Lakewood, CO. They face 16 counts of wire and mail fraud, with a maximum penalty of five years in prison and $1 million in fines if convicted.

Authorities have contacted Beach and Walton, who was banned from eBay after it was discovered that he had bid on his own item, the FBI said. The location of Fetterman, who also is charged with six counts of money laundering, is unknown.

The practice of bidding on one's own item, known as “shill bidding,” is forbidden by eBay, San Jose, CA. According to the indictment, the men placed shill bids in 1,100 auctions between October 1998 and May 2000.

According to The New York Times, the FBI began investigating the trio after seeing a story in the newspaper about how Walton had bought the supposed Diebenkorn painting at a secondhand store and originally put it up for sale on eBay for 25 cents.

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