SAN JOSE, Calif., March 8 — Three men were charged Thursday with joining together to drive up prices in Internet art auctions on eBay, including one in which a Dutch user bid $135,000 for a fake Richard Diebenkorn painting.
THE MEN ALLEGEDLY created more than 40 different user names on eBay with false registration information, then used those aliases to inflate bids on paintings they were auctioning.
The scheme garnered bids totaling $450,000 in hundreds of auctions from November 1998 to June 2000, according to federal prosecutors in Sacramento.
Self-bidding, known as shill bidding, is forbidden by San Jose-based eBay Inc. and is generally illegal in traditional auctions. EBay’s deputy general counsel, Rob Chesnut, said he believed this was the first criminal case to result from alleged shill bidding online.
Kenneth A. Walton, 33, a lawyer in Sacramento; Kenneth Fetterman, 33, of Placerville, and Scott Beach, 31, of Lakewood, Colo., were charged with a total of 16 counts of wire and mail fraud, which carry up to five years in prison, a $250,000 fine and possible restitution to victims.
Fetterman also is charged with money laundering, which carries up to 20 years and a $500,000 fine.
Walton is cooperating with the investigation, said his attorney, Harold Rosenthal.
“He feels very bad about all of this and is going to do whatever he can to make it right,” Rosenthal said.
Beach did not return a message seeking comment. No listing for Fetterman could be found. According to the federal indictment, Walton put the initials “RD 52” in the bottom right corner of an unsigned orange and green abstract painting that he and Fetterman had picked up at an antique store.
Prosecutors said Walton then listed the painting on eBay — with photos showing the signature — and wrongly said he had bought it in Berkeley, where Diebenkorn worked in the early 1950s.
The three men allegedly made more than 50 phony bids on the painting, driving its price from 30 cents to $135,505, before a Dutch man stepped in and bought it for $135,805. Diebenkorn’s real paintings have sold for millions.
Investigators for eBay later dissolved the sale and barred Walton from the site after discovering he had placed a $4,500 bid on the painting himself. Walton has said that bid was made for a friend.
The indictment said the three men also drove up bids together on another work purportedly by Diebenkorn and artists such as Alberto Giacometti, Clyfford Still and Maurice Utrillo. Fetterman and Walton allegedly came up with fake user names with “Giacometti” and “Still” in them, to make it seem as if the painters’ family members were bidding.
In one case, prosecutors said, the men created a phony e-mail account for a supposed expert on Still and congratulated the buyer for recognizing an “excellent example” of the American abstract expressionist’s work.
EBay rules prohibit overt shill bidding and even legitimate bids from relatives and roommates of sellers. Chesnut said eBay constantly is monitoring for violations of that policy. Still, he suggested that buyers check the bid histories of their fellow auction participants to see if they notice suspicious patterns.
“Anything that might in any way undermine trust in the community is unacceptable,” Chesnut said.
posted on March 9, 2001 05:37:48 AM
There was a thread on the phony Diebenkorn and the Walton guy and his shilling on the phony piece a few months ago. It was a bald-faced con job.
According to the LA Times, the lawyer for Walton "said the scheme started out innocently." Harold Rosenthal continued, "What first appeared to be clever mischief eventually got out of hand."
Since when is lying, deceit, shilling, and theft clever mischeif?
And the perpetrator is someone who should know better, an educated man, a lawyer for goodness sakes.
I guess my dad was right when he told me that lawyers were nothing but paid liars.
Ebay has just instituted a change making it MUCH MORE DIFFICULT to identify shillers by way of e-mail addresses. Now you CANNOT easily see the e-mail addresses of other bidders!
That used to be one of the easiest and quickest ways to catch on to a shiller.
posted on March 9, 2001 02:39:25 PMlotzamags: Ahhhh, but keep in mind that eBay now has "special" software that allows them to catch shill bidding, so they no longer need the members to catch the shill bidders for them....
*SNORT*
Sorry -- just couldn't say that with a straight face!
Barry
---
The opinions expressed above are for comparison purposes only. Your mileage may vary....
posted on March 10, 2001 12:23:45 AM
Actually it is interesting to conjecture on the method that the FBI must have used to catch the shilling. I would assume that there is a cookie passed every time a bid is made and that the cookie will contain info about IP address and probably some other info about the type of system the bid is coming from. I would have to go back and read ebay's privacy policy but that is how Yahoo does it. Even though Yahoo says that they only capture your IP address for advertising, sales and marketing purposes many a damaging poster on the financial boards has had their IP address turned over to plaintiffs based on a flimsy court subpoena relating to some John Doe.
To get around this one would have to delete the cookies off of the system every time a bid was made and use some anonymous dial-up like Netzero or Bluelight. In addition something like a freedom.net firewall might help if the custom nym feature is purchased that hands out a fake IP address. Even so all of this would fall down if the case is really aggravated as the telco logs would be a giveaway if law-enforcement went so far as to get the proper court order for telco switch log access, which is how most of the really big fish get caught.
thx,
snipekiller
[ edited by snipekiller on Mar 10, 2001 12:35 AM ]
posted on March 10, 2001 12:47:29 AM
A few months ago I caught Home Shopping Clud (collectibles.com) shilling a $10,000 sports card. They used the EBAY auction OR AIR to show the value of the card they were selling. I took the info and looked up the auction. There were 3 bids by 2 bidders. The opening bid was $100.00. Second bid was $125. Third bid was over $5,000!!!! That means the second bidder had to bid SUBSTANTIALLY more than the $125.00 his bid was automatically raised to and then somebody else had to outbid him to get it THAT HIGH.
I looked up the bidders and the seller. BOTH bidders were "no longer registered users". Their user ID info was false but BOTH were from Nashville (HSCs home).
I contacted the seller to see if he ever got paid and told him what was happening. No surprise he never responded.
I told EBAY about it. They too failed to respond.
The BIG BOYS stick together. I guess when you are making the big bucks you don't rock the boat. Some of your money might wash overboard.
Ebay cares about only one thing. That's right$$$$$$$$$$$$.
They only do what they absolutely have to to keep buyer confidence up. The rest of the time they are figuring out new ways to seperate you and I from OUR $$$$$$.
I also saw on TV the Home Shopping people using print outs of ebay bids to sell the cards on TV. I also looked up the bids and found that a bidding war between two bidders had pushed up the bid really high. Other similar cards didn't get the same bids.
It was bad enough that they were showing Ebay's auctions to help sell theirs, but I did even think about it actually being the auction people doing it!
As for your contacting Ebay, did you send it to the right place? I have sent emails to ebay for various problems in the last couple of years, and I can say that I have never had an email go un-answered.
Of course, many had the wrong answers, answers that made no sense, answers to questions that I never asked....
posted on March 10, 2001 11:49:45 AM
Snipekiller is right-
Cookies can be used to track IP addresses, the use of custom nym features would reflect a fake IP address and the telco logs could be used to track the timing of access.
However, after they impounded the crooks computers, the easiest way to catch them would be to check their history/cache of their Web Browser applications.
Most of the Internet crooks that get caught aren't technocally savvy enough to purchase IP masking / nym features software and they also forget to change the History Memory defaults that are included when the Web Browser is installed. In many cases, IE defaults to 24 days...
I'll give you a case on point...
I was formerly a Webmaster for a software company that sold to public housing departments of municipal government organizations.
Most of the end users of our interactive web site had low-end systems with 8 to 16 Megs of memory (government issue). One of the presidents of a large public housing department in the "Great Northwest" was constantly calling me with questions about why his system was timeing out when trying to view our site. My standard response to him was to walk him through clearing his browser cache. Once this was done, he experienced no problems in viewing our site.
It became very apparent to me that he was spending most of his day surfing the Net.
What I later found out was... he was surfing the net to gather ideas about how he could murder his wife and get away with it. His wife was indeed found dead after she had been missing for 3 days. However, the guy was charged with her murder because the police impounded his office computer and found all of the information they needed to charge him stored safely away in his Web Browser's cache!
