DOJ logo Email this Document!
U.S. Department of Justice
United States Attorney
Eastern District of California
(916) 554-2700
Fax: (916) 554-2900
501 I Street, Suite 10-100
Sacramento, CA 95814

THREE MEN INDICTED FOR EBAY SHILL BIDDING RING THAT AUCTIONED
FAKE DIEBENKORN PAINTING FOR $135,805

United States Attorney John K. Vincent announced today that a federal grand jury returned an indictment charging two California men and one Colorado man for their participation in a ring of fraudulent bidding in hundreds of art auctions on eBay, including one last May in which an eBay user was induced to bid over $135,805 for a fake Richard Diebenkorn painting.

The sixteen-count indictment charges KENNETH FETTERMAN, 33, of Placerville, California; KENNETH A. WALTON, 33, of Sacramento, California; and SCOTT BEACH, 31, of Lakewood, Colorado, with wire fraud and mail fraud for making the fraudulent bids, also known as "shill bids." WALTON is charged with three counts of wire fraud and four counts of mail fraud; BEACH is charged with one count of wire fraud and three counts of mail fraud; and FETTERMAN is charged with four counts of wire fraud, six counts of mail fraud, and six counts of money laundering for promoting the fraudulent bidding scheme using laundered funds. The fraud counts each carry a sentence of up to five years in prison and a $250,000 fine, and the money laundering counts carry a sentence of up to twenty years in prison and a $500,000 fine.

According to Assistant U.S. Attorneys Christopher P. Sonderby and Michael J. Malecek, who are prosecuting the case, the Indictment alleges that the defendants created more than 40 User IDs on eBay using false registration information, and then used those aliases to place fraudulent bids to artificially inflate the prices of literally hundreds of paintings they auctioned on eBay from November 1998 to June 2000.

According to the Indictment, the defendants shielded their true identities from eBay by providing bogus names, postal addresses, and telephone information, and by providing e-mail addresses obtained from free e-mail providers known to collect little or no verifiable information on their account holders. By creating multiple User IDs, the defendants intended to trick other eBay users into believing that the "shill" bids they placed on each other’s items were legitimate. Some of FETTERMAN’s shill bidding User IDs were thriftstorebob, artpro, jgle, estate-queen and big-fat-mamba-jambas; WALTON’s shill bidding User IDs included grecescu, dragul, bububuy, and cheesesix; and BEACH’s shill bidding User IDs included puckchuck, birdaroo, pickinlickingood, and astheworldturns. FETTERMAN hosted auctions typically using the User IDs howdyhi and pogdog; WALTON typically hosted auctions as fouroneone (later advice); BEACH used boyscoutsofamerica to host most of his auctions.

Using these on-line aliases and others, the Indictment alleges that the defendants hosted more than 1,100 auctions on eBay from late 1998 until May 2000, and that they placed fraudulent bids on more than half of those auctions. The total value of the winning bids in all auctions hosted by defendants FETTERMAN, WALTON and BEACH in which they placed shill bids exceeded approximately $450,000. The total value of the high shill bids in these auctions exceeded approximately $300,000. The high shill bid averaged approximately 66% of the final high bid.

The Fake Richard Diebenkorn Auction in May 2000

According to the Indictment, in April 2000, WALTON forged the initials "RD 52" in the bottom right corner of an unsigned painting that FETTERMAN and WALTON had bought for resale from an antique store located in Little Rock, California. WALTON chose those initials to defraud eBay users into believing the painting had been created by renowned artist Richard Diebenkorn.

The Indictment further alleges that on April 28, 2000, WALTON listed "RD 52" for sale on eBay under his alias golfpoorly, and placed digital photos of the painting on the eBay site, including a close-up of the forged initials. In describing the painting to users, WALTON misrepresented that it had been purchased in Berkeley, California, to promote the falsehood that the painting had been acquired from an area where Diebenkorn created artwork in the early 1950's. The defendants then made more than 50 fraudulent bids on the auction of "RD 52," in amounts ranging from 30 cents to $135,505, causing an eBay user from the Netherlands to place a winning bid of approximately $135,805.

Forged Signatures, Suggestive E-mail Accounts, and a Fictitious Art Expert

The Indictment also alleges that defendants placed fraudulent bids on other paintings they sold on eBay that appeared to bear signatures of renowned painters, including another Diebenkorn painting, as well as paintings purportedly signed by William Wendt, Percy Gray, Alberto Giacometti, Clyfford Still and Maurice Utrillo. The Indictment alleges that the signatures of the Still and Wendt paintings were forged. FETTERMAN and WALTON created and utilized User IDs with the names "Giacometti" and "Still" in them to cause eBay users to believe that a family member of the famous artists was bidding in the auctions of those paintings. FETTERMAN and WALTON also created an e-mail account for a fictitious expert on the art of Clyfford Still, and then sent an e-mail to the winning bidder of a painting with the signature "C. Still" on it, congratulating the user for recognizing an "excellent example" of Still’s work. These paintings received bids from unsuspecting eBay users of as much as $33,000.

The charges in the Indictment are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation, and the Sacramento Valley Hi-Tech Crimes Task Force.

eBay and its fraud investigation team provided substantial assistance in this extensive investigation.

###

 


Go to . . . CCIPS Home Page  || Justice Department Home Page

Last updated June 21, 2001
usdoj-crm/mis/jam