Three Charged In eBay Painting Case

S A N   J O S E, Calif., March 9 -- Three men were charged Thursday withjoining together to drive up prices in Internet art auctions oneBay, including one in which a Dutch man bid $135,000 for a fakeRichard Diebenkorn painting.

The men allegedly created more than 40 different user names oneBay with false registration information, then used those aliasesto inflate bids on paintings they were auctioning.

The scheme garnered bids totaling $450,000 in hundreds ofauctions from November 1998 to last June, according to federalprosecutors in Sacramento.

First Online Case

Self-bidding, known as shill bidding, is forbidden by SanJose, Calif.-based eBay Inc. and is generally illegal in traditionalauctions. EBay's deputy general counsel, Rob Chesnut, said hebelieved this was the first criminal case to result from allegedshill bidding online.

Indicted were Kenneth A. Walton, 33, a lawyer in Sacramento;Kenneth Fetterman, 33, of Placerville, and Scott Beach, 31, ofLakewood, Colo. They were charged with a total of 16 counts of wireand mail fraud, which carry up to five years in prison, a $250,000fine and possible restitution to victims.

Fetterman also is charged with money laundering, which carriesup 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 dowhatever he can to make it right," Rosenthal said.

Beach did not return a message seeking comment. No listing forFetterman could be found.

According to the federal indictment, Walton put the initials"RD 52" in the bottom right corner of an unsigned orange andgreen abstract painting that he and Fetterman had picked up at anantique store.

Painter's Work Sold For Millions

Prosecutors said Walton then listed the painting last year oneBay — with photos showing the signature — and wrongly said he hadbought it in Berkeley, where Diebenkorn worked in the early 1950s.