FBI Opens Probe of eBay Art Auction

Wednesday, June 7th 2000, 12:00 am

By: News On 6

SACRAMENTO, Calif. (AP) â€” The FBI is reportedly investigating whether groups of people are driving up prices on eBay and other Internet auction sites by bidding on each others' items.

The probe was prompted by media reports about Sacramento lawyer Kenneth A. Walton's attempts to sell a painting that bidders thought was by the late abstract master Richard Diebenkorn, The Sacramento Bee and The New York Times reported today.

Donald Vilfer, a supervisory special agent in the FBI's Sacramento office, said the bureau turned its attention to the case after reading a June 2 story in the Times outlining how Walton and several other eBay users had engaged in cross-bidding on one another's items and offered glowing testimonials to each other on the site.

Walton, 32, told the newspapers he had not been contacted by the FBI and knew nothing about an investigation. The company said it was cooperating with the investigation. EBay spokesman Kevin Pursglove declined to comment further today.

No one knows if the painting is an original Diebenkorn, which have sold for millions. Walton made no such claim in his eBay listing, calling it a ``great big wild abstract painting'' he said he bought at a garage sale.

The bidding began April 28 at 25 cents. By May 8, a Dutch man named Rob Keereweer won the painting for $135,805. But it never changed hands.

Investigators for eBay voided the sale and barred Walton from the site after discovering that he had placed a $4,500 bid on the painting himself, using an online alias. Walton said that bid was made for a friend, and had ``absolutely no effect on the eventual price for which the painting sold.''

Self-bidding, known as shill bidding, is generally forbidden in the traditional auction world as well as on eBay. Participation in a bidding ring could also be a violation of federal statutes prohibiting mail fraud and wire fraud. Each count carries a penalty of up to five years in prison and a $1 million fine.