"This points out the fact that eBay and federal authorities take issues suchas `shilling' very seriously." Self-bidding, also known as shill bidding, isforbidden bye Bay rules and illegal in much of the traditional auctionworld. But crime experts said the explosion of Net auctioneering was provinghard to police, giving fresh life to old scams. "We're looking at a numberof different types of traditional fraud which are now taking place through anew media," said Nick Rossi, an FBI spokesman in Sacramento. Rossi declinedto comment on the eBay investigation, which Pursglove confirmed startedafter a May art auction amazed art aficionados around the world.

Sacramento-area lawyer Kenneth Walton listed the abstract painting on thesite with an opening bid of 25 cents, saying he had found it at a Berkeley,Calif, garage sale and his wife refused to let him keep it because "it lookslike it was done by a nut-case." But the style of the piece, its purportedage, and the carefully photographed "RD52" signature included on the eBayWeb page prompted frenzied bidding by buyers who hoped the painting was infact an undiscovered painting by the late California modernist RichardDiebenkorn - whose works sell for millions at established auctions.

The painting eventually sold to an amateur Dutch collector for a whopping$135,805. But in the glare of media publicity surrounding the deal, Walton'sstory began to collapse and eBay voided the sale after saying it haddetected "shill" bids during the auction. According to both the New YorkTimes and the Sacramento Bee, the FBI is investigating whether Walton waspart of a ring of people who fraudulently cross-bid on each other's eBayofferings to run up prices. "It ranges from wire fraud to mail fraud. It'sbasically a fraud scheme," one FBI source told the Bee. Pursglove said that,while eBay had checked a number of user accounts with its proprietary "ShillHunter" software and delivered at least two warnings, "none of those namessuggested any indication of a bidding ring."

Nevertheless, any suggestion of fraud is a danger to the online auctionhouse, which takes 1,000 bids per minute and trades in millions of dollarsworth of merchandise every day. "It is a concern to us because even thoughit may be small in the number of bids placed on eBay in a day, it creates acloud over any given listing," Pursglove said. Even though the Walton salenever went through, the penalties for attempted fraud could still be severe,ranging up to five years in prison and $1 million for each count.

Walton, who has denied any misdoing and said he used a different onlinealias to bid on his own item only to help a friend who did not have an eBayaccount, told reporters he had not been contacted by the FBI and had nocomment. The FBI's Rossi, while declining to comment on specific cases, didsay that online crime was an important focus for investigators around thecountry. "I would certainly say that the FBI is keenly interested in theissue of Internet fraud," Rossi said, noting that the agency had recentlyformed an Internet Fraud Complaint Centre in West Virginia to serve as aclearinghouse for complaints about online scams. Conceding that some peopleactively seek to defraud bidders, eBay's Pursglove said the company believedmost of the shill bid cases detected thus far were due to ignorance. "Wehave found out that a lot of users have not educated themselves to thetradition and the histories of the competitive bidding," he said. "They areunaware that you cannot bid on your own item."