The complaint, filed in Manhattan federal court on February 14, alleges the bidding scheme, which involves a conspiracy to drive up bids on an item on behalf of the vendor, ran between September 1999 and last month, totalling more than $1.3m, including individual pieces that sold for more than $15,000 on the online auction Website.
Charged are John Danis, 43, of Illinois, a Lalique glass collector and adviser for Schroeder’s Antique Price Guide; his sister, Diane Grismore, also of Illinois; and David Weinstein, a Manhattan art glass dealer. Each is charged with wire fraud and could face a maximum five-year prison term if convicted.
The complaint alleges they conspired to bid on pieces of Lalique offered on eBay under their own identities and the identities of others. By bidding repeatedly, the trio created the illusion of multiple bids on an item with the goal, say federal prosecutors, of inflating prices above an amount set by Danis, and sell the piece to an unwitting bidder.
According to the charges, Danis hosted more than 600 auctions of Lalique glass under his eBay User ID ‘norsepottery’ with shill bidding involved in at least 429.
eBay had investigated Danis and Grismore for suspected shill bidding in early 2000 although at that time the two allegedly denied they were involved in illegal activity and were permitted to keep their eBay accounts.
How to combat online shill bidding was high on the agenda when eBay CEO Meg Whitman met with the House Energy and Commerce Committee in June to answer questions about Internet auction fraud. At the meeting Whitman was asked a number of questions on the shilling issue although she was adamant that the practice was not as prevalent as some believe it to be.
Sensitive software
“Rotten apples represent less than one-tenth of one per cent,” she said. In answer to the question “Are online auction companies successful in detecting shill bidders?”
New software recently implemented by the dotcom giant has proved “very sensitive” in the detection of shill bidding, she said. Certainly the right mechanisms seem to have been in place to detect this alleged breach of auction ethics. Prosecutors said US Postal inspectors determined that shill bidding was taking place by analyzing the Internet Protocol (IP) addresses from which the defendants’ bids were placed. IP addresses are unique numeric addresses assigned to each computer on the Internet.
• The eBay auction site was the vehicle used in the first criminal case to result from shill bidding online. Two men pleaded guilty to conspiring to drive up auction prices by posting more than 50 phony bids on a fake painting by Richard Diebenkorn and admitted they had placed shill bids on as many as 550 of their lots. A third man who was charged, Kenneth Fatterman, is still at large.
US court to hear $1.3m Web bidding fraud case
In the second major Internet shill bidding case, three people have been charged with running a scheme that boosted the sale prices of hundreds of pieces of Lalique glass auctioned on eBay.
