Going,

Going,

Gone...

LawEnforcement

Efforts toCombat

Internet Auction 

Fraud

February 2000

In only five years, Internet auctions have become perhaps the hottest 

phenomena on the web. They offer buyers a "virtual flea-market" with 

an endless array of merchandise from around the world — and they give 

sellers a "storefront" from which to market everything from sentimental 

sports memorabilia to sophisticated computer systems.

Every day, millions of items are offered for auction on the Internet; the 

vast majority of transactions occur without incident. Unfortunately, 

however, some con artists have identified Internet auctions as an easy 

way to make a fast buck at the expense of trusting buyers who send a 

personal check, cashier’s check or money order to someone they don’t 

know for a product they’ve never seen. Typically, such fraudsters offer 

goods for sale that they do not have, accept payment for goods they 

don’t deliver, provide goods that are not as advertised, or fail to deliver 

goods in a timely way.

On the theory that Internet auction fraud is, like most fraud, best fought 

on many fronts, the Federal Trade Commission has developed a multipronged strategy, Project Safebid, that consists of training, law 

enforcement and education. The training component ofProject 

Safebid was designed to encourage local, state and federal law 

enforcement cooperation in the investigation and prosecution of Internet 

auction fraud. Under theProject Safebid umbrella, FTC attorneys and 

investigators have conducted training sessions for law enforcement 

authorities from coast to coast.
The FTC’s Consumer Sentinel 

fraud database is integral to 

coordinating meaningful law 

enforcement efforts. This 

binational, multi-state 

computerized consumer fraud 

database uses the Internet to 

provide secure access to over 

220,000 consumer complaints for 

over 200 law enforcement 

organizations across the United 

States and Canada. Through 

Consumer Sentinel, the FTC and 

partner enforcement officials have 

been able to track complaints about 

Internet auction fraud, which have 

escalated from approximately 100 

in 1997 to over 10,000 in 1999.

Tips for Sellers

Provide an accurate 

description of the item 

your’re selling, including all 

terms of the sale and who will 

pay shipping costs.

Respond quickly to any 

questions bidders may raise 

during the auction.

Contact the high bidder as 

soon as possible after the 

auction loses to confirm 

details of the sale.

Ship the merchandise as 

soon as you receive payment.

The rising number of Internet auction fraud complaints means a rise in 

the number of investigations and potential cases. Using Consumer 

Sentinel data, the FTC is able to refer potential cases to a wide array of 

law enforcement agencies where the wrong-doers are located. For their 

part, law enforcement agencies throughout the nation have risen to the 

challenges that Internet auction fraud presents. A list of cases already 

filed against Internet auction fraud artists follows. Many more are in the 

pipeline.

Tips for Buyers

Identify the seller and check 

the seller’s feedback rating.

Do your homework. Be sure 

you understand what you’re 

bidding on, its relative value 

and all terms and conditions 

of the sale, including the 

seller’s return policies and 

who pays for shipping.

Establish your top price and 

stick to it.

Evaluate your payment 

options. If possible, use a 

credit card. It offers the most 

Recognizing that law enforcement 

alone cannot stem the tide of 

Internet auction fraud, the FTC has 

launched an ambitious education 

program directed to Internet auction 

sites as well as auction participants. 

Most major and many smaller 

Internet auction websites have 

fraud prevention and detection 

programs, and many are working 

closely with law enforcement 

investigators when problem sellers 

are identified. In fact, starting in 

February, eBay — perhaps the 

largest and best-known of all the 

Internet auction sites — will feed 

its fraud complaints directly to the 

Consumer Sentinel database.
protection if there’s a 

problem. Consider using an 

escrow service if the seller 

doesn’t accept credit cards.

Anecdotal evidence from many consumers suggests that despite the 

incredible popularity of Internet auctions, many consumers don’t fully 

understand how they work, the kinds of auctions available — and 

perhaps most important, how to participate in auctions as responsibly 

and safely as possible. To help educate consumers about Internet 

auctions, the Federal Trade Commission is disseminating Internet 

Auctions: A Guide for Buyers and Sellers, which offers tips for buyers 

to protect themselves against fraud and advice for sellers on how to 

make Internet auction transactions as smooth and successful as possible. 

The guide advises buyers and sellers to contact the FTC for more 

information about their rights and responsibilities and to file a 

complaint with the FTC if they have a problem with an Internet auction 

transaction. It is available in print and online.

There’s no question that the electronic marketplace is creating 

challenges. There’s also no question that consumer confidence is critical 

to its continued growth. A program that combines training, enforcement 

and education — and consumers, industry, law enforcement officials 

and regulators — can ensure meaningful consumer protection in 

cyberspace and allow consumer confidence to flourish.

Internet Auction Fraud Cases

Alabama

Alabama v. White

On April 27, 1999, David M. White was convicted on charges of theft 

of property in the first degree by deception. The defendant offered items 

for sale via Internet auctions using various fictitious names and 

addresses. He accepted payment from hundreds of consumers all over 

the world and failed to provide the merchandise. The defendant 

received five years probation and was ordered to pay full restitution.

This case was investigated by the Geneva County District Attorney's 

Office, the Hartford Police Department and the United States Postal 

Inspection Service, Southeast Division, and the case was prosecuted by 

the Geneva County District Attorney's Office.

Contacts:
Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

David Emery, Geneva County District Attorney, 334/684-3697 or 

334/774-9500.

Alaska

USPS v. Various Fictitious Names at various addresses in Anchor Point, 

Alaska

On November 10, 1999, an order to withhold mail, under the provisions 

of 39 USC 3003 and/or 3004, was issued by the USPS Judicial Officer 

and resulted in mail, most of which contained payment checks, being 

returned to the sender(s). The Order resulted from an investigation that 

determined that the respondents were running a scam that involved 

offering goods via an Internet auction web site and failing to deliver the 

goods.

This case was investigated by the United States Postal Inspection 

Service, Northwest Division.

Contact:

Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

Arizona

Arizona v. Simek

On February 19, 1999, Arizona Attorney General Janet Napolitano 

announced that her office had obtained an Assurance of Discontinuance 

from Anthony Simek, who allegedly offered computers for sale over the 

Internet but failed to deliver. Simek allegedly used an Internet auction 

web site to advertise the computers, and then made arrangements to ship 

the computers to a buyer after receiving a $1,500 payment. However, 

the consumer never received the computer. Under the terms of the 

Assurance, Simek will furnish written statements of material terms of 

sale to future buyers, including a complete description of the 

merchandise, price, terms and delivery arrangements. He also is 

required to keep records of shipment and payment as well as all 

correspondence with buyers. Simek also refunded the buyer's money.

Contact:
Pati Urias, Public Information Officer, 602/542-8017.

California

U.S. v. Guest

On July 14, 1999, Robert J. Guest pleaded guilty in United States 

District Court in Los Angeles to charges of bilking people who bid on 

various items offered at auction on the eBay Internet auction web site, 

taking approximately $37,000 from consumers and never delivering the 

purchased goods. Guest pleaded guilty to one count of mail fraud as 

well as a second count of illegally obtaining a credit card. On 

November 2, 1999, Guest was sentenced to 14 months in federal prison.

This case was investigated by the County of Orange Boiler Room 

Apprehension Task Force, which includes the FBI, the Orange County 

Sheriff's Office and the United States Postal Inspection Service. This 

case was prosecuted by the Office of the United States Attorney for the 

Central District of California.

Contact:

Thom Mrozek, Public Affairs Officer, Office of the United States 

Attorney, Central District of California, 213/894-6947.

People of the State of California v. Alto Corp. et. al.

On May 27, 1999, the District Attorney of Ventura County, California 

obtained a final judgment and permanent injunction against Alto 

Corporation and Auction Sales, Inc. The companies operated a web site 

that conducted sales and auctions for computer equipment and other 

merchandise and the companies operated as an Internet service 

provider. According to the Complaint, the defendants offered goods for 

sale, accepted payment and, among other things, failed to deliver the 

merchandise in a timely manner, failed to provide refunds to customers 

who received defective merchandise, and failed to provide refunds to 

customers who returned defective merchandise. The final judgment 

required the defendants to pay a civil penalty of $28,500, and requires 

that the defendants ship merchandise within 30 days and follow other 

legal requirements regarding auctions and Internet sales.

This case was investigated and prosecuted by the office of the Ventura 

County District Attorney.

Contact:
Michael Schwartz, Deputy District Attorney, Ventura County, 805/289-

1997.

People of the State of California v. Frazier

On August 12, 1999, Eugene Michael Frazier pled guilty in San Diego 

Superior Court to one count of Accessing a Computer to Defraud and 

one count of Grand Theft. Mr. Frazier was sentenced to 12 months in 

jail and three years probation. He also was required to make full 

restitution to his victims, and was prohibited from using the Internet for 

the duration of his probation.

This case was investigated by the San Diego Police Department and 

was prosecuted by the San Diego County, District Attorney's office.

Contact:

Gayle Falkenthal, Director of Public Affairs, Office of the San Diego 

County District Attorney, 619/531-3529.

People of the State of California v. You

On November 1, 1999, Jonathan You was charged in California 

Superior Court, Santa Clara County, with obtaining money from 

consumers by Conducting a Pretend or Mock Auction in violation of the 

California Penal Code.

The case was investigated by the San Jose and Mountain View Police 

Departments and is being prosecuted by the Santa Clara County District 

Attorney's Office.

Contact:

Frank Dudley Berry, Jr., Deputy District Attorney, Santa Clara County, 

408/792-2742.

USPS v. Various Fictitious Names at PO Box 22754, Sacramento, CA 

95822-0754

On March 16, 1999, an order to withhold mail, under the provisions of 

39 USC 3003 and/or 3004, was issued by the USPS Judicial Officer 

against the above address. This Order resulted in mail, most of which 

contained payment checks, to that address being returned to the 

sender(s). The Order resulted from an investigation that determined the 

respondent was participating in Internet auctions and paying for 

merchandise with credit cards that he was not authorized to use.
This case was investigated by the United States Postal Inspection 

Service, Northern California Division

Contact:

Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

USPS v. Various Fictitious Names at 865 Ackerman Drive, Danville, 

CA 94526-1849

On February 18, 1999, an order to withhold mail, under the provisions 

of 39 USC 3003 and/or 3004, was issued by the USPS Judicial Officer 

against the above address. The Order resulted in mail, most of which 

contained payment checks, to that address being returned to the 

sender(s). The Order resulted from an investigation that determined the 

respondent was offering computer software at Internet auctions. 

Winning bidders were advised to send cash. The merchandise was never 

provided.

This case was investigated by the United States Postal Inspection 

Service, Northern California Division

Contact:

Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

Florida

FTC v. Hare

On March 30, 1998, the Federal Trade Commission filed a civil suit in 

the United States District Court for the Southern District of Florida 

alleging that Craig Lee Hare violated the FTC Act by offering 

computers and computer-related equipment for sale on various Internet 

auction web sites, accepting payment and failing to deliver the goods. 

Ultimately, the Court issued a stipulated permanent injunction banning 

Hare from using the Internet to advertise, market or otherwise offer for 

sale any goods or services.

This case was investigated and prosecuted by the Federal Trade 

Commission.

Contact:
Lisa Hone, Staff Attorney, Federal Trade Commission, 202/326-3207.

U.S. v. Hare

On September 6, 1998, the United States Attorney for the Southern 

District of Florida charged Craig Lee Hare with wire fraud for offering 

computers and computer-related equipment for sale on various Internet 

auction web sites, accepting payment and failing to deliver the goods. 

On February 12, 1999, Hare pled guilty to one count of wire fraud and 

was sentenced to six months home detention and three years probation, 

and ordered to pay approximately $22,000 in restitution.

The case was investigated by the Federal Bureau of Investigation in the 

Southern District of Florida, West Palm Beach Division, and prosecuted 

by the United States Attorney's Office for the Southern District of 

Florida, West Palm Beach Division.

Contact:

Kerry S. Baron, Assistant United States Attorney, Southern District of 

Florida, 561/820-8711.

USPS v. Various Fictitious Names at addresses in Miami, Miami Beach 

and Hallandale, Florida

On November 2, 1999, an order to withhold mail, under the provisions 

of 39 USC 3003 and/or 3004, was issued by the USPS Judicial Officer, 

and resulted in mail, most of which contained payment checks, being 

returned to the sender(s). This Order was the result of an investigation 

that determined the respondents accepted payment but failed to deliver 

merchandise ordered as the result of Internet auctions.

This case was investigated by the United States Postal Inspection 

Service, Florida Division.

Contact:

Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

Illinois

Illinois v. Briedis

On August 26, 1998, the Illinois Attorney General filed a civil 

complaint against Peter Briedis in the Illinois State Circuit Court, 
alleging that Briedis violated the Illinois Consumer Fraud And 

Deceptive Business Practices Act by offering merchandise for sale 

using the Internet auction site eBay, accepting payment from 

consumers, and failing to deliver the goods or a refund. The case was 

settled; the final order requires Breidis pay restitution to 17 consumers 

and prohibits him from selling items through Internet auctions in the 

future.

This case was investigated and prosecuted by the Illinois Attorney 

General's office.

Contact:

Debbie Hagan, Bureau Chief, Consumer Fraud Bureau, Southern 

Region, Office of the Illinois Attorney General, 217/782-9021.

Illinois v. Fairbank et. al.

On August 19, 1999 the Illinois Attorney General filed a civil complaint 

against Graham Fairbank d/b/a Fairbank Computer, Fairbank PCS and 

Venture Computer and against Mark Litwin d/b/a Venture Computer 

alleging that the defendants violated the Illinois Consumer Fraud and 

Deceptive Business Practices Act. The defendants allegedly advertised 

the sale of computer products through various Internet auction web 

sites, including eBay and ZDNet/FairMarket, accepted payment and 

then either delivered unwanted merchandise or did not deliver any 

merchandise. This litigation is pending.

This case was investigated and prosecuted by the Illinois Attorney 

General's office.

Contact:

Debbie Hagan, Bureau Chief, Consumer Fraud Bureau, Southern 

Region, Office of the Illinois Attorney General, 217/782-9021.

Illinois v. Chicago Copier Wholesale, Inc. et. al.

In February 2000, the Illinois Attorney General filed a civil complaint 

against Chicago Copier Wholesale and Daniel Fisher, each doing 

business under various names. The complaint was filed in the Illinois 

State Circuit Court, alleging that the defendants violated the Illinois 

Consumer Fraud And Deceptive Business Practices Act by offering 

copying equipment for sale using various Internet auction sites, 

accepting payment from consumers, and, at least in some instances, 

failing to deliver the specific merchandise offered. The Complaint also 
alleges that as part of the scheme, defendants used various false names 

to give themselves positive feedback ratings and bid on their own 

merchandise in order to inflate the price.

This case was investigated and is being prosecuted by the Illinois 

Attorney General's Office.

Contact:

Debbie Hagan, Bureau Chief, Consumer Fraud Bureau, Southern 

Region, Office of the Illinois Attorney General, 217/782-9021.

Illinois v. Nelson et. al.

On February 9, 2000, the Illinois Attorney General filed a civil 

complaint against Jay and Kirsta Nelson, each doing business under a 

variety of names, including softwarefourless, diamondsoft, and JKB 

Software. The complaint was filed in Illinois State Circuit Court, 

alleging that the Nelsons violated the Illinois Consumer Fraud And 

Deceptive Business Practices Act by offering merchandise for sale 

using various Internet auction sites, accepting payment from consumers, 

and failing to deliver the goods or a refund. Additionally, the Complaint 

alleges that in some instances, the defendants allegedly delivered 

"pirated" software. The Complaint also alleges that after being 

suspended from at least one auction web site, the defendants used false 

names and contact information to obtain new accounts with an auction 

site.

This case was investigated and is being prosecuted by the Illinois 

Attorney General's Office.

Contact:

Debbie Hagan, Bureau Chief, Consumer Fraud Bureau, Southern 

Region, Office of the Illinois Attorney General, 217/782-9021.

USPS v. Various Fictitious Names at 511 West 3rd Street, Flora, IL 

62839-1249

On July 28, 1999, an order to withhold mail, under the provisions of 39 

USC 3003 and/or 3004, was issued by the USPS Judicial Officer against 

the above address. The Order resulted in mail to that address, most of 

which contained payment checks, being returned to the sender(s). The 

Order was the result of an investigation that determined the respondents 

were involved in a failure to render scheme involving the auction of 

Beanie Baby collectibles over the Internet. Losses to the known victims 
were estimated to be $50,000.

This case was investigated by the United States Postal Inspection 

Service, Midwest Division.

Contact:

Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

Indiana

Indiana v. Martin

On January 24, 2000, Jeffrey L. Martin was convicted in Indiana State 

Court on theft charges. The defendant assumed someone else's identity, 

and using that identity, offered goods for sale via the eBay auction site, 

accepted payment for the goods and failed to deliver the goods. 

Investigators identified approximately 50 consumers victimized by 

defendant's scam, with an approximate loss of $9,400. The defendant 

was sentenced to six years in prison, all of which was suspended except 

for two months; he also received six years of probation. Additionally, 

Martin was ordered to pay victim restitution and was ordered to stay off 

the Internet while on probation. When postal inspectors learned of this 

scam, quick action was taken through the USPS Judicial Officer to 

prevent further victimization. An order to withhold mail, under the 

provisions of 39 USC 3003 and/or 3004, was issued by the USPS 

Judicial Officer against 434 Harlan Drive, Mooresville, IN, the address 

the defendant was using. This Order resulted in mail to that address, 

most of which contained payment checks, being returned to the senders. 

This is an example of how a combination of administrative and criminal 

action can be taken to protect consumers.

This case was investigated by the United States Postal Inspection 

Service, Michiana Division, and was prosecuted by the Morgan County 

Prosecutor's Office.

Contact:

Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

Iowa

State of Iowa v. Striley
In February 2000, the office of the Iowa Attorney General filed a 

Consent Agreement entered into with Karen Striley of Clinton, Iowa. 

The defendant allegedly offered household items such as candlesticks 

for sale via Internet auction websites, accepted payment and failed to 

deliver the goods. Pursuant to the consent agreement, the defendant has 

agreed to a permanent injunction prohibiting her from selling over the 

Internet, taking money and not delivering goods. The defendant has also 

agreed to reimburse consumers.

This case was investigated and prosecuted by the Iowa Attorney 

General's office.

Contact:

Bob Brammer, Communications Director, Office of the Iowa Attorney 

General, 515/281-6699.

State of Iowa v. Schnathorst

In February 2000, the office of the Iowa Attorney General filed, in Polk 

County District Court, a Consent Agreement entered into with Daniel 

Schnathorst of Norwalk, Iowa. The defendant allegedly offered camera 

and stereo equipment for sale via Internet auction websites, accepted 

payment and failed to deliver the goods. Pursuant to the consent 

agreement, the defendant has agreed to a permanent injunction 

prohibiting him from selling over the Internet, taking money and not 

delivering goods. The defendant also has agreed to be reimburse 

consumers.

This case was investigated and prosecuted by the Iowa Attorney 

General's office.

Contact:

Bob Brammer, Communications Director, Office of the Iowa Attorney 

General, 515/281-6699.

Kansas

State v. Arik Gentry and Jerry Dove II, d/b/a Beanmania

The Kansas Attorney General filed a lawsuit in Shawnee County, 

Kansas, on July 1, 1999, against Arik Gentry and Jerry Dove II, d/b/a 

Beanmania alleging that the defendants violated the Kansas Consumer 

Protection Act by representing that they had Beanie Babies for sale on 

an Internet auction site and received payments for the products but 
failed to provide them to consumers. The defendants entered into a 

Consent Judgement on September 1, 1999 and agreed to pay $5,364.00 

in restitution to consumers and $1,000 in civil penalties and 

investigative fees.

This case was investigated and prosecuted by the Kansas Attorney 

General's Office.

Contacts:

Assistant Attorney General Jim Welch, 785/296-3751. Special Agent 

Lori Denk, 785/296-3751.

Missouri

Missouri v. Marriott

On October 29, 1999, Donald L. Marriott pled guilty to criminal 

charges brought by Missouri Attorney General Jay Nixon, admitting 

that he had defrauded consumers seeking to purchase computer 

equipment on the Internet auction site, eBay. Marriott was 16 at the 

time the crimes occurred, and was certified to stand trial as an adult on 

the charges. The plea agreement called for Marriott to pay $5,863 in 

restitution to 13 consumers, complete 200 hours of community service 

and be placed on five years probation. While on probation, Marriott is 

prohibited from (1) using the Internet to buy, sell, advertise, or trade 

any goods or services; (2) visiting any Internet site on which goods or 

services are sold via auctions or classified advertisements, and (3) 

permitting anyone else to use his computer, screen name, identification 

or account to do those things described above.

This case was investigated by and prosecuted by the Missouri Attorney 

General's Office.

Contact:

Office of the Missouri Attorney General, Office of Communications, 

573/751-8844.

Nebraska

USPS v. John A. Wilhelm

On June 4, 1999, a Cease and Desist Order, under 39 USC 3005, was 

issued against John A. Wilhelm. Under this Order, the respondent was 

ordered to cease and desist from making false representations relating to 
the sale of computers via Internet auction sites. An investigation 

determined that he had accepted payment for computers without 

furnishing the merchandise. Under this order, the respondent agreed to 

make victim restitution.

This case was investigated by the United States Postal Inspection 

Service, Midwest Division.

Contact:

Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

New Jersey

Farmer and Herr v. Arakelian et. al.

On October 1, 1999, the Attorney General of the State of New Jersey 

filed suit against Barbara Arakelian a/k/a Barbara Wilson, d/b/a Bobbi1 

and Halo58 and against Darren Baker d/b/a Mugsy 430. The complaint 

alleges that Ms. Arakelian offered Beanie Babies and Furbies for sale 

on the eBay and Amazon auction web sites, accepted payment and 

failed to deliver the merchandise. The Complaint further alleges that 

Mr. Baker, with assistance from Ms. Arakelian, offered to sell Bruce 

Springsteen tickets via eBay, accepted payment and failed to deliver the 

merchandise.

This case was investigated and is being prosecuted by the New Jersey 

Department of Law and Public Safety, Division of Consumer Affairs.

Contacts:

Genene Morris or Jennifer Salvato, Press Office, New Jersey Division 

of Consumer Affairs, 973/504-6327.

Farmer and Herr v. Beanie Stars, Inc. et. al.

On February 4, 2000, the Attorney General of the State of New Jersey 

filed suit against Beanie Stars, Inc., Hani Kheiralla and Mohammad 

Kheiralla, d/b/a nada400 and beaniestars. The Complaint alleges that 

the Kheirallas offered Beanie Babies for sale on the eBay auction web 

site, accepted payment and either failed to deliver the merchandise, or 

failed to deliver the merchandise within the time frame required under 

the New Jersey Consumer Fraud Act.

This case was investigated and is being prosecuted by the New Jersey 
Department of Law and Public Safety, Division of Consumer Affairs.

Contacts:

Genene Morris or Jennifer Salvato, Press Office New Jersey Division of 

Consumer Affairs, 973/504-6327.

New York

People of the State of New York v. Dikhtyar

On October 18, 1999, Paul Dikhtyar was arrested and charged with 

larceny. The defendant allegedly manipulated Internet auction sites and 

fraudulently attempted to have bidders send him money for items other 

people were selling. On November 18, 1999, the defendant was 

sentenced to one year probation and eight days of community service.

This case was investigated by a joint task force comprised of the United

States Postal Inspection Service, New York Metropolitan Division and 

the New York Police Department, Computer Crimes Squad. The case 

was prosecuted by the Kings County District Attorney's Office.

Contact:

Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

Melissa C. Jackson, Deputy District Attorney Kings County District 

Attorney's Office, 718/250-2600.

North Carolina

US v. Lane

On December 15, 1999, Richard Lane of Raleigh, North Carolina, was 

arrested and charged with Mail Fraud and other crimes. Lane allegedly 

used numerous aliases and email addresses, and offered toys, jewelry 

and collectibles for sale on an Internet auction site. He purportedly 

accepted payments from consumers by falsely advertising he had the 

items listed in his auctions and would sell them to the highest bidder. 

Consumers complained of misrepresentations of the value and/or 

condition of the items offered for sale, receipt of something entirely 

different and, in some case, receipt of nothing at all.

This case was investigated by the United States Postal Inspection 

Service, Mid-Atlantic Division, and prosecuted by the United States 
Attorney's Office for the Eastern District of North Carolina.

Contact:

Inspector Bill Johnson, United States Postal Inspection Service, 

919/501-9314.

Ohio

State of Ohio ex rel. Betty D. Montgomery v. Brenda Theos, et al.

Ohio Attorney General Betty D. Montgomery filed a lawsuit on 

February 11, 2000, in the Licking County Court of Common Pleas. The 

lawsuit was filed against Brenda Theos of Newark, Ohio, for alleged 

violations of Ohio's Consumer Sales Practices Act. Theos is alleged to 

have sold counterfeit Beanie Babies through Internet auctions. 

Montgomery's office received numerous complaints regarding the 

authenticity of the products received. In some cases, the products were 

never received at all. Specific allegations in the lawsuit include failing 

to deliver the products, misrepresenting the authenticity of the products 

being sold, and using fictitious names to avoid connection with previous 

bad dealings.

This case was investigated and is being prosecuted by the Ohio 

Attorney General's Office.

Contact:

Jennifer Detwiler, Office of the Ohio Attorney General, 614/466-3840.

Oklahoma

US v. Lansford

On January 19, 2000, Christine Lansford was indicted in the United 

States District Court, Western District of Oklahoma, on 14 counts of 

mail fraud for allegedly offering Beanie Babies on Internet auction web 

sites, accepting payment and failing to deliver the goods. Lansford 

allegedly used numerous aliases to perpetrate her scheme.

This case was investigated by the United States Postal Inspection 

Service, Fort Worth Division, and prosecuted by the United States 

Attorney's Office for the Western District of Oklahoma.

Contact:
Joe Heaton, Assistant United States Attorney, Western District of 

Oklahoma, 405/553-8772.

Pennsylvania

Pennsylvania v. Cavanaugh

Pennsylvania Attorney General Mike Fisher reached an Assurance of 

Voluntary Compliance with Scott Cavanaugh, owner of Cavanaugh 

Collections, resolving claims that the defendant advertised brand name 

or authentic trademarked collectibles on eBay, but delivered 

reproductions or knock-offs. Attorney General Fisher further alleged 

that Cavanaugh misrepresented the value of the items offered for sale. 

Under the terms of the agreement, Cavanaugh is required to comply 

with the Commonwealth's Consumer Protection Law, and pay 

$1,379.81 in restitution and $260 in investigatory costs.

This case was investigated by the Office of the Pennsylvania Attorney 

General.

Contact:

Barbara Petito, Deputy Press Secretary, Office of the Pennsylvania 

Attorney General, 717/787-5211.

Pennsylvania v. Piatt

In January, 1999, Pennsylvania Attorney General Mike Fisher filed a 

civil complaint against Jamison Piatt a/k/a George Williams and George 

Lijerus, who allegedly took money for toys he never delivered. 

According to the Complaint, Piatt advertised the sale of nearly 500 

Furbys on eBay, an Internet auction website. Piatt allegedly offered the 

Furbys for $60 and promised to mail all orders on the day payment was 

received to ensure delivery before Christmas. Piatt also allegedly 

ignored requests for refunds from consumers who did not receive the 

toys. Under the terms of a settlement agreement reached with the 

Attorney General's office, Piatt was required to: refrain from operating 

any mail order or Internet order business without approval from the 

Attorney General's office; pay $2,617 in restitution, $500 in civil 

penalties and $500 in investigatory costs, as well as additional 

restitution to consumers who filed complaints within 90 days; and 

deliver two Furbys to one consumer in lieu of a cash refund. In January 

2000, the settlement was modified to resolve allegations that the 

defendant accepted payment for Pokemon cards he sold to dozens of 

consumers over eBay, but failed to deliver. Under the modified terms of 

this settlement, Piatt must pay an additional $2,000 in civil penalties 
and investigation costs as well as $600 in restitution to nine consumers 

who purchased the Pokemon trading cards he advertised for sale. Piatt 

also must deliver more than $2,200 worth of Pokemon cards to 38 

additional consumers.

This case was investigated and prosecuted by the Pennsylvania 

Attorney General's Office.

Contact:

Barbara Petito, Deputy Press Secretary, Office of the Pennsylvania 

Attorney General, 717/787-5211.

US v. Saunders

On September 20, 1999, David M. Saunders was convicted on charges 

of mail fraud. The defendant posted approximately 60 Internet auctions 

and, after collecting the bidders' money, failed to render the 

merchandise.

This case was investigated by the United States Postal Inspection 

Service, Philadelphia Metropolitan Division, and prosecuted by the 

United States Attorney's Office for the Middle District of Pennsylvania

Contacts:

David Barasch, United States Attorney for the Middle District of 

Pennsylvania, 717/221-4482.

Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

USPS v. Various Fictitious Names at 224 E 21st Avenue, Munhall, PA 

15120-2524

On July 6, 1999, an order to withhold mail, under the provisions of 39 

USC 3003 and/or 3004, was issued by the USPS Judicial Officer against 

the above address. The Order resulted in mail to that address being 

returned to the sender(s). The Order resulted from an individual using 

Internet auctions to defraud individuals in a failure to pay scam. Using 

fictitious names and addresses, he accepted payment from the auction 

winners and failed to provide the advertised merchandise.

This case was investigated by the United States Postal Inspection 

Service, Western Allegheny Division.
Contact:

Rob Bethel, National Public Information Officer, United States Postal 

Inspection Service, 202/268-5283.

South Dakota

South Dakota v. Global Shopping Network

South Dakota Attorney General Mark Barnett entered into a settlement 

with the Global Shopping Club, Inc., a company that auctioned goods 

over the Internet. The company allegedly sent consumers items that 

were defective or different than those ordered. In addition, some 

consumers did not receive purchases at all, but were charged for the 

items on their credit cards. The company is enjoined from conducting 

any future business over the Internet, and will pay $31,784.73 in 

consumer restitution.

This case was investigated and prosecuted by the South Dakota 

Attorney General's Office.

Contact:

Roxy Everson, Director of Operations, 605/773-3215.

Wisconsin

In the Matter of Maura M. Werts

On February 19, 1999, the State of Wisconsin, Department of 

Agriculture, Trade & Consumer Protection, issued an order finding that, 

in violation of Wisconsin state law, Maura M. Werts offered items 

using the Internet auction site eBay, accepted payment and failed to 

provide the goods for at least several weeks after payment was made, 

misrepresented the goods she was auctioning, or misrepresented the 

time it would take to complete the transaction and delivery of goods 

sold or auctioned. Under the order, Maura Werts is required to ship 

merchandise within 14 days of receiving payment or to furnish a refund 

to the buyer.

This case was investigated and prosecuted by the State of Wisconsin, 

Department of Agriculture Trade & Consumer Protection.

Contact:

Glen Lloyd, Public Information Officer, State of Wisconsin, 
Department of Agriculture, Trade & Consumer Protection, 608/224-

5007.