Fraud charges filed in alleged Web auction scam

From Bloomberg News

Twenty-one people were charged with running a fraud that netted $5 million from users of Internet auction sites, including the largest, EBay Inc.

Seven of eight defendants arrested Tuesday appeared before U.S. Magistrate Judge Maria Valdez in Chicago, who gave prosecutors a three-day delay on any requests for bail. None entered a plea. A ninth defendant has agreed to surrender, prosecutors said.

"This is an example of using new technology to commit an old-fashioned fraud scheme," U.S. Atty. Patrick Fitzgerald said in a statement. Five other people were arrested earlier in connection with the alleged fraud -- two in Chicago, two in Florida and one in Las Vegas -- and seven remain at large, prosecutors said.

More than 2,000 people have been defrauded by the ring since November 2003 and some of those responsible may be in Romania, Fitzgerald said.

The defendants contacted losing bidders and told them they could get a second chance at the goods they had sought, including cars and farm equipment, by wiring money to the purported sellers through Western Union, Assistant U.S. Atty. Brian Hayes said.

"None of it was delivered," he said. He declined to say how the defendants might have obtained the bidders' contact information. Nobody at San Jose-based EBay was involved in the scam, he said.

"We're thrilled when fraudsters get caught and prosecuted," EBay spokeswoman Catherine England said. The site has more than 212 million users, allowing scammers to find victims by sending random "second-chance e-mails," she said.

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