California Bar Journal
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Phony art auction on eBay leads to lawyer's resignation
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A Sacramento attorney who pleaded guilty last year to conspiring to sell fake artwork on eBay, including works purportedly by Richard Diebenkorn and Alberto Giacometti, has resigned from the State Bar. The Supreme Court accepted the resignation of KENNETH A. WALTON [#192272], 34, on Feb. 8, 2002, and ordered him to comply with rule 955 of the California Rules of Court.

Walton pleaded guilty in federal court a year ago to four counts of mail fraud and three counts of wire fraud involving submission of phony bids, known as "shill bids," to artificially drive up prices on canvases he and his cohorts claimed were painted by well-known modern artists.

After hauling in what the indictment charged was $450,000 from more than 500 auctions, Walton and the others got caught when he listed a piece that purportedly was painted by Diebenkorn, considered one of America's greatest 20th Century artists. One of his paintings sold at Sotheby's in 1998 for $3.9 million.

Although Walton never expressly said the artist was responsible for the predominantly orange, red and green canvas, he claimed he bought it at a garage sale in Berkeley, where Diebenkorn had lived. It was a similar style to the artist's work and bore his trademark initials "RD" and the year "52" in the bottom right corner.

The offering, which began at 25 cents, set off an international buying frenzy and the bidding ultimately skyrocketed to $135,805, offered by a Dutch software executive.

Walton, whose online handle was "golfpoorly," wrote, "I got this big abstract art painting at a garage sale in Berkeley . . . back in my bachelor days. Then I got married, and my wife has never let me keep it in the house. She says it looks like it was done by a nutcase." He also said his child punctured a hole in the painting with his Big Wheel tricycle.

He later admitted he is single, has no children and forged Diebenkorn's initials. He and a friend found the painting in an antique store in the Los Angeles County town of Littlerock.

EBay killed the deal after discovering Walton had placed a phony "shill" bid of $4,500 under a different user name.

Investigators determined Walton and the other two men actually placed 52 shill bids on the fake Diebenkorn. Such shill bidding is prohibited both on eBay and by traditional auction houses.

After a 10-month investigation, the three men were charged with 16 counts of wire and mail fraud. They were accused of creating 47 phony online identities, such as "big-fat-mamba-jamba," "thriftstorebob," and "bububuy," and placed $300,000 in phony bids on hundreds of their own auctions between October 1998 and May 2000.

The indictment said the three bought a wide variety of items that appeared to have been created by such well-known artists as Edward Hopper, Percy Gray, Clyfford Still and Giacometti and marketed them on eBay. According to the charges, Walton and another man even created user IDs with the names "Giacometti" and "Still" in an effort to make it appear "a family member of the famous artists was bidding in the auctions of those paintings."

The two men also created an e-mail account for Gerald Stone, a fictitious expert on the art of Still, according to the indictment. "Stone" sent an e-mail message to the winning bidder for the fake Still painting, congratulating the buyer for recognizing an "excellent example" of the artist's work.

An Illinois man who placed a high bid of more than $33,000 for a painting he believed was done by Still canceled the deal after Walton, who flew to Chicago with the painting, failed to provide the correct provenance papers to prove its authenticity. The painting eventually was sold to a Virginia computer programmer who borrowed $30,000 against his 401(k) plan to pay for the phony piece.

Walton agreed to pay $60,000 in restitution to eBay users who thought they had bought paintings by modern artists.

When Walton entered his guilty plea, he acknowledged he knew his actions were unlawful. His attorney, Harold Rosenthal, said Walton cooperated with the investigation. "He's a good guy, and this is a dumb, juvenile thing that got out of hand," he said. "It makes me want to hit him over the head."