Mention Jay Nelson's name to many regular online auction users, and you're likely to get a violent reaction. Nelson has allegedly scammed so many eBay and Yahoo users during the past two years that he's now on the U.S. Postal Inspector's Office's most wanted list. But Nelson has remained elusive despite raising the ire of thousands of Internet users, many who have gone to great pains to track him through cyberspace--including an Internet "posse" that formed last year to trap him, complete with message board and secret code.
The authorities almost had him. Investigators raided Nelson's home in tiny Gilsum, N.H., last fall and filed a criminal complaint Jan. 26 with U.S. District Court in New Hampshire. A grand jury charged him with wire fraud on Feb. 7. He was released on bail by the local judge, but on Valentine's Day, one day before he was to be arraigned, Nelson left town.
U.S. Postal Inspector Tom Higgins, who authored the complaint, says investigators have gotten some good leads on his whereabouts since then--once they arrived at a Florida hotel just days after Nelson had checked out. But so far, despite fairly brazen tactics, he's been uncatchable.
"Since he's been on the run since February, he seems to consider himself the John Dillinger of Internet auction fraud," said Higgins. "He's not even trying to hide it."
Authorities believe he's simply checking into and out of hotels, running his scam for a few days at each stop before moving on to the next phone line.
His technique is simple but executed with elaborate preparation.
For example, earlier this week MSNBC.com reported that Nelson was likely behind a Memorial Day weekend scam that tricked some 200 eBay users into buying kitchen appliances, such as Kitchenaid mixers for $100 apiece.
As usual, the scamster accepted PayPal payment for the mixers but never delivered them.
But this rather brutish technique actually involves great patience and an ability to turn auction site ratings systems against the sites.
He lures victims by using a fake login name and gradually building up a positive rating from other auction users, the standard sign of a trustworthy auctioneer.
In the most recent scam, the perpetrator used the moniker "Skunkker," buying small items and asking for positive ratings from July 2000 until Memorial Day weekend. He earned about 75 positive comments. Then, in a flurry, he auctioned off some 200 items, with hundreds of people falling for the scam. He probably netted thousands of dollars for the weekend's work, though exact figures are hard to come by because some victims stopped payment in time.
At any given time, Nelson might be running several such scams, authorities said. Many are hard to tie directly to Nelson, since he is clever about hiding his identity.
Postal Inspectors Pay a Visit
But Nelson didn't go to great pains to hide his activity last year, when he allegedly opened several fraudulent businesses and ran into trouble with police in three different states. Undaunted, he continued to create personas, take payment for items and never ship them.
"He has done nothing else in two-and-a-half years, or maybe three," said Michael Gunnison of the U.S. District Attorney's Office in New Hampshire. "He just facilitates running of scams via Net auctions."
Nelson first caught the attention of federal investigators in February 2000, when he ran into trouble with New Hampshire authorities. Complaints started to trickle into the Mont Vernon, N.H., police department in December 1999 about a Nelson company named Always PC, which maintained a post office box in that city.
The name Always PC links Nelson to the most recent fraud committed over Memorial Day weekend; MSNBC.com has learned that "Skunkker" once sent e-mail to an eBay customer using an AlwaysPC.com address.
On Feb. 17, 2000, local authorities and a representative of the postal inspector's office interviewed Nelson, and he promised to make good on refunds, according to Higgins' complaint. But within weeks, a new set of complaints were filed with police in Tyngsboro, Mass., about two other Nelson companies-- "Comp-U-Ware" and "Quality Parts" --regarding failure to deliver purchased goods. In his complaint, Higgins says Nelson merely switched company names and P.O. boxes after his interview with federal authorities.
Long history of fraud
Meanwhile, within days of the postal inspector's interview, the Illinois Attorney General's Office filed a complaint against Nelson and his wife, Krista, for online auction fraud dating all the way back to October 1998. Higgins' complaint says records from eBay show Nelson maintained 33 different personas between November 1998 and March 2000. Nelson allegedly started auctioning off items and not delivering merchandise in 1998, and he's still at large.
While living in Ellsworth, Ill., Nelson allegedly used a flurry of names to cheat auction buyers, including "softwarefourless," "diamondzsoft," "JKB Software" and "windycityman."
The couple left Illinois and resurfaced in early 2000 in Lyndeboro, N.H., and began accepting payments at a post office box in nearby Mont Vernon. In May, they moved into their new home on Main Street in Gilsum, N.H.
Then in June 2000, the Nelson's alleged scams hit fever pitch, and that's when MSNBC.com readers started sending in floods of complaints. Between June and July, an auctioneer using the name "harddrives4sale" ran 153 auctions on Yahoo.com--141 of the winners have filed complaints. Days later, a scamster began a string of 54 auctions that ended Aug. 10 using the name "more gr8stuff" with the same outcome. And starting Aug. 10 and running through Aug. 25, Nelson allegedly ran 113 auctions under the name "cwilly1955," claiming to be Chad Williams of Las Vegas. In each case, Nelson used his bank of extra Yahoo logons to create fake positive feedback before beginning his auctions, Higgins' complaint says.
The scams were apparently quite profitable, and the couple wasn't shy about displaying their Internet riches--they installed a swimming pool not long after acquiring the Gilsum property, according to the federal complaint.
Inside their home was an impressive local network devoted to efficient Internet fraud, according to the complaint. Court records claim there were five phone lines connected to the home. When authorities raided it in November, they seized five computers.
How much was stolen?
Determining just how much has been stolen is difficult because many victims sent traditional checks that went uncashed, and some PayPal fund payments have been halted. But to give the court an idea of how widespread the scams were, Higgins was able to track down all the Nelsons' electronic funds transfers between PayPal and the Bank of New Hampshire from April to July 2000. During that time, Nelson controlled 31 PayPal accounts and moved $84,000 out of the PayPal system.
And that's just one bank account, and one payment type, during one three-month slice of time.
"It's so extensive it's really hard to say how much the actual dollar loss is," Higgins said. "I could only guess, but it's certainly hundreds of thousands of dollars."
It's unclear how many frauds Nelson may have executed since he went on the run in February, but MSNBC.com readers have sent in evidence suggesting about 10 other scams that used similar methods. Gunnison said Nelson is still using auction sites to scam victims, and asked Net users to help catch the fugitive.