Catch Me If You Can

Other buyers began finding themselves in similar situations. "I sent money order, they sent nothing," another buyer wrote in May 1999. Eventually, a postal inspector knocked on the door of the house that Nelson rented from his brother and told Nelson that there had been complaints about his auctions. The sheriff and a representative from the Illinois attorney general's office also dropped by.

Nelson decided that it might be a good time to move to New Hampshire. "My wife hated the Midwest, and she'd lived in Nashua [New Hampshire] before," he says. Another motivating factor: The Illinois attorney general was building a case against the Nelsons for failing to deliver merchandise they'd sold, selling pirated software, and establishing new screen names with false information after their old screen names had been suspended. So Jay and Krista relocated to Lyndeborough. (They later reached a settlement with the Illinois attorney general, agreeing to pay $6,000 to their customers and $1,000 to the attorney general's Consumer Education Fund.)

Since most auction bidders look at a seller's feedback messages before they place a bid to determine whether the seller is trustworthy, Nelson devoted a lot of energy to creating positive feedback profiles for his various online identities. One identity of Nelson's would "sell" an item to another, and then the "buyer" would post positive feedback on the "seller." Nelson would also buy inexpensive items, like paperback books, from sellers who actually existed, hoping that they would add good feedback to his profile. He didn't care about actually receiving the books, and he regularly used a fake mailing address.

Once an identity had received enough positive feedback to be considered trustworthy, Nelson would set up a "Dutch auction," in which he claimed to have a large batch of a particular item to sell. Dutch auctions allow sellers to post quantities of identical merchandise all at once, rather than item by item, and bidders can buy as many as they want. By the time buyers started complaining to Yahoo or eBay that they'd paid but never received the product, causing that particular identity of Nelson's to be suspended from selling, Nelson would have collected most of the money. In June 2000, one identity, harddrives4sale, took $32,104 from would-be buyers on Yahoo; in September, another identity raked in $12,985 on eBay.

By the fall of 2000, when Higgins felt he had made enough progress to take the next step in his investigation, the Nelsons had moved again. They'd purchased a historic house on Main Street in Gilsum, New Hampshire, a town near the Vermont border. The house, built in 1883, had once been an inn, and Nelson converted the third floor, which had served as the inn's ballroom, into his office. Nelson hardly kept a low profile: He coached Little League, led a Boy Scout troop, and occasionally helped his neighbors with computer glitches.

Higgins first met Nelson on the morning of October 20, 2000, when Higgins arrived at the front door of his house with a search warrant, two New Hampshire state troopers, six fellow postal inspectors, and a battering ram. The last proved unnecessary: Nelson answered the door when Higgins knocked. "Mr. Nelson, we're federal agents from the U.S. Postal Inspection Service," Higgins told him. "We have a federal search warrant from a magistrate regarding your activity on Internet auctions."

Higgins and his team took five computers from Nelson's house, along with several boxes of documents. The search took about six hours, and afterward, the computers were sent to a crime lab in Virginia for analysis.

Nelson expected to be arrested that day. But Higgins first needed to comb through the evidence from the search and write up a formal complaint against Nelson. "I knew there was stuff on my computers that would screw me," Nelson says.

Learning of his own indictment on the 11 o'clock news

After the search of his house in Gilsum, "we figured Nelson was on notice," Higgins says. But then Higgins got calls from Stoney Burke, a member of eBay's antifraud squad, and his contact at PayPal, who reported, incredulously, that Nelson still seemed to be at it. (Yahoo's auction service was much less cooperative with the investigation, Higgins says. A Yahoo spokeswoman issued a statement: "When we are contacted by the authorities, we work closely with them to provide the requested information in a timely manner.")

With a proud smile, Nelson says that shortly after his home was searched, he built three new computers. "They took the CPUs but left the keyboards and monitors," he says. "And we had a lot of extra parts sitting around."

With his new computers, Nelson continued vacuuming money via eBay and Yahoo auctions. In November and December of 2000, under the name Susancutey, he took bidders for more than $30,000 on Yahoo Auctions. As YoshiInc on eBay, he "sold" $7,600 worth of computer gear.