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SACRAMENTO — Two men accused of selling fake masterpiece paintings on an online auction site and inflating the bid prices pleaded guilty Tuesday to fraud charges in federal court. 

Kenneth Walton, 33, pleaded guilty to three counts of wire fraud and four counts of mail fraud. Scott Beach, 31, pleaded guilty to one count of wire fraud and three mail fraud charges. 

Walton, a Sacramento attorney, was accused of having nearly 20 different eBay login identities that he used to sell paintings and bid on paintings. Those login names hosted more than 250 auctions, according to court documents. 

Beach, of Lakewood, Colo., is also accused of having many login identities that he used to drive up auction prices. 

Both men faced five years in prison and a $250,000 fine on top of restitution payments. If they cooperate with the federal investigation, they could be sentenced to probation. 

A third man, Kenneth Fetterman, 33, of Placerville is a fugitive, prosecutors said. 

Harold Rosenthal, Walton’s attorney, said his client would cooperate with the investigation but did not know where Fetterman was living. 

Fetterman has been charged with fraud and money laundering. He faces at least 20 years in prison and a $500,000 fine if convicted. All three men together are thought to have hosted about 1,000 auctions from late 1998 to May 2000. 

The fraudulent bidding, known as shill bidding, is forbidden by San Jose-based eBay Inc. and is generally illegal in traditional auctions. EBay’s deputy general counsel, Rob Chesnut, has said he believes this is the first criminal case to result from alleged shill bidding online. 

In the plea agreement, Walton agreed to pay about $65,000 in restitution to six people who bought the paintings. He also agreed not to challenge a decision to remove him – at least temporarily – from the State Bar of California. Beach agreed to pay about $39,000 in restitution. 

Paintings offered for sale included an orange-and-green abstract work on which Walton forged the initials “RD 52” to imply it had been created by renowned artist Richard Diebenkorn, according to court documents. 

A Dutch man bought it for $135,805. EBay later dissolved the deal and barred Walton from the Web site. 

Prosecutors accused Walton of posing as an unsophisticated art owner who knew nothing about the art he was selling. The “RD 52” painting was sold along with a Mexican voodoo mask and an unopened roll of twine, according to prosecutors. 

The indictment said the three men drove up bids together on other works presented as if they were created by Diebenkorn and artists such as Alberto Giacometti, Clyfford Still and Maurice Utrillo. 

The case was investigated by the FBI, IRS, and the Sacramento Valley Hi-Tech Crimes Task Force. 

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Ebay: http://www.ebay.com