A Virginia auctioneer who last month attempted to hold an auction at the Elbow Beach hotel, but had to leave the Island for an alleged immigration violation, has been subject to legal action in the US for deceptive business practices at auctions.

In 2001 Anwar Khan, president of Fidelity First Financial Corporation was disciplined and fined by the Oregon AG consumer protection department for using unlawful advertising and is subject to an injunction which, if violated, will land him in jail.

In 2002, Mr. Khan recruited Bermudian, Zahra Jabbar, to run a series of advertisements in Bermuda for an auction which was due to be held at the Elbow Beach hotel on 20 January 2003.

He himself arrived in Bermuda on 17 January 2003 and held a telephone interview with The Royal Gazette.

During the course of that interview he apologised for the fact that his advertisements had not made it clear that works of arts by artists such as Picasso, Pizarro, Renoir, Degas and many other artists were not genuine paintings, but lithographs. Mr. Khan said: "Nowhere did it mention the word oil paintings."

It was pointed out to him that the advertisement stated: "Artists include: Picasso, Tarkay, Dali, Max, Chagall, Manet, Degas, Bragg, Steynovitz, Icart, Zion, George, Renoir, Erte, Monet, Picot, Kovrigo, Matisse, Sharinski, Neiman, Rodin, plus much more. Oil paintings."

Mr. Khan said: "I'm sorry about that, it should have been made clear."

The following day, The Royal Gazette reported that Mr. Khan was operating in Bermuda on a tourist visa, that the licensed Bermudian auctioneer, Ms Jabbar, had no prior experience of auctions or fine art and published Ms Jabbar's statement that she had decided to cut ties with Mr. Khan and cancel the auction.

However, Ms Jabbar subsequently denied having made her earlier statement and claimed: "I'm a good person and I do want to pursue a career as an auctioneer... Yes there were one or two glitches we didn't cover... the next time I'll make sure we cover all our bases.

"Other than that everything is legal and everything is legit. There is nothing controversial about it." It transpires that Anwar Khan has had several brushes with the law for misleading advertisements.

In 2001, he was ordered by the Multnamah County Circuit Court, Oregon to cease misrepresenting the source of goods or affiliation with any other persons in connection with his auctions. Until 2005 he must have all advertisement for his business reviewed by the Department of Justice at least seven days prior to any mailing or use though any media in Oregon.

In 2002, Patricia Madrid, Attorney General for New Mexico, posted a warning about a misleading advertisement for an Auction in Albuquerque.

In 2001 Anwar's relation, Azam Khan, and his corporation, First Guarantee Credit Corporation, was subject to disciplinary hearings concerning advertisements for auctions to be held in Wisconsin that consisted of false, deceptive or misleading statements.

The main complaint in that hearing was that the advertisements contained references to "US GOVERNMENT SEIZED" and "Bankruptcies, Government confiscated goods".

These were the same phrases that were used in the advertisements which were used by Mr. Khan in Bermuda.

It is against the law in the US to imply that a government institution is involved in a business venture when there is in fact no involvement.

Karen Marshall, executive officer of the Bermuda Consumer Affairs Department, said she was not aware of any auction scandal. Usually, she said, an investigation would only be launched in response to complaints from the public.

Ms Marshall said that Consumer Affairs would take action if they were aware of suspicious advertisements, however: "We would call the person who placed the ad to make sure it was not a mistake by the newspaper, but if it is deemed that the ad was put in there as a misrepresentation then we would pull it and send out a press release. Under the consumer affairs Act it is an offence to mislead or misrepresent what you're doing to to the public," she said.

Another element common to the advertisements used by the Khans in the US and Bermuda, was the suggestion of a distressed sale, due to a death, Police seizures, divorce, bankruptcy and so forth.

In Oregon the advertisements claimed that the goods to be auctioned were part of an estate that was forced to liquidate following bankruptcy reorganisation and a health crisis.

In 2002 an investigative reporter for Oregon's Morning Call newspaper reported on an auction that was advertised by Azam Khan as being held due to the divorce of "the prominent attorney at law, Stacy Michaels."

The reporter discovered that Anwar Khan held a separate auction in Texas and the advertisement stated that furniture and paintings were from the estate of "prominent attorney Stacy Michaels". The Morning Call found that there were no records of an attorney named Stacy Michaels practising law in Texas or Oregon.

A spokesperson for the Oregon attorney general's office, Jan Margosian told the Morning Call: "The MO (method of operation) is always the same."

Last year the Oregon attorney general obtained a permanent injunction against Anwar Khan, forbidding him from posting misleading ads. He paid a $2,500 fine and must submit all future ads to the state Department of Justice for review.

"If he operates in the state again, he's going to jail," Margosian told the Morning Call. This took place in the Spring, 2002. Later on last year, Anwar Khan appears to have turned his attention to Bermuda.