Updated 9:50 a.m.

CANNON BEACH - Authorities wonder how many bilked art investors are out there.

A federal grand jury in Portland indicted a Cannon Beach art dealer Thursday. The indictment claims the investments arranged by Donald Dean Seybold were no more than a Ponzi scheme involving some 2,000 artworks including paintings, prints, sculptures, plates and books.

For more than a decade, Seybold has owned the Ernst & Ernst Collectors Gallery, which had locations in Cannon Beach and Seaside.

The grand jury charged Seybold, 36, with nine counts of wire fraud. Federal authorities say Seybold allegedly raised money from investors telling them they could participate in the sale of art in deals that he had already put together.

He faces a maximum sentence of 20 years in prison and a fine of $250,000 on each of the nine charges.

"The conduct varied with different investors," said Hannah Horsley, an assistant U.S. attorney. "The basic scheme is he would solicit investors to purchase art and it would be resold. He would say that he had a buyer who had agreed to buy.

"Almost across the board, the art and the buyer didn't exist."

While prosecutors believe that Seybold's alleged swindle was more modest than other high-profile cases like the Bernard Madoff scandal, authorities believe he caused losses of about $3.2 million to more than 100 investors.

Starting some time in 2004, and continuing through March 11 this year, prosecutors say Seybold lied to artists and investors who consigned art through his galleries. He allegedly told investors that he would invest profits from their early deals into subsequent transactions. Prosecutors allege that in order to lull investors and delay discovery, he paid off some early investors with money from new investors, the definition of a Ponzi scheme.

During this time, federal investigators say Seybold obtained a resort timeshare in Las Vegas, a restored 1944 Jeep and a Toyota sports utility vehicle.

Seybold was arrested Thursday in Seaside and appeared in U.S. District Court in Portland, where he pleaded not guilty to all charges and was released. Trail was set for July 14 before U.S. District Court Judge Anna Brown.

The case is a joint investigation involving the Federal Bureau of Investigation and the Cannon Beach Police Department, with assistance from the Seaside Police Department. U.S. Attorney for Oregon Karin Immergut commended the agencies for their work on the case "and their efforts to recover assets for the victims."

The FBI is looking for other investors in Seybold's art deals. They ask anyone who believes they are victims to call (503) 273-5812.

The Oregonian contributed to this story through an Associated Press member exchange.

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