According to Gigs Taggart, he and several others were scammed for a combined $10,000 US dollars or so, and while Linden Lab appears to have banned the perpetrator, Taggart says that Linden Lab are basically allowing the fraudster to get away with it.

Bargaining in good faith, Taggart made an offer on an island for sale, unaware that the seller was receiving money for the sale of the same island from other would-be purchasers. The first purchaser ended up with the island, but everyone else has nothing to show.

After the fold, Gigs Taggart tells the story.

Gigs Taggart's story:

In Second Life, used island regions are a hotly traded commodity,
fetching prices from $1400 to $2100 on the open market. Usually these
land deals are completed without a hitch, but a series of recent events
has exposed a critical flaw in the system that Linden Lab uses to handle
the transfer of these valuable assets.

Between July 4, 2007 and July 9, 2007, a person operating under the
Second Life name "Juggernaut Stoklitsky" sold the same island region to
6 different people. The first purchase was legitimate; the island was
eventually delivered to this person. The other five buyers were not so
lucky.

Jim Gervais (SL: JR Unknown) was among one of the victims. Gervais paid
Stoklitsky 485 thousand Linden Dollars (1850 US Dollars) on Sunday, July
8, 2006. Gervais suspected something was awry the next day, when he
noticed that Stoklitsky had posted another advertisement on the Second
Life forums claiming to have a region for sale, even though Stoklitsky
only owned two regions.

"I logged into a second account, and sent Stoklitsky another offer,
which Stoklitsky accepted. I asked my friends and family that had Second
Life accounts to make him an offer and Stoklitsky accepted every offer,
even though he only had two islands," Gervais said. At this point on
Monday, July 9, he contacted Linden Lab and informed them of the scam.

In total, three victims paid using Linden Dollars. Jason Giglio (SL:
Gigs Taggart) also paid Stoklitsky on Sunday. Giglio realized there was
a problem when he contacted Linden Lab early Tuesday morning, and Linden
Lab responded that they were "investigating the situation" but would
give no further details. "I really didn't know what to think, Linden
Lab stonewalled me. I didn't get a straight answer until Jack Linden
called me on Wednesday," said Giglio. The other two victims paid using
PayPal.

Linden Lab's head concierge Jack Linden sent a message to all the
victims of this scam on July 17, stating "despite our best efforts we
have not been able to recover funds from [Stoklitsky]."

Several questions remain open in this case. Linden Lab requires from
one to five business days to process the sale of Linden Dollars, with
the typical delay being two to three days. It is unclear how Stoklitsky
cashed out the Linden Dollars he was paid over the weekend, as Linden
Lab became aware of the scam on that Monday.

The victims are working with the FBI and local law enforcement in the
area where they believe Stoklitsky resides. Linden Lab has declined to
take any action on this matter, claiming, "Linden Lab does not generally
get involved in private deals between residents," with only the
assurance that they will "comply with legal processes".

Stoklitsky owned a second island, the disposition of which is known only
to Linden Lab. The second island was not liquidated to pay restitution
to the victims, rather, it appears that Linden Lab has removed the
island, making it available for resale by Linden Lab.

Linden Lab has not responded to queries regarding this matter.