An elaborate money-making scheme at city tow pound auctions started as "an honest mistake," police said, and ended in the arrests of six people yesterday -- including an employee of the city controller's office.

Police said Michael Livingstone, 35, a performance auditor for the city, was at the helm of the scam, helping to rig vehicle auctions at the city supply warehouse for several accomplices, who would bid high amounts of money but would pay much lower amounts for the vehicles.

The deals, police said, cost the city more than $17,500.

Mr. Livingstone, of Mount Washington, has been charged with conspiracy, theft by deception and 22 counts of misapplication of government property. He was suspended from his job pending discharge, Controller Michael Lamb said.

Also facing conspiracy and theft by deception charges are Donald Matthew Tollan, 56, of Esplen; his sons, Donald Matthew Tollan Jr., 38, Sean Matthew Tollan, 28, and Donald Mathias Tollan, 29; and their friend, Edward Freiberger, 32, of McKees Rocks.

"It was a scam that started with an honest mistake" when Mr. Livingstone wrote the wrong price for a vehicle on a bid record, said auto squad Sgt. Rich Begenwald. One of the arrested men said, "Thanks for hooking me up. You did me a favor. You cut me $1,000 off that car.

"It went from there," Sgt. Begenwald said.

Mr. Livingstone's 14-page criminal complaint says the Tollans would regularly attend city auctions, place high bids for vehicles and then present bid slips with much lower dollar amounts. Mr. Livingstone was responsible for recording the winning bid prices on the slips. Police said he was paid to alter the bids, though they would not disclose how much.

Police began investigating the scheme in August, when a man told detectives he saw "a heavyset guy" bid $1,200 on a 1999 Yamaha motorcycle and pay just $200 for the bike at the city supply warehouse on Railroad Street, according to a criminal complaint.

It described another incident in September, when an Acura bid up to $8,500 and Donald Mathias Tollan tried to buy it for $2,000, which was the amount written on bid records. People standing in line after the auction told police they saw Donald Mathias Tollan and his brother, Don Matthew Tollan, try to make the deal, and the car was pulled from the auction because they reported the discrepancies.

The complaint details several similarly fraudulent transactions.

"Fortunately we got involved in this," Sgt. Begenwald said. "This could have gone on a long time."

At the auctions, Don Matthew Tollan and Sean Tollan represented themselves as buyers for McGann and Chester Auto Sales in Carrick, police said. William Chester Jr., president of the company, said he is a victim of the scam.

"Nobody from my place ever went to city auctions," he said. "I've been cooperating with police."

He said his business earns about 10 percent of its revenue from towing vehicles for the city of Pittsburgh. Mr. Chester said he once bought cars from the elder Mr. Tollan years ago, but neither Mr. Tollan nor his sons have ever worked for him.

In June, the Pennsylvania Department of State denied applications for salesperson licenses from Mr. Tollan and his sons. They applied under the name McGann and Chester Auto Sales, according to documents provided by Mr. Chester.

"They were buying cars under my name," he said. "I haven't seen them in years."

Mr. Livingstone is a 12-year city employee and earns $39,951 annually.

"I'm angry as the controller. I'm angry as a public employee because this makes all public employees look bad," Mr. Lamb said at a news conference last night. "I'm angry as a taxpaying citizen of this city that someone violated the public trust."

Mr. Livingstone had been the only person at the auction reviewing bid records.

"We need to make sure there's a division of workload down there," Mr. Lamb said, adding that his office and others in the city were exploring ways to better oversee the auctions.

In January, longtime controller's office employee Kim D. Platt was arrested for theft of checks and eventually pleaded guilty to forgery and was sentenced to two years' probation plus $5,101 in restitution.

Mr. Lamb also said last night that the controller's office is involved in an audit that would have revealed the recent crimes had it happened earlier. "At the end of the day, I blame myself that this individual was able to do this."