WALNUTPORT, Pa. - Mary Jo Pletz was really, really good at eBay. But now the former stay-at-home mom and gonzo Internet retailer fears a maximum $10 million fine for selling 10,000 toys, antiques, videos, sports memorabilia, books, tools and infant clothes on eBay without an auctioneer's license.

An official from the Department of State knocked on Pletz's white-brick ranch here north of Allentown in late December 2006 and said her Internet business, D&J Virtual Consignment, was being investigated for violating state laws.

"I was dumbfounded," said Pletz, who led the dark-suited investigator to a side patio area where he grilled her. "I told him I would just shut down," she said.

The Pletz case has unleashed a political storm in Harrisburg over what - if anything - should be done about regulating Internet auctions in Pennsylvania.

Two bills have been introduced in Harrisburg. One would require Internet sellers who run a business to get an electronic auctioneer's license that would cost about $100 a year. The other would leave Internet auctions as the Wild West of retail.

Thousands of jobs and the fate of a new economy industry in Pennsylvania could be at stake. There are 400 so-called Internet retail drop-off stores in Pennsylvania, according to state officials, and 14,000 state residents who earn most of their annual income selling on Internet auctions.

EBay opposes state regulatory action on Internet auctions around the nation and warns that it could threaten the livelihood of an estimated 430,000 people who "earn a substantial portion or all of their incomes selling on eBay."

Some Pennsylvania officials now admit that Pletz, with her heart-tugging story, wasn't the best person with whom to make a legal point.

The 33-year-old woman opened her Internet business in 2004 so she could stay home with her 6-month-old daughter, Julia, who was diagnosed with a hypothalamic hamartoma brain tumor.

She cooperated when told it was illegal and works at dental offices in Allentown, Bethlehem and Lehighton as a hygienist to help pay the bills at home. Julia, whose health stabilized on medication, is enrolled in day care. Pletz also has a son, Douglas, 7.

But the state hasn't dropped prosecution. It sent Pletz a complaint in April and an amended complaint in December. The complaint says she could be fined $1,000 for each violation of the state law. The April complaint noted 10,000 sales. Pletz and her lawyer, Joseph V. Sebelin Jr., of Palmerton, did the math - $10 million in possible fines. The second complaint does not list a number.

A July hearing was canceled; a new one hasn't been scheduled.

In an e-mail Monday, a Department of State spokeswoman said Pletz faces $2,000 maximum fine because of two counts listed in the complaint.

"Well it's nice they told you, because they haven't let me know," Pletz said.

Because of the complaint, Pletz worries the state also could revoke her dental hygienist's license, which she earned by attending community college for seven years at night.

"I really wish that they will walk away from that one and prosecute somebody else," said State Rep. Michael Sturla (D., Lancaster), who is chair of the House Professional Licensure Committee. "There is every reason in the world that if she is found guilty she should be exonerated," he said.

Sturla has proposed the bill to create the electronic auctioneer's license. The license would require the Internet seller to buy a $5,000 bond for about $40 a year. This would protect consumers, he said.

Sen. Rob Wonderling (R., Montgomery), who labeled the Pletz case "bureaucracy run amok," has introduced a bill that would exempt eBay sellers from auctioneer's licensing.

Barry Fallon, in the Harrisburg area, is the only other person in Pennsylvania to face an investigation for selling on eBay without an auctioneer's license, according to officials. He closed his three-employee iSold It franchise store after the investigator showed up last year.

Fallon, 61, said an auctioneer offered to represent him for a commission of $1 per sale so that he could keep his business. "It's like the buggy-whip manufacturers deciding whether these newfangled automobile manufacturers can do it without a buggy-whip license," he said.

"It's breaking new ground," Department of State spokeswoman Leslie Amoros said of the Pletz and Fallon cases. People who sell their own goods on eBay are exempt from the auctioneer's licenses, she said.

Pletz launched her business in 2004 when she realized she couldn't work full time because of Julia's medical tests and doctors visits.

In the hills around Walnutport, the word spread of D&J Virtual Consignment and Pletz's talent for selling on eBay. People in the area weren't computer savvy. Pletz's husband, John, 38, is a computer technician. Some people were uncomfortable supplying the Internet auction giant with banking information. Pletz wasn't. Customers, she said, paid a 30 percent sales commission.

"There was a lot of surprises," she said. A novel pull-along toy puppy sold for $600. A pull-along toy duck from the same seller sold for $200. "We were paying the bills. We weren't making a lot of money. I was able to stay home with Julia." She declared the income from the auctions on her taxes, Pletz said.

A few days after Christmas 2006, the state investigator drove up. She recalls his warning that the state was "drawing a line in the sand."

"I don't know how I won this lottery," she added, with her German shepherd, Ripley, running crazily around the kitchen, and Julia holding onto her leg. "I guess they wanted to go after somebody who was good at what they do. We were very good."

D&J Virtual Consignment had 11,000 feedback comments on eBay and 14 were negative, Pletz said, giving her a 99.9 percent satisfaction rating.

Amoros, the state spokeswoman, said investigations are a "complaint-driven" process but those complaints are confidential.

Pletz stayed off eBay for months.

"Maybe around October or November I started again," she said. An aunt was downsizing into a smaller home and had items. "I thought, I'm going to sell. Now, did I take a commission for it? No."

Contact staff writer Bob Fernandez at 215-854-5897 or bob.fernandez@phillynews.com.