Doug,

They're called shill bidders, and it's against eBay rules... if you suspect an account of using shill bidders, or you suspect a bidder of being a shill, report them to eBay.

I recently auctioned a few pieces of high-end test equipment, and there was a similar instance. The bid went up a few tens of dollars at a time (up to $800, if memory serves) until the max was hit (and they were the winner). Suddenly they backed out of their bid claiming the had made a typo (bid reversals are allowed for accidental typos, like bidding $400 instead of $40, but it should not happen often). How can you make a typo multiple times, each time increasing the bid? Lucky for me, someone else came along and bid well beyond that max, but I reported the bidder.