No Reserve means No Reserve!
It's illegal (and should be) because these auctions are being listed as 'No Reserve' auctions.
Whether or not someone is willing to pay a higher price is irrelevant. The fact that these auctions are being touted as having no reserve price, when in fact company employees are bidding on them (and thus creating a minimum or 'reserve' price) is unfair not only to the consumer, but also to the other sellers on ebay who don't reap the benefits of getting a low opening price to boost traffic to their ads.
And here-here to Anigel for pointing out the slight $4,600,000 'discrepancy' between the fine and the profit. If all crimes were as profitable as that, I'd trade in my suit and tie for a ski-mask and gun and make my way to the nearest Bank of London.