If you need a referral for a local real estate attorney, feel free to contact me.
This is why we have escrow money - so the seller cannot take it and run. It is so important not to give the seller money before the closing.
If the sale can close and be funded before the auction, then it could be legitimate. If the seller was offering seller financing or lease to own, you have been defrauded.
If that is the case, start with the police and go from there. There are cases like this where the person who claimed to own the home actually didn't, they take the deposit and disappear. I'm sorry this happened to you, it makes good sense when trying to buy to get a professional involved before any money changes hands or terms are negotiated. I hope you get your money back.