According to the GNU Public Licence, you are allowed to charge a fee for 'distributing' open source software, as long as you make the source code freely available (I think you might even have to include the source code, not sure).
Even if he has modified the program, he still has to provide the source code for free, as it is a work derived from Audacity. Its the same rule that lets linux distributions charge heaps for boxed sets, but users can download the same software for free.
So unless he's not supplying the source code, he's not doing anything wrong. Sure he's an asshole for decieving people like that, but yeah. I've seen the same thing on Aussie ebay. If he's claiming that it's propietry software then he is breaking the law.