SAN FRANCISCO (Reuters) - A San Francisco computer expert duped international media on Saturday into believing Islamist kidnappers had executed an American hostage in Iraq by staging his own mock beheading on the Internet.

The FBI questioned Benjamin Vanderford, 22, shortly after the hoax became public. "We will pursue any and all legal avenues for prosecution," said FBI special agent LaRae Quy of the bureau's San Francisco office. "At this point the matter is still under investigation."

The video, which appeared on a Web site used by Islamic militants, showed Vanderford appealing to the United States to leave Iraq. The Web format was that used by al Qaeda ally Abu Musab al-Zarqawi and was introduced by a headline that said it showed Zarqawi killing an American.

"If we don't (leave Iraq), everyone is gonna be killed in this way ... I have been offered for exchange for prisoners here in Iraq," the terrified-looking man said, rocking back and forth in his chair, his hands tied behind his back.

The video showed a hand with a large knife apparently slicing the neck of a limp body.

But the blood was dye, the setting was a friend's garage, the Koran reading was a tape and the knife was held by a friend. Mutilated bodies and sound effects were edited in from photos on Web sites and the video was purposefully blurred to make it seem even more amateur, Vanderford said.

A major motivation for his action, an unrepentant Vanderford told Reuters, was to see how the world media would react and to see if they would be fooled. "It really illustrates the potential that this kind of thing would happen," he said.

Vanderford said he worked at branch of Wells Fargo bank. A college drop-out, he was a candidate for the local city council earlier this year but had since dropped out of the race. His Web site also says he is a video game programmer and works with a local record label.

He said his video was made and posted on the Web about three months ago, intended as an experiment into how quickly such items spread on the Internet. He was surprised at how long it took.

"It is unfortunate that it had to be the type of video that was offensive and shocking, but it was necessary to see how quickly this kind of thing would spread," he said.

Vanderford said he distributed the staged video on Kazaa and other Internet peer-to-peer networks which are popular swapping forums for films, music and software. He said if his staged death appeared on any terror-related Web sites it was the work of others who found the video on the peer-to-peer networks.

Scores of hostages from two dozen countries have been seized in the last four months. Most have been freed but at least 10 have been killed, and at least 20 are still being held in Iraq.