The $40 million transit fraud scheme

Two men have been charged with running a six-year scheme in which they allegedly defrauded a ride-hailing company and customers out of $40 million in fraudulent “surveillance” fees by selling pirated smartphones and fake GPS apps to hundreds of shared transport drivers.

An indictment unsealed Wednesday in federal court in Brooklyn charges Eliahou Paldiel and Carlos Arturo Suarez Palacios with wire fraud and money laundering conspiracies. According to the office of Breon Peace, U.S. Attorney for the Eastern District of New York, the two men are accused of outfitting more than 800 ride-hailing drivers with devices that allowed them to fraudulently collect “surveillance” fees and manipulate legitimate sharing apps to get rich. se.

The indictment alleges that the scheme ran between November 2018 and August 2024. Not only did Paldiel and Suarez defraude users and drivers of an unnamed ride-sharing company, making passengers pay millions of dollars in fraudulent “surveillance” fees , but they also lacked legitimate ride sharing. drivers of their true share of “rising” fares and most profitable journeys. The fraudulent devices and apps they sold for profit allowed their driver co-conspirators to “choose” high-fare rides, obtain proprietary information and “queue” in areas where they were not physically present, they claim court documents.

Over the course of the scheme, the driver co-conspirators allegedly made more than $40 million from ride-hailing customers. Paldiel and Suarez received more than $1.5 million from driver co-conspirators through just one peer-to-peer payment service, prosecutors allege.

Paldiel was arrested in Brooklyn and Suarez was arrested in Brick Township, New Jersey. In addition to the U.S. Attorney’s Office, the New York Field Office of the Federal Bureau of Investigation participated in the case.

Charges are charges and defendants are presumed innocent unless and until proven guilty. If convicted, the defendants face up to 20 years in prison on each of the two counts.

“As alleged, the defendants sought to enrich themselves by corrupting the ride-sharing market at the expense of unsuspecting passengers and hardworking, rule-abiding drivers,” Peace said in the arrest announcement.

Over nearly six years, this alleged conspiracy provided “an unfair financial advantage to more than 800 participants and disrupted the integrity of ride-sharing services nationwide, netting participants more than $40 million,” said Acting Deputy Director of the FBI Christie M. Curtis.

The unnamed ride-hailing company primarily operates through its smartphone app, connecting users with drivers for on-demand ride services. The defendants allegedly sold fake apps to co-conspirators drivers on cellular devices that had their security restrictions modified or removed, thereby allowing the installation of apps that the device manufacturer did not make available for the device.

Fake GPS “Spoofing” and Screwber Apps

Prosecutors allege that Fake GPS is a GPS spoofing app developed by the defendants and others. Fake GPS allowed drivers to manipulate or “spoof” their locations and make it appear they were in an area with rising fares when in fact they were not.

Another app they allegedly developed, Screwber, provided co-conspirator drivers with information about potential rides not otherwise available to other drivers before they accepted such rides. For example, Screwber allowed them to learn destinations and approximate fares, allowing them to choose only the most profitable rides on offer.

By installing outdated versions of the rideshare company’s app, the defendants ensured that the Fake GPS and Screwber apps were not detected by security features implemented in newer versions of the app, prosecutors allege.

Prosecutors indicate that the defendants discussed their strategy among themselves. For example, in November 2018, Suarez is said to have written to Paldiel: “You know Screwber is like drugs… once you get on it you get withdrawals when you can’t get your dose.” In another message, prosecutors say Paldiel wrote to Suarez about the driver co-conspirators: “I’m getting them hooked on software, even a drug dealer throws in a few extra grams of weed at first.”

Officials ask that anyone with information related to this case contact the FBI at [email protected]

TOPICS
Fraud