Federal prosecutors in Brooklyn accused two shady software developers on Wednesday of creating an app that helped Uber drivers trick customers into paying millions of dollars in fraudulent “surge” fares.
According to federal investigators, the pair developed two apps, “Screwber” and “FakeGPS,” that drivers used to manipulate fare surges.
Eliahou Pardiel, 52, of Queens, and Carlos Arturo Suarez Palacios, 54, of Brick Township, New Jersey, were indicted on federal wire fraud and money laundering charges in Brooklyn federal court on Wednesday. Both men pleaded not guilty and were released on $210,000 restitution. The defendants and their lawyers declined to comment.
Federal investigators say the pair installed the app on jailbroken phones to avoid detection of their custom software, as well as older versions of Uber's official app.
Federal agents said the perpetrators sold the phones near Pardiel's Queens home, charging $600 for the devices, $300 a month for Screwbar and a one-time fee of $50 for the FakeGPS app.
In total, federal agents claim more than 800 drivers were arrested and the pair made off with nearly $1.5 million.
Meanwhile, drivers earned more than $40 million in fare revenue between January 2020 and June of this year, but it's unclear what percentage of that came from unfairly inflated fares.
Federal prosecutors allege that the scam had two distinct victims: passengers who were forced to pay extra for rides, and honest drivers who lost out on real surge fares and higher-value fares.
Federal investigators said Screwver provided drivers with information they weren't authorized to have, allowing them access to destinations and estimated fares so he could handpick the most profitable customers.
In a November 2018 text message conversation, Paladiel wrote to Suarez, “Screwbar is like a drug. Once you get hooked, you have withdrawal symptoms when you can't get the drug,” and “I get them hooked on the software, even drug dealing.”[er] “He would then initially throw in a few additional grams of marijuana,” according to the indictment.
The federal government alleges that the FakeGPS app allows passengers to fake their location, making it appear they are in areas with high fares when they are not, allowing them to skip lines at airports and events.
The jailbroken phones also offered push notifications. According to the indictment, one helpful message from April warned drivers, “It is extremely dangerous to use two iPhones with FakeGPS. If you need FakeGPS at an airport, we recommend using it once a day. If you are unsure, do not use FakeGPS. And if you are using FakeGPS, never take a selfie.”
“As alleged, the defendants sought to corrupt the ride-sharing marketplace and enrich themselves at the expense of unsuspecting passengers and hard-working, law-abiding drivers,” U.S. Attorney Brion Peace said Wednesday. “This indictment has taught the defendants an important lesson: there is no such thing as a free ride.”
The indictment does not name Uber as one of the ride-hailing companies in question, but a spokesman for the ride-hailing giant acknowledged that it was a target of the scam.
Disgruntled drivers often refer to the company as “Screwber” in online forums.
Uber spokesman Josh Gold said the fraudulent apps caused the company to misreport ridership to the Taxi and Limousine Commission, an indicator of driver downtime that ride-sharing companies want to minimize.
Drivers recently protested, alleging that Uber had banned them from the app in an effort to boost ridership.
“The alleged fraud committed by 800 bad actors has not only taken money from hard-working drivers' wallets, but has also forced ride-sharing companies to further restrict employment for tens of thousands of TLC drivers,” Gold told the Daily News.
If convicted at trial, the two men face up to 20 years in prison. They were awaiting arraignment Wednesday in Brooklyn federal court.
It was not immediately clear how many of the more than 800 drivers operate within New York City.
David Do, head of the Taxi and Limousine Commission, told the News that they are working to ban drivers who use the app.
“We are incredibly grateful to the FBI and Department of Justice for taking down this shady scheme that stole money from both passengers and honest, hard-working drivers,” Du said. “We are working closely with the FBI to identify TLC drivers who used this illegal app and ensure they never again drive for-hire vehicles in New York City.”
Evan Simko Bednarski
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