Two men are facing charges from federal prosecutors with a scheme that allegedly brought the pair $1.5 million through “surge pricing” that was fraudulent.
On Wednesday, federal prosecutors made the announcement that they had arraigned 52-year-old Eliahou Paldiel of Queens and 54-year-old Arturo Suarez Palacios on charges of money laundering and wire fraud.
Prosecutors are alleging that the two sold smartphones that were hacked and then loaded up with illicit applications. One was an app labeled as “Screwber,” which was sold to more than 800 drivers for the ride-sharing platform Uber.
These apps allowed the drivers to manipulate the software Uber had created so that they could view the destinations of potential riders, and the associated fares, before they accepted any rides. They did this by faking their locations in some areas that were in surge pricing at the time or that had higher demand.
In a statement, U.S. Attorney Breon Peace said:
“As alleged, the defendants sought to enrich themselves by corrupting the rideshare market at the expense of unsuspecting passengers and hardworking drivers who play by the rules.”
According to court documents, Suarez and Paldiel were allegedly able to get around the system Uber created, which allowed them to pocket $1.5 million just for themselves. The drivers who participated in the scheme by purchasing the hacked phones collectively brought in almost $40 million more.
Included in the court documents is a text message that Suarez sent to Paldiel during the early stages of the scheme in 2018, in which he wrote:
“You know Screwber is like drugs … once you get into it you’ll get withdrawals when you can’t get your fix.”
According to representatives from Uber, the scheme deprived thousands of hardworking drivers from being able to access work. A spokesman for the company, Josh Gold, said:
“The alleged fraud by 800 bad actors not only took money out of the pockets of hardworking drivers — it forced rideshare companies to further limit access to work for tens of thousands of TLC [Taxi & Limousine Commission] drivers.”
David Do, who’s the commissioner of the Taxi & Limousine in New York City, condemned all of those drivers involved in the scheme. He commented:
“We are working closely with the FBI to identify any TLC drivers who used these illegal apps and ensure they never drive for hire in New York City again and, if feasible, recover any overcharges for those harmed.”
Both Suarez and Paldiel pleaded not guilty when they were arraigned on the charges. They were released on separate bonds of $210,000.
If they are convicted on all of the charges against them, they could each spend as many as 20 years behind bars.
Companies like Uber charge higher fees for riders who use their service during what are termed peak hours and sometimes when the demand for the service is higher than normal. This is what the two defendants allegedly took advantage of, by using the illicit apps.
