A pair of shady software developers created apps to help Uber drivers trick customers into paying millions in fraudulent “surge” pricing fees, federal prosecutors in Brooklyn alleged Wednesday.
The duo developed two apps — “Screwber” and “FakeGPS” — that drivers used to manipulate surge fares, according to the feds.
Eliahou Paldiel, 52, of Queens, and Carlos Arturo Suarez Palacios, 54, of Brick Township, N.J., were indicted Wednesday in Brooklyn Federal Court on federal wire fraud and money laundering charges. Both pleaded not guilty, and were released on $210,000. The defendants and their lawyers declined to comment.
According the feds, the pair loaded the apps onto jail-broken cell phones, along with out-of-date versions of Uber’s official app so their custom software wouldn’t be detected.
They’d then sell those phones near Paldiel’s Queens home, charging $600 for the device plus a $300 monthly subscription fee to Screwber, and a one-time $50 fee for the FakeGPS app, the feds said.
In all, more than 800 drivers were reeled in, providing the duo with nearly $1.5 million, the feds allege.
The drivers, in turn, made more than $40 million in fares from January 2020 to this past June, though it’s not clear what percent of that amount came from improperly jacked-up prices.
The scheme had two different sets of victims: customers who were swindled into paying extra for their rides, and honest drivers who lost out on actual surge fees and more valuable fares, federal prosecutors allege.
Screwber gave drivers information they weren’t allowed to have, giving them access to destinations and estimated fares so they could cherry-pick the most lucrative customers, the feds say.
In a text message conversation in November 2018, Paladiel wrote to Suarez, “You know Screwber is like drugs .. once you get into it you’ll get withdrawals when you can’t get your fix, ” and “I get them hooked on the software, even a drug deal[er] throws in a few extra grams of weed in the beginning,” according to the indictment.
The FakeGPS app would let riders spoof their locations to make it look like they were located in an area with surging prices when they weren’t, and would let them cut the line in airport and event queues, the feds allege.
The jailbroken phones also offered push notifications. One helpful message in April warned drivers, “Using 2 iphones with FakeGPS is very risky. If you need FakeGPS for airport I recommend doing it one time a day…. If you are not sure do not use FakeGPS and never take a selfie if you are using FakeGPS,” according to the indictment.
“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,” U.S. Attorney Breon Peace said Wednesday. “The defendants learned an important lesson in these charges: there is no such thing as a free ride.”
The indictment doesn’t name Uber as the rideshare company in question, but a spokesman for the rideshare giant confirmed they were the target of the alleged fraud.
Disgruntled drivers often refer to the company as “Screwber” in online forums.
Uber spokesman Josh Gold said the fradulent app caused Uber to report an incorrect utilization rate to the Taxi and Limousine Commission — a measure of driver down-time that the rideshare firm is supposed to keep to a minimum.
Drivers have recently protested Uber for locking them out of the app in an effort to boost the company’s utilization stats.
“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 drivers,” Gold told the Daily News.
The two men face up to 20 years behind bars if convicted at trial. They were awaiting arraignment Wednesday in Brooklyn Federal Court.
It was not immediately clear exactly how many of the over 800 drivers were operating in New York City.
Taxi and Limousine Commission head David Do told the News he was working to ban any drivers who used the apps.
“My heartfelt thanks go out the FBI and Justice Department for cracking down on this insidious scheme, which stole from both passengers and honest, hardworking drivers,” Do said. “We are working closely with the FBI to identify any TLC drivers who used this illegal app and ensure they never drive for hire in New York City again.”
With Evan Simko-Bednarski