Borough Man Indicted in $40 Million Rideshare Scheme

Borough Man Indicted in $40 Million Rideshare Scheme

By Forum Staff

On Wednesday morning, an indictment was unsealed in Brooklyn federal court charging Eliahou Paldiel, 52, and Carlos Arturo Suarez Palacios (Suarez), 56, with wire fraud and money laundering conspiracies relating to a wide-ranging, lucrative scheme in which the defendants sold hacked smartphones and fraudulent applications to more than 800 rideshare drivers (Driver Co-conspirators). The applications enabled the Driver Co-conspirators to “spoof” GPS locations to fraudulently obtain “surge” fees and to otherwise manipulate legitimate rideshare applications to illegally enrich themselves.

Rideshare Company-1 is a multinational company headquartered in the United States that provides ridesharing services. It operates primarily through its smartphone application (the Rideshare Company-1 Application), connecting users with drivers for on-demand transportation and delivery services.

As alleged in the indictment and other court filings, between November 2018 and August 2024, Paldiel, a Queens resident, and Suarez, who lives in New Jersey, engaged in a scheme to defraud Rideshare Company-1’s users and drivers by causing passengers to collectively pay millions of dollars in fraudulent “surge” fees to hundreds of participating Driver Co-conspirators, and depriving legitimate rideshare drivers of their true share of “surge” fares and the most lucrative trips. In addition, the fraudulent devices and applications sold by the defendants for profit enabled the Driver Co-conspirators to cherry-pick high-fare rides by obtaining proprietary information and to “queue” in areas where they were not physically present.

The defendants allegedly sold scheme applications to Driver Co-conspirators on manipulated—also known as “jailbroken” or “rooted”—cellular devices (the Scheme Devices). A jailbroken or rooted cellular device has had its operating system security restrictions modified or removed, thereby allowing the installation of software, including applications that the device manufacturer had not made available for the device. Driver Co-conspirators utilized the Rideshare Company-1 Application on their Scheme Devices.

Fake GPS was a GPS spoofing application developed by the defendants and others. Fake GPS enabled Driver Co-conspirators to manipulate or “spoof” their locations within the Rideshare Company-1 Application and make it appear as if they were located in an area with surging fares when, in fact, they were not.

Screwber is an application developed by the defendants and others that provided Driver Co-conspirators with information about prospective Rideshare Company-1 rides that was not otherwise available to Rideshare Company-1 drivers prior to accepting such rides. For example, Screwber enabled Driver Co-conspirators to obtain prospective riders’ destinations and approximate fares for prospective trips, thereby allowing Driver Co-conspirators to accept or decline the prospective rides based on information to which they were otherwise not entitled and, in turn, cherry-pick only the most profitable and lucrative rides offered to them through the Rideshare Company-1 Application.

The defendants caused outdated versions of the Rideshare Company-1 Application to be downloaded onto the Scheme Devices provided to Driver Co-conspirators. By installing outdated versions of the Rideshare Company-1 Application, the defendants ensured that the Fake GPS and Screwber applications were not detected by security features implemented in newer versions of the Rideshare Company-1 Application.

As part of the scheme, the defendants also spoke with one another about their strategy to profit from the Driver Co-conspirators. During the course of the scheme, the Driver Co-conspirators, using the defendants’ fraudulent devices and applications, allegedly earned over approximately $40 million from rideshare customers. The defendants received more than $1.5 million from Driver Co-conspirators through one peer-to-peer payment service alone.

If you have information related to this case, please contact the FBI at NY_RideShareTips@fbi.gov.

If convicted, the defendants face up to 20 years in prison on each of the two counts.

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