2 Men Allegedly Scammed Uber, Drivers Out of $40M

Federal prosecutors are charging two men involved in an alleged scheme that reaped them $1.5 million through fraudulent "surge pricing."

Federal prosecutors announced Wednesday, according to the New York Post, that Eliahou Paldiel, 52, of Queens, and Carlos Arturo Suarez Palacios, 54, were arraigned in Brooklyn federal court on charges of wire fraud and money laundering.

The prosecutors allege that Paldiel and Suarez sold hacked smartphones loaded with illicit apps, including one called "Screwber," to more than 800 Uber drivers. The apps allowed drivers to manipulate Uber's software by viewing potential riders' destinations and fares before accepting rides by faking their locations in areas with higher demand or surge pricing.

"As alleged," U.S. Attorney Breon Peace said in a statement, "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."

Court documents read that Paldiel and Suarez allegedly circumvented Uber's system, allowing them to garner $1.5 million for themselves while the participating drivers collectively pocketed nearly $40 million.

The documents also include a message from Suarez to Paldiel during the scheme's early stages in 2018, in which Suarez wrote, "You know Screwber is like drugs ... once you get into it you'll get withdrawals when you can't get your fix."

The scheme, according to Uber representatives, deprived tens of thousands of drivers of access to work.

"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," Uber spokesman Josh Gold said.

David Do, New York City's Taxi & Limousine commissioner, condemned the drivers involved, stating, "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."

Paldiel and Suarez have pleaded not guilty to the charges and were released on $210,000 bonds. If convicted, they each face up to 20 years in prison.