Two men, one from Miami and the other from Denver, allegedly profited from 10,000 reservations on Airbnb and other platforms, linked to nearly 100 properties across 10 states. The alleged double-booking, bait-and-switch scam brought in more than $8.5 million.
The US District Court in Los Angeles has indicted Shray Goel, 35, of Miami, and Shaunik Raheja, 34, of Denver, on federal fraud charges, which also included discrimination against black people, the Justice Department announced.
Goel and Raheja owned and operated a short-term property rental business that they used to defraud Airbnb, Vrbo, and guests renting properties through those platforms, according to the charges.
Their business operated under various names, one of them was Abbot Pacific LLC. By 2019, they were managing nearly 100 properties across the United States.
“To carry out the fraudulent scheme, Goel and Raheja allegedly double-booked properties through multiple listings of the same property on Airbnb and Vrbo, and then invented bogus last-minute excuses – often claiming plumbing problems – to cancel overbooked guests or trick them into moving to inferior replacement accommodations,” the US Attorney’s Office’s press release reads.
The conspirators profited from the scheme by running a secret bidding war for the properties. They posted multiple listings for the same property at different prices for the same night, so that the highest bidder would rent the property in the area. Other lower-paying guests were downgraded to a different property in the area or canceled.
The scheme allowed them to keep properties “at maximum capacity” as popular listings baited guests into booking, and then the excess of them were steered into other less popular properties at the last minute.
Racially discriminated victims
The indictment further alleges that “Goel and Raheja made decisions about which guests to keep and which to cancel based in part on their racial prejudices and discrimination.” They tried to avoid renting to guests they perceived to be black and “in this way depriv[ed] these guests of their property interest in the reservations and otherwise caus[ed] these guests to suffer monetary losses when their reservations were canceled,” the court document reads.
“This deplorable scheme victimized thousands of consumers and families across the country, some of whom allegedly were discriminated against because of racial bias,” said United States Attorney Martin Estrada. “Fueled by greed, the defendants deceived consumers about the locations and conditions of properties, canceled reservations to double-book properties and based on racial prejudices, and lied to victims leaving them scrambling to find last-minute replacement accommodations.”
He finds the sheer number of victims to be astonishing, “as is the millions of dollars earned through the scheme.” The fraud also took advantage of reputable online rental platforms that offer valuable services.
“The defendants are charged with preying on unsuspecting travelers and robbing them of time and money, leaving them with no choice but to settle for inferior lodging at the last minute,” Donald Alway, the Assistant Director in Charge of the FBI’s Los Angeles Field Office, added.
Goel, Raheja, and others owned and leased properties in Los Angeles, Malibu, Marina Del Rey (California), Denver, Chicago, Davenport (Florida), Savannah (Georgia), Bloomington (Indiana), and many other cities.
Fake host names, addresses, and last-minute lodging
Investigators found that Goel, Raheja, and their accomplices used fake host names and, in certain instances, other people’s identities to list properties, conceal their own identities, double-book, and even fabricate positive reviews. Even after being banned from VRBO in 2015, the conspirators continued listing properties using fake host accounts.
They also used fake addresses and addresses that did not have any rental housing, were unaffiliated with the schemers, or did not exist at all. Using fake addresses, they created duplicate listings for a single purported property.
“The fake addresses also allegedly allowed them to evade local rules and regulations governing short-term rentals, and to control who had access to properties,” the press release reads.
Goel and Raheja allegedly manipulated user reviews to further their fraud. They falsely discredited negative reviews and otherwise tried to hide them from prospective future victims. Investigators found that the defendants posted negative reviews about their guests who criticized the listing or exposed dishonest practices.
To further their fraud by purging bad reviews, Goel and Raheja removed negatively reviewed listings to then reupload them using new identifiers.
Lies and misrepresentations allowed them to trick guests into bookings they would not have otherwise made and keep payments from guests entitled to refunds.
“The last-minute nature of the cancellations also caused guests and the rental platforms to suffer losses when guests were forced to find alternative lodging at the last minute,” according to the press release.
Investigators calculated that in 2018 and 2019, defendants and others working with them received more than $7 million in payouts on more than 10,000 Airbnb reservations and an additional $1.5 million in payouts on reservations, which sometimes were conflicting, through Vrbo.
Goel was arrested in Florida on December 27th and was released on bond the following day. Raheja was added as a defendant in the superseding indictment. Both defendants are expected to be arraigned in the US District Court in Los Angeles in the coming weeks.
The indictment charges Goel and Raheja with conspiracy to commit wire fraud and 13 counts of wire fraud, each carries a statutory maximum penalty of 20 years in federal prison if proven guilty.
Goel is additionally charged with two counts of aggravated identity theft, there is a two-year mandatory consecutive sentence for each count.
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