Two Individuals Charged In $8.5m Scam Involving Airbnb And VRBO, Defrauding Thousands Of Victims

Mocobizscene- The Justice Department has announced that two men have been indicted by a federal grand jury on federal fraud charges. The charges are related to a scam that the men allegedly ran through online property rental platforms, primarily Airbnb. The scam involved double-booking, bait-and-switch tactics, and resulted in over $8.5 million in earnings. The men are accused of misleading listings and fraudulently canceling reservations, which also included instances of discrimination against Black people.

Miami resident Shray Goel, 35, and Denver resident Shaunik Raheja, 34, faced charges on Wednesday in a superseding indictment. The charges allege their involvement in fraudulent activities, specifically related to over 10,000 reservations associated with close to 100 properties spanning across 10 states.

Goel faced initial charges in an indictment issued on December 13. He was taken into custody in Florida on December 27 but was released on bond the next day. Raheja was later included as a defendant in the revised indictment. The arraignment of both defendants is anticipated to take place in the United States District Court in Los Angeles in the upcoming weeks.

Goel and Raheja are accused in the superseding indictment of owning and running a short-term property rental business. They allegedly used this business to deceive Airbnb, Vrbo, and the guests who rented properties through these platforms. The business, known by different names such as Abbot Pacific LLC, was involved in fraudulent activities.

According to the superseding indictment, Goel, Raheja, and their colleagues were accused of owning and leasing properties in various locations across the United States for their rental business. These properties included Los Angeles, Malibu, Marina Del Rey, Denver, Chicago, Davenport, Savannah, Bloomington, South Bend, Cleveland, Nashville, Austin, Dallas, and Milwaukee. As of 2019, they were responsible for managing almost 100 properties across the country.

Goel and Raheja are accused of carrying out a fraudulent scheme by double-booking properties on Airbnb and Vrbo. They allegedly used multiple listings for the same property and came up with false last-minute excuses, such as plumbing problems, to cancel overbooked guests or persuade them to accept inferior accommodations. The indictment states that the conspirators profited by conducting a secret bidding war for the properties. They posted multiple listings at different prices for the same night, allowing the highest bidder to rent a particular property while switching or canceling the lower-paying guests. This scheme also enabled Goel, Raheja, and their accomplices to maintain maximum occupancy for all their properties in a given area. They used popular listings as bait to entice guests to book, only to redirect them to less popular and available listings in the same area at the last minute.

According to the superseding indictment, Goel and Raheja have been accused of making discriminatory decisions regarding guests based on their racial prejudices. The indictment states that the defendants attempted to avoid renting to guests they believed to be Black, thereby depriving these guests of their property rights in the reservations and causing them financial losses when their reservations were canceled.

United States Attorney Martin Estrada expressed his outrage over the deplorable scheme that targeted numerous consumers and families nationwide. He highlighted the discriminatory practices that some victims faced due to racial bias. The defendants’ greed led them to deceive consumers about property locations and conditions, double-book properties by canceling reservations, and even base their actions on racial prejudices. As a result, victims were left in a state of panic, scrambling to find last-minute accommodation alternatives. The scale of this scheme is truly astonishing, with countless victims affected and millions of dollars earned through exploiting the reputation of online rental platforms, which provide a valuable service.

“The FBI’s Los Angeles Field Office Assistant Director in Charge, Donald Alway, has condemned the defendants for targeting unsuspecting travelers and exploiting them, resulting in a loss of both time and money. This leaves the victims with no other option but to settle for subpar accommodations at the last minute. Alway further emphasized the gravity of the situation by stating that the conspiracy charge against the defendants, which accuses them of discriminating against potential renters based on their skin color, is an appalling abuse that should not be tolerated in the United States. To combat such fraudulent and biased practices in the vacation rental industry, the FBI is committed to collaborating with federal partners and the private sector.”

Special Agent in Charge Ryan Korner of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) stated that the defendants are being charged for their alleged involvement in a plot to deceive Airbnb, Vrbo, and the renters using these platforms. He emphasized that the FDIC-OIG is fully dedicated to safeguarding the nation and innocent victims by apprehending and prosecuting individuals who orchestrate such fraudulent schemes.

Goel, Raheja, and their co-conspirators, as stated in the superseding indictment, employed deceptive tactics such as using fake host names and even hijacking other individuals’ identities to list properties. The purpose behind these fraudulent host accounts was to hide their true identities, engage in double-bookings, and publish fictitious positive reviews about their properties. Despite being banned from Vrbo in 2015 due to a track record of host cancellations and guest complaints, they allegedly continued to exploit these fake host accounts to list properties.

According to the superseding indictment, Goel, Raheja, and their accomplices engaged in deceptive practices by utilizing fake addresses. These addresses were either non-existent, unrelated to the schemers, or lacked rental housing. The purpose of these fake addresses was to create duplicate listings for a single property. Additionally, the use of fake addresses allowed them to circumvent local regulations governing short-term rentals and exert control over property access.

Goel and Raheja went to great lengths to deceive people and protect their fraudulent practices. They allegedly took deliberate actions to ensure that negative reviews didn’t harm their business. They did this by discrediting and hiding negative reviews from potential guests. As stated in the superseding indictment, they would even write fake negative reviews about guests who had criticized their listings or exposed their deceptive practices. Additionally, they would remove negatively reviewed properties and relist them under new identifiers, effectively erasing any trace of bad reviews.

Goel and Raheja, as stated in the superseding indictment, resorted to deception by using these lies and misrepresentations. Their aim was to manipulate guests into booking properties they would not have chosen otherwise, and also to withhold payments from guests who were eligible for refunds. Moreover, the abrupt cancellations not only resulted in financial losses for the guests, but also for the rental platforms, as they had to find last-minute accommodations for these guests.

According to the indictment, in 2018 and 2019, defendants Goel and Raheja, along with others working under their direction, engaged in a scheme where they made over 10,000 reservations through Airbnb, resulting in payouts exceeding $7 million. Additionally, they made conflicting reservations through Vrbo and received payouts exceeding $1.5 million from those reservations.

Goel and Raheja have been charged with conspiracy to commit wire fraud and a total of 13 counts of wire fraud in the superseding indictment. Furthermore, Goel faces two additional charges of aggravated identity theft. The charges of conspiracy and wire fraud can result in a maximum prison sentence of 20 years each. Additionally, there is a mandatory consecutive sentence of two years for the counts of aggravated identity theft.