$8.5M short-term rental scam targeted ‘astonishing’ number of victims, prosecutors say – NBC Southern California

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Two men accused of targeting unsuspecting travelers in a complex $8.5 million short-term rental scam that involved several Southern California properties are facing federal fraud charges.

The suspects used Airbnb, Vrbo and similar platforms to orchestrate a secret bidding war among users by posting multiple listings for the same property at different prices for the same night, the the U.S. Department of Justice said. The highest bidders were allowed to rent a property and lower bidders were steered to other less popular and inferior properties also owned and operated by the defendants, according to the department’s news release.

Shray Goel, 35, of Miami, and Shaunik Raheja, 34, of Denver, ran what prosecutors called a double-booking, bait-and-switch scheme that included discrimination against Black people, according to the Department of Justice.

They were charged Wednesday in an indictment that accuses them of fraud involving more than 10,000 short-term rental reservations linked to nearly 100 properties across 10 states, including California. The short-term rental business operated by the defendants went by several names, including Abbot Pacific LLC.

“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 DOJ said in a news release.

The California properties owned and leased through the company included locations in Los Angeles, Malibu and Marina Del Rey.

“Members of the conspiracy profited from the scheme by running a secret bidding war for the properties – meaning they posted multiple listings for the same property at different prices for the same night, allowed the highest bidder to rent a particular property, and then cancelled or switched the lower-paying guests to a different property in the area,” the DOJ said.

Properties were kept at maximum capacity by baiting and tricking guests into booking the popular listings, then “steering overbooked guests at the last minute to less popular and open listings in the same area,” prosecutors said.

When deciding which guests to rent to and which guests to book elsewhere, the defendants avoided renting to guests they perceived to be Black, prosecutors said.

“This deplorable scheme victimized thousands of consumers and families across the country, some of whom allegedly were discriminated against because of racial bias,” U.S. Attorney Martin Estrada said in a statement. “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. The sheer number of victims is astonishing, as is the millions of dollars earned though the scheme that took advantage of the reputations of online rental platforms that offer a valuable service.”

Goel, Raheja and others involved in the alleged scheme used fake host names other people’s identities to list properties, the DOJ said. The fake host accounts helped conceal their own identities, allowing the double-booking of properties and posting of fake reviews for their properties, prosecutors said.

Negative reviews were falsely discredited and, in some cases, the defendants posted bogus negative reviews about the guests who posted them, according to the DOJ.

The superseding indictment charges Goel and Raheja with conspiracy to commit wire fraud and 13 counts of wire fraud. Goel is additionally charged with two counts of aggravated identity theft.

The conspiracy and wire fraud charges each carry a possible sentence of up to 20 years in federal prison. There is a two-year mandatory consecutive sentence for the aggravated identity theft counts, the DOJ noted.

Prosecutors said both Airbnb and Vrbo are cooperating with the government in the investigation.

It was not immediately clear whether the defendants have an attorney who can speak on their behalf.

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