Two men accused of defrauding thousands of victims across 10 states and racking up more than $8.5 million in a scam run on the vacation rental sites Airbnb and Vrbo were indicted on fraud charges, federal prosecutors announced Thursday.
Shray Goel, 35, of Miami and Shaunik Raheja, 34, of Denver were charged Wednesday with multiple fraud counts in connection with more than 10,000 reservations linked to nearly 100 properties, according to the U.S. Attorney's Office for the Central District of California.
Prosecutors said the two men and their employees ran a "double-booking, bait-and-switch" scam through the online property rental platforms. They brought in about $7 million in payouts on Airbnb and about $1.5 million in reservations through Vrbo through misleading listings and fraudulently canceling reservations, which included discrimination against "guests perceived to be Black."
The properties were located in places like Davenport in Florida, Los Angeles and Malibu, Denver, Chicago, Savannah, South Bend, Cleveland, Nashville, Austin, Dallas and Milwaukee, authorities said.
Goel and Raheja allegedly double-booked properties through multiple listings of the same home 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 U.S. attorney's statement said.
Get Tri-state area news delivered to your inbox.> Sign up for NBC New York's News Headlines newsletter.
Meanwhile, they profited from the scheme by running a secret bidding war for the properties, posting multiple listings for the same property at different prices for the same night, then allowing the highest bidder to rent a property, before they canceled or switched the lower-paying guests to a different property in the area, prosecutors said.
U.S. & World
Goel and Raheja even tried to avoid renting to guests they perceived to be black, prosecutors said.
"Goel and Raheja made decisions about which guests to keep and which to cancel based in part on their racial prejudices and discrimination," the indictment alleges.
“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 their co-schemers used fake host names and, in certain instances, other people’s identities to list properties, prosecutors said. They allegedly used these fake host accounts to conceal their own identities, to double-book properties, and to post fabricated positive reviews of their properties.
They were also allegedly using the fake host accounts to continue to list properties after they had been banned from Vrbo in 2015 because of repeated host cancellations and guest complaints, officials said.
In addition, the pair took steps to hide or prevent negative reviews of the properties, even posting bogus negative reviews about the guests who had panned their listings, prosecutors said.
Goel and Raheja are charged with conspiracy to commit wire fraud and 13 counts of wire fraud. Goel is also charged with two counts of aggravated identity theft.
The conspiracy and wire fraud charges each carry a statutory maximum penalty of 20 years in federal prison.
Michael G. Freedman, an attorney for Goel, said in a statement that his client "fully denies the allegations and looks forward to defending against them in court."
An attorney who represents Raheja, Keri Curtis Axel, released a brief statement Thursday.
"My client disputes the government’s indictment and categorically denies the government’s false and inflammatory claims of racism. We look forward to clearing his name in court," the statement read.
Airbnb also released a statement Thursday following news of the indictments.
"Airbnb is built on trust, and bad actors have no place in our community. We supported the US Attorney’s Office and the FBI throughout their investigation to help ensure accountability, and we are thankful to them for their work," the statement read. "We have taken multiple steps to strengthen our defenses against deceptive behavior, including measures like identity and listing verification which we believe will help further deter already rare instances of this type of activity.”
Vrbo could not immediately be reached for comment Thursday.
