Fraud: UBER to face prosecution

Fraud: UBER to face prosecution


Uber, which at one time had a valuation of almost $70 billion, is being investigated by the United States attorney’s office for the Northern District of California, which covers Silicon Valley, for allegedly using a software program called Greyball.

Greyball, according to New York Times, allowed the company to send what was essentially a fake version of its ride-sharing app to users to help drivers evade law enforcement agencies that were scrutinising the service for potential violation of local laws.

The federal investigation came to light in a roundabout way through a report about the use of Greyball prepared by the Portland, Ore., Bureau of Transportation that was initiated in response to the Times article. It states that the city was notified “that Uber is the subject of a federal inquiry” by the Justice Department.

Uber does not have the same public disclosure obligations that corporations whose shares trade on the stock markets do, which might have resulted in a more detailed — and earlier — revelation of the investigation from the company. At this point, all that can be inferred from the cryptic statements by the authorities in Portland and Philadelphia is that the United States attorney’s office investigation is just getting started as prosecutors begin gathering information.

It is not clear how the Greyball program might have violated any federal criminal laws, although there are a few possibilities. The computer fraud statute contains a number of additional elements, like causing damage to a computer or unauthorized access that might not have been violated by downloading the app from Uber.

Prosecutors will have to take a close look at exactly how Greyball might have affected the devices to see if it might rise to a level of a federal crime, but at this preliminary stage it appears to come within the scope of the grand jury’s purview.

Blocking a local law enforcement inquiry could be viewed as an obstruction of justice, but the federal laws on this crime apply only to an “official proceeding” involving a federal court, grand jury, or administrative agency. The Justice Department can get involved in many areas related to state and local governments, but obstructing the work of the local police probably falls outside the jurisdiction of federal prosecutors