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Amazon Returns-Scheme Perp Sentenced to 30 Months on Fraud Charges

The U.S. District Court of Rhode Island sentenced Michael Chaves, owner of an East Providence automobile transport company, to 30 months in federal prison for operating a fraudulent product return scheme and defrauding Amazon of more than $50,000, as well as other charges including bank fraud, wire fraud, falsification of records, aggravated identity theft, and tax evasion.

Amazon, which supported the investigation, prosecution and sentencing, said in statement, “We work hard to build a great shopping experience and that includes a seamless, customer-friendly returns policy. Mr. Chaves abused our policy, and we took action to protect our selling partners, our store and the experience for all customers. We are grateful to the United States Attorney’s Office for the District of Rhode Island in their thorough pursuit of this case.”

The U.S. Attorney’s Office in Rhode Island said Chaves was specifically convicted of falsifying U.S. Department of Transportation (DOT) Federal Motor Carrier Safety Administration records, utilizing another person’s personal identifying information to continue to illegally operate his auto hauling business after being ordered to shut down, fraudulently obtaining more than $400,000 from various financial institutions and taking evasive steps to avoid paying personal income taxes owed to the Internal Revenue Service (IRS).

According to information presented to the court, Chaves, 41, owner of CAT Inc., continued to operate a fleet of auto transport trucks after having been cited for, among other things, allowing drivers to operate without a current or properly classified license, failing to maintain certifications that drivers were medically able to drive, failing to implement a driver alcohol or controlled substances testing program, and allowing drivers to exceed the maximum number of hours of driving allowed under the law.

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Chaves was convicted of fraudulently obtaining more than $400,000 from various financial institutions by employing schemes during which he obtained $332,000 in loans and funds from several banks and credit unions by providing fraudulent earning statements, tax returns, motor vehicle purchase contracts, and Department of Motor Vehicle documents; caused the fraudulent wire transfer between financial institutions of $72,864, and executed a scheme by submitting 15 fraudulent checks he created to an automobile seller’s bank account from which he obtained $64,453.

Chaves pleaded guilty on Aug. 22 to 10 counts charging him with falsification of records, aggravated identity theft, five counts of bank fraud, two counts of wire fraud and tax evasion.

Chaves was sentenced on Wednesday by U.S. District Court Judge William E. Smith to 30 months in federal prison to be followed by three years of federal supervised release, announced Acting United States Attorney Richard B. Myrus, Acting Special Agent in Charge of IRS Criminal Investigation Ramsey E. Covington, and Acting Special Agent-in-Charge Daniel Helzner of the DOT Office of Inspector General, Northeast Region.

In addition to restitution to be paid in the fraud schemes connected to the operation of his auto transport company, the order will include restitution to be paid by Chaves to Amazon. It was alleged in court documents that Chaves defrauded Amazon through theft of inventory through falsely represented returns. It is alleged in court documents that Chaves ordered products from Amazon and, at times, replaced the original products with lesser value replacements, often items different than the ones he originally ordered, before returning the packages to Amazon for refunds.

Chaves’ alleged Amazon refund scams were discovered during the investigation by IRS Criminal Investigation and DOT Office of Inspector General into Chaves’ auto transport company. The case was prosecuted by Assistant U.S. Attorney Dulce Donovan.