The former owner of a Rhode Island trucking company is facing serious charges after federal investigators uncovered a complicated scheme to defraud Amazon while investigating other crimes.
On June 17, the U.S. Attorney’s Office District of Rhode Island announced that 40 year old Michael Chaves had been arrested and charged with wire fraud and mail fraud in connection with the scheme.
Investigation Into Fraud to Keep Trucking Company Open Leads To Discovery of Amazon Scheme.
Chaves owned the now defunct Rumford, Rhode Island-based auto transport trucking company CAT Auto Logistics.
Chaves is awaiting sentencing in a separate case for fraudulently obtaining more than $400,000 from financial institutions and using the stolen personal identifying information of another person to continue to illegally operate his auto hauling business after being ordered to shut down for safety violations. He pled guilty in August 2019 to falsification of US DOT records, aggravated identity theft, five counts of bank fraud, two counts of wire fraud, and tax evasion.
While investigating the crimes Chaves pled guilty to in August 2019, Internal Revenue Service (IRS) and U.S. Department of Transportation (DOT) investigators stumbled onto the Amazon scheme.
Thousands of Fraudulent Amazon Returns Discovered
While executing a court-authorized search of Chaves’ home and business, agents spotted a large number of opened and unopened Amazon packages and packing materials at the business location. Items in the room included televisions, incense, European wall plugs (some for phone chargers), computer parts, small electronics, and a significant quantity of auto parts.
This discovery triggered a separate investigation into what federal authorities say turned out to be a large scale scheme against Amazon.
A United Parcel Service (UPS) driver later told investigators that he dropped off Amazon packages and picked up returns at the business location every day, “often times dropping off an Amazon package one day and picking up the same package the next day as a return back to Amazon.”
As part of the scheme, authorities say that Chaves would replace an original product with a similar substitute product before returning it to Amazon. Chaves also reportedly simply returned Amazon boxes containing an item that had a similar weight as the original product — once ordering a commercial truck tire and returning two pieces of wood.
Authorities say that since March 2017, Chaves held approximately 30 Amazon customer accounts under various names and email addresses. Over this time period, Chaves’ accounts placed approximately 10,795 orders totaling approximately $713,970.78, most of which have been refunded based on Chaves’ return of the items purchased.
Chaves allegedly received a total of $643,324.04 in concessions or refunds on 7,450 orders, including nearly 7,200 items that were physically returned to Amazon. Amazon’s standard inspection process flagged approximately 149 of the returned items as potentially fraudulent, valued at $23,872.89.
Following an appearance in U.S. District Court in Rhode Island, Chaves was ordered to remain in federal custody until a possible pretrial hearing.