Rhode Island trucking company owner must pay $632K in fraud scheme restitution

June 9, 2021

Land Line Staff

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A Rhode Island trucking company owner who was sentenced to more than two years in prison has now been ordered to pay $632,000 in restitution.

On March 8, a Rhode Island federal district court sentenced Michael Chaves to 30 months in prison and three years of supervised release after Chaves pleaded guilty to a 10-count indictment that included charges of falsifying motor carrier safety records, income tax evasion, fraud and identity theft.

On May 21, the same court issued an amended sentencing judgment that tacks on $424,598 in restitution to victims and another $207,270 in payments to the Internal Revenue Service.

According to court records, Chaves, 41, owner of CAT Inc. in East Providence, R.I., continued to operate a fleet of auto transport trucks after having been cited for multiple violations, including 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.

“Chaves utilized another person’s personal identifying information to continue to illegally operate the business after FMCSA ordered the business shutdown,” according to a news release from the U.S. Attorney’s Office for the District of Rhode Island.

Additionally, Chaves fraudulently obtained 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. He then executed a scheme by submitting 15 fraudulent checks he created to an automobile seller’s bank account from which he obtained $64,453.

Additionally, according to information presented to the court, Chaves took several steps to evade income taxes, including commingling business and personal expenses; using a check casher to divert third-party income; creating fraudulent third-party checks and cashing them using a check casher instead of a bank; and maintaining approximately 15 bank accounts using at least five company names.

Amazon fraud scheme

In addition to restitution to be paid in the fraud schemes connected to the operation of his auto transport company, the order includes restitution to be paid by Chaves to Amazon as part of a separate fraud scheme.

During the initial investigation of Chaves’ auto transport company, authorities uncovered a scheme by which Chaves defrauded Amazon through theft of inventory via falsely represented returns.

Court records show 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. LL

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