From The US Attorney’s Office, District of Rhode Island:
The former owner of an East Providence automobile transport company . . . was arrested and charged today with allegedly executing an elaborate scheme to defraud Amazon.
It is alleged in court documents that Michael Chaves, 40, former owner of CAT Inc., executed a scheme to defraud Amazon through fraudulent transactions and theft of inventory through falsely represented returns. It is alleged that Chaves ordered thousands of products from Amazon and 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.
According to court documents, since March 2017, Chaves has 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 received a total of approximately $643,324.04 in concessions or refunds on approximately 7,450 orders, including nearly approximately 7,200 items that were physically returned to Amazon. Many of the returned items were sent back in the original packaging in an attempt to deceive Amazon’s incoming inspection process. Amazon’s standard inspection process flagged approximately 149 of the returned items as potentially fraudulent, valued at $23,872.89.
According to court documents, while investigating Chaves’ fraudulent activities associated with his now defunct automobile transport company, Internal Revenue Service Criminal Investigation Division and U.S. Department of Transportation Office of Inspector General agents executed a court-authorized search of Chaves’ home and business. At the business location, agents observed many opened and unopened Amazon packages and packaging materials. The room containing these items appeared to be a packing area for Amazon returns. The room contained a wide-ranging variety of items such as televisions, incense, European wall plugs (some for phone chargers), computer parts, small electronics, and a significant quantity of auto parts. At a later date, a United Parcel Service (UPS) driver told investigators that he would stop at Chaves’ business location every day delivering Amazon packages and picking up returns, often times dropping off an Amazon package one day and picking up the same package the next day as a return back to Amazon.
According to court documents, currently Chaves has six active Amazon accounts. The majority of Chaves’ purchases and returns consist of auto and commercial motor vehicle parts. Chaves also purchased and returned many other non-vehicle related items, including, but not limited to; electronics including cellular telephones and televisions, household items including chandeliers, closet organizers, lawn sheds, lawn mowers and vacuum cleaners. Most of these items were returned in an unsellable condition.
According to court documents, Chaves’ schemes would, at times, include replacing an original product purchased with a substitute product which, at first glance, appeared similar to the original purchase. Other returns were placed in boxes to represent the approximate weight of the original product. Among the examples cited in court documents of purchases and fraudulent returns include Chaves having ordered a commercial truck tire and sending back two pieces of wood; Chaves having ordered Apple Air Pod Pros and returning an unopened package of mini light bulbs; Chaves ordering a vehicle suspension joint and returning an oil filter wrench; and Chaves ordering a stabilizer bar link kit and returned in its place doggie treats.
Chaves was arrested today by U.S. Department of Transportation Office of Inspector General and Internal Revenue Service’s Criminal Investigations Division agents, with the assistance of East Providence Police, on a federal criminal complaint charging him with wire fraud and mail fraud.
Link to the rest at The US Attorney’s Office, District of Rhode Island
From Business Wire:
On Friday, March 12, The U.S. District Court of Rhode Island sentenced Michael Chaves 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 supported the investigation, prosecution, and sentencing.
. . . .
Amazon has teams and systems in place to proactively detect, investigate, and stop suspicious behavior and prohibited activity. Amazon has an extensive history of protecting its customers from fraud and abuse.
Link to the rest at Business Wire
From The US Attorney’s Office, District of Rhode Island:
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 Internal Revenue Service Criminal Investigation Ramsey E. Covington, and Acting Special Agent-in-Charge Daniel Helzner, U.S. Department of Transportation Office of Inspector General, Northeast Region.
A restitution order will be forthcoming from the court. 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 Internal Revenue Service Criminal Investigation and U.S. Department of Transportation Office of Inspector General into Chaves’ auto transport company.
Link to the rest at The US Attorney’s Office, District of Rhode Island
PG doesn’t know the background of this particular matter, but the message from Amazon is that it watches for scams of all sorts and is capable of persuading federal law enforcement officials, including Internal Revenue Service Criminal Investigation agents (who are likely to be interested in any claim of financial fraud because fraudsters typically don’t report the fruits of their labors on their tax returns) to take the matters Amazon brings to them seriously.
IRS involvement means that, if for any reason, the criminal fraud claims fall apart, federal prosecutors can prosecute criminal charges for violations of the Internal Revenue Code.
That potential 1-2 threat is enough to persuade a lot of bad guys to plead guilty, even if they’ve managed to cover up some of the evidence of their involvement in the underlying fraud.
Amazon publicizes such prosecutions and convictions to help spread the word that anyone who would like to enjoy a richer long-term lifestyle than can be supported by their lawful labors should probably consider pursuing a softer target than Amazon in their pursuit of their goal.
If Amazon develops a reputation for providing detailed evidence to support a criminal fraud prosecution with federal and state prosecutors, District Attorneys, etc., they’ll find that almost anyone will take their call and schedule a meeting to review what Amazon has located.
It is very common for companies the size of Amazon to hire former law enforcement officials (often at higher salaries than they earned while working for their former agencies) to do this sort of work. Such men and women have a good idea about what it takes to prove a case and how to collect evidence to support criminal charges and successful prosecution of those charges.
Additionally, PG doubts Amazon’s people (unlike a few citizens without such backgrounds) ever try to mislead law enforcement officials due, in part, to the fact that everybody involved has the same backgrounds, values and character traits. They’re brothers and sisters who gain a great deal of personal satisfaction from putting bad guys away.
This moronic bozo is also subject to civil lawsuits. And Amazon has deep pockets for a crack legal team to pursue him.
Hmm, WalMart and Target have been (finally!) boosting their online sales efforts.
Might they be softer targets?
Could be, Felix.
I expect there is a certain strata of humanity that is exploring for the answer to your question at the very moment.