Auto transport company owner sentenced for falsifying motor carrier safety records, fraud, id theft, tax evasion

 

Date: March 12, 2021

Contact: newsroom@ci.irs.gov

PROVIDENCE — The owner of an East Providence automobile transport company has been sentenced to 30 months in federal prison for falsifying U.S. Department of Transportation (DOT) - Federal Motor Carrier Safety Administration (FMCSA) 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 IRS.

According to information presented to the court, Michael Chaves, 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.

Chaves utilized another person's personal identifying information to continue to illegally operate the business after FMCSA ordered the business shutdown.

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; caused the fraudulent wire transfer between financial institutions of $72,864.28; and 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 by, among other things, 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, rather than a bank; and maintaining approximately 15 different bank accounts using at least five different company names.

Chaves pleaded guilty on August 22, 2020, to a ten-count information 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 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.

The case was prosecuted by Assistant U.S. Attorney Dulce Donovan.

Acting United States Attorney Myrus thanks officers from the East Providence Police Department and the National Crime Insurance Bureau for their assistance in the investigation of this matter.