A Rhode Island man was sentenced yesterday to 28 months in prison for deceiving banks by artificially inflating his company’s sales numbers to avoid bank scrutiny over its excessive consumer chargebacks.
According to court documents, Michael Brian Cotter, 64, of Greenville, Rhode Island, was CEO of a tech support company that operated from a call center in India. In 2016, when banks began restricting the company’s ability to process debit and credit card payments because of fraud and chargeback concerns, Cotter and his co-conspirators began purchasing virtual debit cards to run thousands of sham transactions on their own merchant accounts. In doing so, Cotter artificially inflated the company’s sales numbers to make it appear to banks and their agents that the company’s chargeback ratios — a key metric used by banks to detect fraud — were within acceptable levels. Although this tactic amounted to the company effectively paying itself, Cotter used actual customer personal identifying information, without customers’ knowledge or consent, to disguise the transactions from banks by making them appear like legitimate sales.
Cotter pleaded guilty to conspiracy to commit bank fraud.
Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division and Inspector in Charge Eric Shen of the United States Postal Inspection Service Criminal Investigations Group (USPIS CIG) made the announcement.
The USPIS investigated the case.
Trial Attorneys Jason Feldman and Shana Priore of the Criminal Division’s Fraud Section prosecuted the case.
