FBI on Monday raided upstate New York home of MyPayrollHR CEO as part of fraud investigation
Raid was conducted on the luxury lakeside home of MyPayrollHR boss Michael Mann after his firm collapsed and left thousands of people across the country without their paychecks
FBI agents descended on the luxury lakeside home of ValueWise payroll company boss Michael Mann in Edinburg, New York
No arrests are believed to have been made and it is not known what agents removed from the home
Mann, 49, is president of the parent company of MyPayrollHR, which unexpectedly closed its doors Sept 5
Tens of thousands of people around the country were left without their bi-monthly paychecks as a result of the mysterious closure
Mann and his wife Kim, 48, have kept a low profile since the parent company ValueWise, collapsed last month
The FBI has searched the New York home of a payroll processing company CEO suspected of fraud. The FBI is investigating whether New York state-based MyPayrollHR allegedly
FBI agents descended on The the luxury lakeside home of mysterious payroll company boss Michael Mann late on Monday following the collapse of his company which cost tens of thousands of people their paychecks.
Half a dozen law enforcement vehicles descended on the house in the tiny town of Edinburg, New York, around 4.30 pm.
The agents stayed for about an hour. Camera flashes could be seen coming from the second story of a massive, half-completed extension to the house which is inside Adirondack Park.
But it is not believed that any arrests were made and it is unclear what investigators removed from the home. The FBI’s Albany office, which is leading the investigation, did not immediately return calls.
Mann, 49, is the elusive president of ValueWise, the parent company of MyPayrollHR, which closed its doors on September 5, leaving people all over the country without their bi-monthly paychecks.
Even as the case hugs the headlines now, no news organization has been able to turn up a photograph of either Mann or his 48-year-old wife, Kim.
Over the weekend the couple strung a rope across the top of the hill leading down to their home and placed buckets across the driveway to deter visitors.
The father of one of the now-unemployed workers said his son was told at lunchtime on Thursday, September 5 not to return in the afternoon and to go to the office the following day to retrieve any personal items.
There was no hint that the company was in trouble until September 5 when workers at some 4,000 companies nationwide discovered that direct deposits into their bank accounts had been withdrawn.
Thousands were left without money to pay bills and many were left with negative bank accounts as they had just made monthly rent or mortgage payments.
A Facebook support group for those who have been affected is growing by the day as many workers say they have been left unable to pay their bills or feed their families.
New York Governor Andrew Cuomo vowed to take action, saying: ‘The company’s reckless actions have left employees across the state with negative bank accounts. They deserve answers.’
California-based Cachet Financial Services, a company that handles direct deposit transactions said some $26 million had been diverted. Codes were changed so funds which would normally go to Cachet were instead sent accounts controlled by Mann’s company.
Upstate New York-based Pioneer Bank, which has a branch right next door to MyPayrollHR’s office building, said it potentially stood to lose some $36 million.
MyPayrollHR and ValueWise operated from adjoining second-floor suites — numbers 220 and 240 — in a nondescript office building in Clifton Park.
Since the closing, the nameplate has been unscrewed from the wall outside the offices, although the two companies’ names still appear on the ground-floor directory.
UPS drivers have stuck two notices on the office door informing the company they have been unable to deliver packages.
Tens of thousands of companies use third-party payroll processors to pay their workers.
How it is supposed to work is MyPayrollHR enlists the services of an automated clearing house – in this case Cachet – to withdraw a sum from an employer’s account.
That sum is placed into a holding account and is then distributed by the clearing house into an employee’s personal bank account.
If a mistake is made, the amount can be withdrawn from the employee’s account.
The situation involving MyPayrollHR is believed to have started last month when the company instructed Cachet to withdraw about $26 million from employers.
Cachet’s general counsel, Wendy Slavkin, told TechTarget that it didn’t happen because MyPayrollHR had somehow manipulated the account numbers.
The clearing house claims it is a victim of fraud in the MyPayrollHR scandal.
‘MyPayrollHR manipulated the account numbers in that electronic file so that the money was taken out of the employer’s account and put into an account controlled by MyPayrollHR, not a Cachet settlement account, as it should’ve been,’ Slavkin said.
When Cachet automatically tried to access the MyPayrollHR accounts it came back as frozen. But the money had already been taken out of Cachet’s holding account and distributed to the employees as their paychecks.
‘Now all of a sudden Cachet is out $26 million because it’s effectively made the payroll for all these companies,’ Slavkin said.
Cachet, due to its standard protocol, said they immediately started withdrawing the amounts already distributed to employees to claim back their money.
Slavkin was the last person known to have spoken to Mann. She was hoping to have a conference call with him and Pioneer Bank and when she called Mann said he would have to call back in 15 minutes. He never did and hasn’t responded to any calls since.