This browser does not support the Video element.
$35 Million goes missing when payroll company suddenly closes
On Sept. 5, MyPayrollHR sent a message to it’s 4,000 clients telling them to find alternative methods for processing their payrolls.
CLIFTON PARK, N.Y. - The FBI is investigating upstate-New York payroll processing company, MyPayroll HR, for suspected “fraudulent activity” in relation to the company’s sudden shutdown of operations that left workers across the country with negative bank balances.
On Sept. 5, MyPayrollHR sent a message to it’s 4,000 clients which read, “We regret to inform you that due to unforeseen circumstances, we are no longer able to process any further payroll transactions. Please find alternative methods for processing your payrolls," the Albany Times Union reported.
The Albany Times Union spoke with a former employee of MyPayrollHR, who agreed to speak on the condition of anonymity due to fear of retaliation and said that employees of the shuttered company were told during a meeting the same morning that the issue occurred because the bank account of CEO Michael T. Mann had been frozen as part of an “investigation.” The employee also said that, during a meeting later that afternoon, all MyPayrollHR staff were told to go home because operations were ceasing.
Cachet Financial Services, which facilitated payments to employee accounts for MyPayrollHR for the last 12 years, said it is owed $26 million by MyPayrollHR. Cachet alleges that on Sept. 4, MyPayrollHR made an usual request — the first of its kind — that all of its clients’ payroll funds be sent to a bank account operated and controlled by MyPayrollHR instead of to Cachet’s holding account, according to a report from KrebOnSecurity. Nevertheless, MyPayrollHR instructed financial institutions to pull payroll funds from Cachet’s holding account the next day.When Cachet tried to reverse that transaction, it resulted in payroll payments being withdrawn from the bank accounts of employees at companies that use MyPayrollHR.
Cachet's general counsel Wendy Slavkin confirmed to FOX Business that the company is responsible for all of the transactions that take place and that Cachet had replaced the missing funds at its own expense so that employers wouldn’t be left scrambling to figure out how to repay their employees’ lost wages. Slavkin added that the company is in the process of taking legal action, but that its first goal is to make sure employees have been made whole.
New York Gov. Andrew Cuomo called on the Department of Financial Services to investigate the issue, tweeting that, “The company's reckless actions have left employees across the state with negative bank accounts. They deserve answers.”
The FBI and the DFS are asking for information from those impacted. The FBI has created a survey for victims, and DFS is urging victims to submit a formal complaint as they continue investigating.
Automatic Data Processing, Inc., otherwise known as ADP, couldn’t pass up the opportunity to throw shade at its former-competitor, tweeting, “Were you working with MyPayrollHR? ADP is here to help and prepared to make your transition fast and easy.”