Established payroll company MyPayrollHR has run off with millions of its clients' dollars and disappeared from the radar entirely, leaving a frenzy of small business owners panicking in its wake.
The occurrence was followed by a full-blown FBI raid being conducted of FBI CEO Michael Mann's upstate New York home, so as to get to the bottom of what actually happened. However, no arrests have been made until now.
"This caused a lot of chaos for employers, but employees were the ones really affected," said Dan L'Abbe, CEO of a San Francisco-based consultancy firm called Granite Solutions Groupe. "This is all very unusual because we don't even have the ability to take money out of our employee accounts."
Prior to the closure, MyPayrollHR was in possession of almost $35 million in wages. This is a huge issue because thousands of affected employees live paycheck to paycheck, relying on the company's services in order to function, pay rent, buy food etc.
Cachet, the company that acted as the third party company that typically vets the payment process for MyPayrollHR, said that instead of sending clients' money to the normal holding account owned and operated by Cachet, the former actually sent it in to an account at Pioneer Savings Bank that was operated and controlled by MyPayrollHR instead.
National Payment Corporation (NatPay), a firm that handled all the tax witholdings for MyPayrollHR's clients, has also been scammed $9 million.
"NatPay was provided information that MyPayrollHR and Cloud Payroll may have been the victims of fraud committed by their holding company ValueWise, whose CEO and owner is Michael Mann," NatPay said. "NatPay immediately put in place steps to manage the orderly process of recovering funds [and] has more than sufficient insurance to cover actions of attempted or real fraud."
What's more is that now, the company's parent firm ValueWise Corp, does not even have a website anymore. CEO Mann has not been heard from in days, and notifications for the aforementioned accounts being frozen came after the fraud had been perpetrated.
"All of their phone lines were down and all of their social media accounts were wiped off," said Tanya Willis, owner of an animal shelter that worked with MyPayrollHR.