The CEO and founder of the New York payroll company MyPayrollHR was arrested and charged Monday (Sept. 23) in a $70 million bank fraud scheme that left hundreds of small businesses across the country scrambling, The Wall Street Journal reported.
Michael Mann, 49, allegedly obtained millions in bank loans and lines of credit over the last decade that he diverted to fake companies, the United States Attorney for the Northern District of New York said in a statement.
MyPayrollHR abruptly shuttered on Sept. 5 after Mann’s banks, suspecting him of fraud, froze his accounts, authorities said. The company handled payroll for roughly 1,000 businesses across the United States.
According to the complaint filed in U.S. District Court in Albany on Friday (Sept. 20), Mann began borrowing “large sums of money” starting around 2010. Mann insisted that MyPayrollHR was a legitimate company, but admitted to creating other companies “that had no purpose other than to be used in fraud,” the complaint says.
Mann did not enter a plea and was released on a $200,000 bond secured by his home and two cars. He faces up to 30 years in prison, a maximum $1 million fine and five years of post-release supervision, the WSJ reported.
The NYC-based financial technology company DailyPay has created a $25,000 fund to pay for overdraft and/or late fees for MyPayrollHR employees, up to $100 per employee. DailyPay enables employers to provide on-demand access to employee wages.
A CEO going full Ocean’s 11 and pulling a heist within their own organization is certainly a Black Swan event in the world of payroll operations, said DailyPay CEO Jason Lee.
But the underlying problems that make this situation such a rapidly escalating catastrophe, Lee said, are the issues incumbent on a payroll archetype that is just out of step with what workers and SMBs need.
DailyPay decided to offer relief through this $25,000 fund because Lee said workers living paycheck-to-paycheck who have been hit by this need an immediate solution.