ALBANY — An Edinburg man whose home was searched by the Federal Bureau of Investigation in relation to an alleged bank fraud scheme involving the payroll company MyPayrollHR appeared in federal court Monday on a criminal complaint charging him with committing a $70 million bank fraud.
Michael T. Mann, 49, allegedly fraudulently obtained at least $70 million in loans from banks and other financial institutions and allegedly created companies that had no purpose other than to be used in the fraud; fraudulently represented to banks and financing companies that his fake businesses had certain receivables that they did not have; and obtained loans and lines of credit by borrowing against these non-existent receivables. Mann allegedly began the fraudulent scheme in 2010 or 2011.
He purchased property at 287 South Shore Road in Sept. 2015 for $375,000. The property is in the Broadalbin-Perth Central School District and Mann lists a post office box in Broadalbin as his mailing address.
Mann operated MyPayrollHR, based in Clifton Park.
Until earlier this month, MyPayrollHR processed payroll and tax payments for approximately 1,000 small-business clients located across the country.
On Sept. 5, MyPayrollHR suddenly ceased operations after Mann’s banks froze his accounts, suspecting him of fraud. This account freeze affected MyPayrollHR’s clients because, as part of the fraudulent scheme, Mann allegedly diverted clients’ payroll payments to a bank account he controlled.
Mann appeared Monday before United States Magistrate Judge Daniel J. Stewart and was released on a financial bond and with pretrial supervision conditions.
If convicted of the charge, Mann faces up to 30 years in prison, a maximum $1 million fine, and up to 5 years of post-release supervision.
Sarah Ruane, FBI public relations spokesperson said that Mann’s home in Edinburg was searched by the agency “as part of an ongoing investigation” into the closure of the company.
She said she was unable to release the exact address of Mann’s home, but the Saratoga County Tax Map lists a home at 287 South Shore Road as purchased by Mann in 2015.
According to published news sources, Mann owns the parent company of MyPayrollHR, ValueWise.
MyPayrollHR, based in Clifton Park, has been under investigation by the FBI and the state Department of Labor for allegedly diverting millions in payroll funds into an account at Pioneer Bank and not paying employees of nearly 4,000 companies that use its services, and in some cases, pulling the paycheck funds back out of employee accounts.
The company closed its doors earlier this month after the direct deposit company, Cachet Financial Services, reported to authorities that MyPayrollHR had changed account numbers so it could move employee paycheck funds into a Pioneer Bank account controlled by the payroll company.
Reports said 4,000 businesses using MyPayrollHR were unable to pay employees that used direct deposit.
Cachet has said it will work with the employees’ banks to correct any payroll reversals and to use its own funds to cover paychecks until it is able to recover its money from Pioneer Bank or MyPayrollHR.
This case is being investigated by the FBI, with assistance from the New York state Attorney General’s Office, and is being prosecuted by Assistant U.S. Attorneys Michael Barnett and Cyrus P.W. Rieck.
The FBI continues to seek information from people and businesses who may have suffered financial loss due to the alleged activities of Mann, MyPayrollHR, and affiliated companies. Information can be sent to the FBI by filling out a form on the FBI’s website, available at forms.fbi.gov/seeking-victim-information-in-mypayrollhr-investigation or they can call its Albany field office at (518) 465-7551.