SoylentNews

NotSanguine writes:

The New York Times is reporting on the background and pending charges against the owner of MyPayrollHR, a payroll processing firm who absconded with $26 million in funds earmarked for direct deposit to ~250,000 employees of ~4,000 companies.

From the article:

Nicole Ingram was at the supermarket when she got a confusing text. Her payroll check for working as a nursing assistant in New Jersey, which had been deposited into her account, was being withdrawn.

On that morning in September, thousands of workers across the country received a similar notification. In all, tens of millions of dollars in direct deposit payments suddenly disappeared.

The paychecks were supposed to have been electronically routed through an upstate New York payroll management company, MyPayrollHR.

Ordinarily, MyPayrollHR would transfer the funds to a corporate middleman, Cachet Financial Services, which would then distribute the direct deposits to employees nationwide.

But days before, according to federal authorities, Michael Mann, the president of MyPayrollHR, redirected those payroll funds — $26 million in total, according to a separate lawsuit — into his own personal accounts.

[...] When Cachet realized it had allocated funds that didn't exist, the company reversed the transactions, taking back money from thousands of workers. One worker in Tennessee had an account overdraft by nearly $1 million.

The shocking development helped uncover a gigantic fraud operation and showed the lack of oversight in the payroll industry.

[...] Who would do this?" asked Stephanie Ross-Pettit, an upstate New York businesswoman who lost nearly $50,000. "Who would do something so terrible that could affect so many people?"

The answer, according to federal authorities, lies in part with Mr. Mann, a shadowy entrepreneur who owned nearly a dozen companies that were based in New York and operated throughout the country, and have now shuttered.

He was arrested and charged with bank fraud on Sept. 10.

[...] Payment reversals are rare, but allowed within the automated clearing house network under very limited circumstances — for legitimate errors, for example, according to an official familiar with the payments network.

Withdrawing rightfully owed funds because of a processor's own mistake or lack of oversight however, as Cachet did, is prohibited by National Automated Clearing House Association rules.

This follows a story posted here: NY Payroll Company Vanishes With $35 Million from September.

Maybe I'm in the wrong line of work?

Original Submission