How Businesses Can Recover MyPayrollHR Losses
If you are one of the thousands of businesses that was financially affected by the sudden collapse of MyPayrollHR and the arrest of the payroll company’s CEO, you may have a legal case to recover your losses.
MyPayrollHR conducted online payroll services for companies across the United States prior to its sudden closing on or about Sept. 5, 2019. According to an NBC News report, the company handled payroll for roughly 1,000 businesses across the United States. In some cases, companies may have white-labeled MyPayrollHR’s services.
Michael Mann, MyPayrollHR’s CEO, was arrested and charged in a $70 million bank fraud scheme near the end of September. The criminal complaint against Mann states that he borrowed large sums of money from banks and financing companies under false pretenses for the span of nearly a decade, in which he ultimately obtained around $70 million that he has not paid back.
According to reports, court filings show that Mann admitted under questioning that, in early September, he diverted to his own bank account $35 million in funds sent by his clients to cover their employee payroll deposits and tax withholdings.
It’s suspected that MyPayrollHR shuttered suddenly after Mann’s banks suspected him of fraud and froze his accounts.
The Fallout of MyPayrollHR’s Demise
MyPayrollHR’s sudden collapse also affected the automated clearing house (ACH) processor that the payroll company had used for years. MyPayrollHR used a financial services company called Cachet Financial Services to essentially move the money into employees’ accounts via direct deposit.
However, when Mann diverted millions of dollars in client payroll deposits from Cachet to his personal bank account, Cachet’s emptied holding account was debited for the payroll payments. According to reports, Cachet quickly reversed those deposits, which then caused one or two pay periods worth of salary to be deducted from bank accounts for employees of companies that used MyPayrollHR.
In some cases, employers were forced to advance funds to their employees.
Eventually, according to multiple reports, Cachet ultimately decided to cancel those reversals and absorb the $26 million hit. In turn, the financial services company filed a lawsuit against MyPayrollHR, which alleges breach of contract, fraud and unjust enrichment, among other accusations.
Cachet Financial Services recently announced it was no longer handling payroll transactions. According to the Cachet’s website, the company stopped processing ACH payments through its sponsor bank on Oct. 25, 2019 after the bank decided to discontinue processing payroll via ACH for Cachet.
Contact the Business Trial Group for a No-Obligation Case Review
If you believe you have suffered a financial loss due to the activities of MyPayrollHR or related businesses, contact the Business Trial Group right away. Our attorneys are experienced in complex business litigation and routinely handle breach of contract lawsuits involving all types of agreements and industries.
The Business Trial Group operates on a contingency fee basis, which means that we charge nothing for an initial case review, and if we accept your case, we will not charge a fee unless the case is successfully resolved.