FBI investigating potential $35M payroll fraud in upstate New York
The FBI is investigating the sudden shutdown of an upstate payroll processing company that left countless workers across the country with negative bank balances amid the disappearance of up to $35 million due to suspected “fraudulent activity.”
In a message posted on its Twitter page, the bureau’s Albany field office said Wednesday it was “seeking information from business owners who may have suffered financial loss due to the alleged activity of MyPayrollHR and its affiliates.”
MyPayrollHR abruptly abandoned its offices in Clifton Park, north of Albany, last week and sent its 4,000 clients an automated message that said it was “no longer able to process any further payroll transactions,” according to the Albany Times Union.
The message blamed “unforeseen circumstances” and advised companies to “find alternative methods for processing your payrolls.”
As a result, thousands of workers had automatic payroll deposits withdrawn from their bank accounts, with some suffering multiple withdrawals, according to reports.
Many had their balances wiped out — or even plunged into the red.
Gov. Andrew Cuomo said MyPayrollHR’s “reckless actions have left employees across the state and the nation with negative bank balances” and vowed Friday that “we will not allow these bad actors to take money away from the hard-working people in this state.”
Albany-based Pioneer Bancorp on Wednesday told federal regulators that it “recently became aware of fraudulent activity … by an established business customer” of its Pioneer Bank, which the Times Union identified as MyPayrollHR.
Pioneer’s filing with the Securities and Exchange Commission said it could be on the hook for $16 million that was part of a $36 million loan it originated, with another $19 million of “deposit activity” also among its “potential exposure.”
Pioneer said it was “pursuing all available sources of recovery” but “has sufficient capital to absorb the potential loss and expects to remain capitalized.”
The massive blow came less than three months after the company went public, and its stock price was down 9.3 percent, to $13.66 a share, early Thursday afternoon.
A lawyer for Cachet Financial Services, which handled individual payroll disbursements for MyPayrollHR, said she spoke briefly with Michael Mann, CEO of MyPayrollHR, after a planned $26 million deposit was diverted from Cachet’s holding account to a Pioneer Bank account on Sept. 4, according to the Krebs On Security website.
Mann promised to call back within a few minutes but never did, Cachet lawyer Wendy Slavkin told the site.
MyPayrollHR’s website doesn’t address the situation and its phone number leads to several automated messages, including one in which a robotic voice says, “We are sorry, no one is available to take your call. Please try again later.”
A message left by The Post at one extension Thursday wasn’t immediately returned.