MayPayrollHR CEO Arrested, Admits To $70 Million Fraud

After absconding with $35 million in payroll and tax deposits from customers, CEO of MyPayrollHR Michael T. Mann was arrested and charged with bank fraud. “On Monday, [Mann] allegedly confessed that the diversion was the last desperate gasp of a financial shell game that earned him $70 million over several years,” reports Krebs On Security. From the report: In court filings, FBI investigators said Mann admitted under questioning that in early September — on the eve of a big payroll day — he diverted to his own bank account some $35 million in funds sent by his clients to cover their employee payroll deposits and tax withholdings. After that stunt, two different banks that work with Mann’s various companies froze those corporate accounts to keep the funds from being moved or withdrawn. That action set off a chain of events that led another financial institution that helps MyPayrollHR process payments to briefly pull almost $26 million out of checking accounts belonging to employees at more than 1,000 companies that use MyPayrollHR.

At the same time, MyPayrollHR sent a message (see screenshot above) to clients saying it was shutting down and that customers should find alternative methods for paying employees and for processing payroll going forward. In the criminal complaint against Mann (PDF), a New York FBI agent said the CEO admitted that starting in 2010 or 2011 he began borrowing large sums of money from banks and financing companies under false pretenses. […] Court records indicate Mann hasn’t yet entered a plea, but that he was ordered to be released today under a $200,000 bond secured by a family home and two vehicles. His passport also was seized.