Cachet Financial Services files $26 million federal lawsuit against Michael Mann, MyPayrollHR

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ALBANY, N.Y. (News10) – The direct deposit third party that did business with MyPayrollHR for 11 years filed a federal lawsuit alleging CEO Michael Mann stole $26 million from the company.

Mann was arrested earlier this week by the FBI, charged with bank fraud. Cachet Financial Services handled MyPayrollHR’s direct deposit payments to thousands of clients across the country until the Clifton Park based company suddenly closed its doors at the beginning of the month.

In the lawsuit, Cachet alleges Mann intentionally rerouted millions meant for payroll payments, to a private account owned by Mann at Pioneer Bank.

“[Mann’s] conduct was willful, wanton, malicious, egregious and done in conscious disregard of Cachet’s rights,” The lawsuit said. “Cachet is entitled to an award of punitive damages in an amount to be proven at trial.”

Cachet still sent direct deposits to workers across the country, but when they recognized the alleged fraud, withdrew the money from people’s accounts without warning.

The National Automated Clearing House Association said that move was unprecedented.

“The direct deposit reversals initiated by Cachet Financial Services were not in compliance with the Nacha Rules or any industry standard practice,” a Nacha spokeswoman told News10.

“Nacha rules are in place to prevent unauthorized withdrawals, including reversals of payroll deposits, and we are taking every step to investigate and remedy this violation of our rules.”

Cachet eventually paid back the victims, and bore the brunt of the $26 million loss. The lawsuit seeks to retrieve the same amount in damages from Mann in addition to interest.

Mann’s attorney says they’ve seen the lawsuit, and they are focusing on cooperating with the authorities.

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