ALBANY, N.Y. (NEWS10) — A Coppell, Texas, man pleaded guilty to conspiring with Michael Mann, the former CEO of MyPayrollHR, to defraud companies that loaned millions of dollars to ValueWise subsidiaries. Derek Schwartz, 54, faces sentencing on January 24, 2024.
Mann’s $100 million fraud scheme led to the collapse of his Clifton Park-based company MyPayrollHR, which, in turn, impacted thousands of people across the country whose employers used Mann’s company for payroll services. Mann falsely told the financing companies that Minnesota-based UnitedHealth Group Incorporated (UHG) and its subsidiary OptumInsight Inc. (Optum) owed millions of dollars to his Clifton Park-based companies.
According to the DOJ, Schwartz was a high-level executive at Optum and began working for ValueWise in October 2013. He operated TrueHR, a ValueWise subsidiary based in Dallas, Texas, until 2016. He worked there until it collapsed in September 2019.
By pleading guilty, Schwartz admitted that in October 2013, he and Mann asked Luke Steiner, a UHG/Optum employee whom Schwartz used to supervise at Optum, to represent the financing companies where fake invoices created by Mann were valid and payable by Optum. With Schwartz’s okay, Steiner regularly verified these false invoices for six years until August 2019.
The DOJ says Schwartz also admitted to the following:
- In 2014 and 2015, he asked two other UHG/Optum employees to verify false invoices that Mann submitted to one of the financing companies, identified in the indictment as “Financing Company-1.” Schwartz instructed these employees to respond to Financing Company-1’s inquiries in the same manner as Steiner.
- From 2014 through 2019, Schwartz lied directly to one of Mann’s lenders, identified in the indictment as “Financing Company-2.” Mann falsely represented to Financing Company-2 that one of his companies, Weitz & Associates, needed loans to pay its vendors. As part of its due diligence process, Financing Company-2 verified, with Weitz’s purported vendors, that they were receiving payments from Weitz. One such purported vendor was TrueHR, a ValueWise company operated by Schwartz. In fact, TrueHR was not a Weitz vendor, and Schwartz regularly lied to Financing Company-2 about TrueHR receiving payments from Weitz – and continued to do so even after TrueHR ceased to exist as a company.
Schwartz faces up to 20 years in prison on each count and up to three years of post-imprisonment supervised release. The government will be seeking $12,968,505.20 in restitution.