ALBANY, N.Y. (NEWS10) — Michael Mann, the former CEO of the company MyPayrollHR that caused employees across the country to have bounced paychecks and money withdrawn plead guilty to 12 counts Wednesday morning in court.
One of his companies, MyPayroll HR in Clifton Park suddenly ceased operations in September 2019, causing businesses across the country to be unable to pay their employees. Mann was ordered to pay over $101,038,793.31 in restitution, and to forfeit assets including $14,522,474.90 already seized by the Government, 30,000 common shares of Pioneer Bancorp Inc. already seized by the Government, and a 2020 Jeep Gladiator.
In court Wednesday, Mann pled guilty to one count of conspiracy to commit wire fraud, one count of aggravated identity theft, nine counts of bank fraud, and one count of filing a false tax return. He is the second person to plead guilty in connection with this fraud.
On February 6 former employee Luke Steiner or Minnesota pled guilty to conspiring with Mann to defraud two financing companies out of millions of dollars.
Mann’s attorney, Michael Koenig, says they are now focused on sentencing which will is scheduled for December 10, 2020.
“Ultimately, as the judge said, sentencing is at his discretion, but we are going to give him a much more complete and broader picture of Michael Mann and his life. He’s not just what you heard in court today,” Koenig said.
According to the Department of Justice, Mann will be sentenced to two years in prison on the aggravated identity theft conviction, and, on the other charges, he faces maximum terms of three years for filing a false tax return, 20 years of wire fraud conspiracy, and 30 years for bank fraud.
The Department of Justice sent a release detailing Mann’s fraud scheme which spanned from 2013 until 2019. Here are the details according to the release:
- Mann obtained tens of millions of dollars in loans from three financing companies, located in New York, Colorado and California, respectively, by falsifying his companies’ revenues and receivables. 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 companies. Mann created fake invoices reflecting the fictitious debt and assigned them to the financing companies as collateral for the loans.
- Mann fraudulently obtained a line of credit (“LOC”) from several Capital Region banks, which had grown to $42 million by 2019. To obtain the LOC, Mann created companies whose sole purpose was to further the fraud by generating fake invoices, disguising sources of funds, and artificially inflating his assets; falsely represented to the banks that his fake businesses had revenues and receivables based on consulting work for Optum/UHG and other well-known companies, including 3M, Best Buy and T-Mobile; hid the tens of millions of dollars in loans he was receiving from the financing companies, and that he was using the LOC to pay down these loans; and provided false financial statements, and individual and corporate tax returns, to his outside auditor, which in turn made inaccurate reports to the banks.
- Mann misappropriated payroll monies, entrusted to MyPayrollHR and another company, by changing the instructions for digital Automated Clearing House (“ACH”) files that were supposed to transmit payroll from MyPayrollHR’s customers (employers) to the employees of the customers. Although his companies’ contracts with Cachet Financial Services specified that ACH transfers would route payroll funds from the employers’ accounts to a designated Cachet trust account and then directly to the customers’ employees, Mann changed the instructions inside digital ACH files provided to Cachet, in order to divert payroll funds from MyPayrollHR’s customers into accounts he controlled at Pioneer Bank. When Pioneer Bank froze Mann’s corporate accounts on or about August 30, 2019, it froze the payroll funds in those accounts, and caused several thousand people across the country to not receive a payroll payment. Cachet, as the guarantor of the payroll funds, paid about $7.2 million to the employees of MyPayrollHR’s customers.