Unmasked: Michael Mann, the man behind the MyPayrollHR collapse that left thousands of workers without their paychecks, has been pictured for the first time by DailyMailTV

ABOVE + BELOW LEFT – Michael T. Mann

Michael Mann, left, the ex-MyPayrollHR CEO, and his attorney, Michael Koenig, enter U.S. District Court on Wednesday, Aug. 12, 2020, in Albany, N.Y. (Paul Buckowski/Times Union)

USA DOJ ANNOUNCEMENT: ValueWise CEO Michael Mann Pleads Guilty to $100 Million Fraud

Department of Justice
U.S. Attorney’s Office
Northern District of New York

Admits to Massive Scheme That Affected Several Thousand Nationwide

ALBANY, NEW YORK – Michael T. Mann, age 50, of Saratoga County, New York, pled guilty today to orchestrating a years-long fraud that caused more than $100 million in losses to banks, financing companies, and other businesses.

The announcement was made by United States Attorney Grant C. Jaquith and Thomas F. Relford, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI).

Mann operated ValueWise Corporation, based in Clifton Park, New York, as well as subsidiary companies including MyPayrollHR.com LLC.  In pleading guilty, he admitted that from 2013 to September 2019, he engaged in a fraudulent scheme to deceive banks and financing companies into loaning his companies tens of millions of dollars. Because Mann could not repay the loans with legitimate business revenues, he expanded the fraud, by stealing and diverting millions of dollars that were entrusted to his payroll companies, and engaging in the daily kiting of millions of dollars among bank accounts he controlled.

Mann’s scheme collapsed in early September 2019, when one of his banks froze his accounts, setting off a chain of events that left his payroll companies unable to make payroll for hundreds of small business customers nationwide.

United States Attorney Grant C. Jaquith stated: “Michael Mann’s fraud was staggering.  He caused more than $100 million in losses and wove a web of deception so complex that it eventually ensnared hundreds of small businesses and several thousand workers across the country. Today’s plea is the start of holding him accountable for the terrible harm he inflicted on these victims, as well as the banks and other companies that trusted him with their money and believed his sophisticated lies.”

FBI Special Agent in Charge Thomas F. Relford stated: “Michael Mann’s deception directly impacted thousands of people across the country. Helping himself to those funds left the businesses who trusted him with their payroll unable to pay their employees who survive on timely paychecks. While many of the businesses were able to recover, others experienced irreparable hits to their reputations. Today’s admission of guilt is a small step forward in their process to rebuild. The FBI will continue to work with our law enforcement partners to aggressively pursue and charge those who willingly defraud our citizens and banking institutions.”

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.

Mann’s scheme had multiple layers, including:

  • 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.

 

Mann is scheduled to be sentenced on December 10, 2020 by Senior United States District Judge Lawrence E. Kahn.  He will be sentenced to 2 years in prison on the aggravated identity theft conviction, and, on the other charges, faces maximum terms of 3 years (filing a false tax return), 20 years (wire fraud conspiracy), and 30 years (bank fraud). A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.

Mann has agreed to entry of an order requiring him to pay $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.

Mann is the second person to plead guilty in connection with this fraud.  On February 6, 2020, former Optum employee Luke E. Steiner, age 32, of Minneapolis, Minnesota, pled guilty to conspiring with Mann to defraud two financing companies out of millions of dollars.

This case is being investigated by the FBI, as well as Internal Revenue Service-Criminal Investigation, and is being prosecuted by Assistant U.S. Attorneys Michael Barnett and Cyrus P.W. Rieck.

BACKGROUND: Unmasked – the MyPayRollHR CEO who stiffed thousands out of their salaries is finally pictured as worker tells how crude forgery sent the ‘Warren Buffett’ of Clifton Park into collapse

 

https://www.dailymail.co.uk/news/article-7576791/MyPayrollHR-CEO-Michael-Mann-pictured-time.html

 

  • Michael Mann is pictured for the first time by DailyMailTV – weeks after he was arrested and charged for swindling $70million through a fraudulent scheme
  • The 49-year-old was the CEO of ValueWise Corporation, the parent company of MyPayRollHR which collapsed on September 5, leaving thousands without pay  
  • Mann’s scheme was detected in 2017 when his client UnitedHealth Group obtained forged documents in which he detailed the two companies’ dealings
  • A spokesman for UnitedHealth Group told DailyMailTV the company cut its ties with Mann, who ran his business in Clifton Park, NY, and alerted the FBI 
  • Until today, the elusive businessman, who is facing decades behind bars, had managed to keep his photo out of the media 
  • Mann’s business portfolio included physical therapy chain Viverant, basketball program Lincoln Academy and temp agency Hireflux 

Six weeks after 23,000 workers found they had been stiffed out of their wages following the collapse of MyPayrollHR, DailyMailTV has finally tracked down a photograph and video of the man behind the alleged fraud.

And we have learned Michael Mann, who is now facing decades behind bars, brought about his own downfall by forging a document — which somehow found its way back to his largest client.

Mann, 49, ran ValueWise, the parent company of MyPayrollHR and a slew of other companies, from offices in Clifton Park, New York, just north of the state capital, Albany.

When it went bust in the first week of September, the payroll company failed to pay workers in 2,500 companies, leaving many of their employees in dire financial straits.

But his downfall started two years ago, DailyMailTV has learned.

Mann's businesses were spread throughout the United States and ranged from payroll companies to a basketball academy. DailyMailTV can reveal his fraudulent scheme first began to unravel in 2017

Mann’s businesses were spread throughout the United States and ranged from payroll companies to a basketball academy. DailyMailTV can reveal his fraudulent scheme first began to unravel in 2017

That’s when Mann allegedly forged the paper purporting to come from UnitedHealth Group — his largest client — showing how much business the two companies did together in a bid to get a loan from his bank.

But when UnitedHealth discovered the document it immediately ended all dealings with him, leading to the collapse of his business empire.

‘UnitedHealth Group cut him off at the knees — quite understandably,’ a former senior worker at Mann’s offices in upstate Clifton Park, New York, told DailyMailTV.

‘But it wasn’t just that document, this is a massive fraud.’

A spokesman for UnitedHealth Group told DailyMailTV that one of its subsidiaries received IT staffing services from ValueWise.

‘It terminated that contract and its business relationship with Mr Mann in 2017 after learning of a suspected attempt by Mr Mann to commit fraud,’ added the spokesman.

‘UnitedHealth Group also alerted the FBI at the time and is cooperating with the ongoing investigation.’

After the company lost its business with UnitedHealth Group, Mann’s empire began its slow demise that ended in the first week of September.

The former ValueWise officer said that one of Mann’s companies, Viverant, a Minnesota-based physical therapy chain, was within two weeks of being sold to a national chain of fitness centers.

Mann, 49, ran ValueWise based parent company of MyPayrollHR and a slew of other companies from Clifton Park, NY, just north of the state's capital Albany

Mann, 49, ran ValueWise based parent company of MyPayrollHR and a slew of other companies from Clifton Park, NY, just north of the state’s capital Albany 

MyPayrollHR ceased operations without explanation on September 5, leaving thousands of workers nationwide without paychecks

MyPayrollHR ceased operations without explanation on September 5, leaving thousands of workers nationwide without paychecks

MyPayrollHR and its owner, ValueWise, operated from adjoining second-floor suites ¿ numbers 220 and 240 ¿ in a nondescript office building (above) in Clifton Park, New York

MyPayrollHR and its owner, ValueWise, operated from adjoining second-floor suites — numbers 220 and 240 — in a nondescript office building (above) in Clifton Park, New York

When CEO Dennis Cernohous called Albany, New York-based Pioneer Bank to see what would happen, he was asked about a series of loans that Mann had taken out against Viverant, that he knew nothing about.

When the bank sent Cernohous the documents on the loans they described Viverant as being registered in New York — when in fact it was registered in Delaware, but nobody at the bank had noticed the discrepancy.

‘It could have been a great situation, but instead of keeping his legitimate businesses and trimming the fat, Mike Mann has hurt so many people — and it was so unnecessary,’ said the former high-level officer.

‘Now he is going to have to pay for that.’

Mann’s attorney, Michael Koenig, did not return calls for comment.

Mann was the head of a sprawling group of companies, employing around 200 people, that included a business consultancy group in Washington State, an academy for promising basketball players in North Carolina and Hireflux, a healthcare temp agency with offices in eight cities including Baltimore, Nashville, Denver and Los Angeles as well as a handful of payroll companies.

But along with his genuine companies, Mann also invented several companies with the sole role of moving money around in an elaborate check-kiting scheme to inflate the value of his operations, according to an affidavit prepared by the FBI.

‘While stating that MyPayroll was legitimate, he admitted to creating other companies that had no purpose other than to be used in the fraud,’ FBI agent Matthew Wabby wrote in the complaint.

Wabby said Mann told banks and other finance companies ‘his fake businesses had certain receivables that they did not have, obtaining loans and lines of credit by borrowing against these non-existent receivables.’

Mann is accused of netting at least $70million in loans through his fraud schemes since 2010.

‘He created companies that had no purpose other than to be used in the fraud,’ wrote Wabby.

One of the mysteries about the case is how Mann — described as at least 6ft 3in tall and weighing close to 300lb — had managed to keep his picture out of the media until now.

One worker in Clifton Park said it was because he would always let others take the credit for work and he would shrink into the background at social gatherings.

Mann's scheme was first discovered in 2017 when one of his clients, UnitedHealth Group obtained forged documents in which Mann detailed the two companies' business dealings in a bid to get a loan

Mann’s scheme was first discovered in 2017 when one of his clients, UnitedHealth Group obtained forged documents in which Mann detailed the two companies’ business dealings in a bid to get a loan

But another said it was deliberate. ‘When I went to interview with him, I looked him up on his website — no picture. I looked him up on Facebook — no account. I looked him up on LinkedIn — he had a page but, again, no picture.

‘I had no idea who I was interviewing with.’

In a role-playing video obtained by DailyMail.com, Mann is seen trying to avoid a meeting with John Reinke, managing partner of ValueWise.

He says he is busy doing payroll but after Reinke leaves, another worker points out that the MyPayrollHR system is so simple to use he could have done the job, leaving plenty of time for the meeting.

‘I know that, but he doesn’t,’ quips Mann.

The company officer — who requested anonymity as he felt going public could hinder his chance of getting another job — described Mann as ‘very humble’ and said he hated to travel.

‘When this all blew up people were asking where he was and speculating that he was somewhere exotic, but anyone who knew him, knew where he would be — at home.

‘He wasn’t going to run off to Tahiti or the Caribbean. It was a standing joke that Mike would never travel unless he absolutely had to. People came to visit him in Clifton Park, he would never go visit them.’

FBI agents raided his house on the banks of the Great Sacandaga Lake in Edinburg, New York, on September 16, leading to his arrest. He appeared in federal court in Albany, New York, the following week and was released on $200,000 bond.

The judge ordered him not to leave Upstate New York without permission and told him to surrender his passport.

MyPayrollHR had built itself up from fewer than 200 clients to 1,250 over the past five years, paying out $11 million weekly to their workers.

‘We were adding about 50 clients a month, it was a hell of a business and it was fun,’ the company officer told DailyMail.com.

Companies that were clients of MyPayrollHR would pay money into the Pioneer Bank account and then on payday, Cachet Financial Services, based in Pasadena, California, would pull the money out and deposit in the accounts of individual workers.

Everything worked well until the last Friday in August when Cachet deposited the money into thousands of accounts.

After the long Labor Day weekend, it suddenly discovered the money had never reached it from Pioneer so it went into the workers’ accounts and yanked it all back again.

But it soon realized it shouldn’t have done that under its own name, so redeposited the money — and then took it out again under the names of the individual companies.

Cachet and MyPayrollHR had worked together for 12 years.

‘We had a great relationship with (Mann). Never had any problems with him,’ Cachet’s general counsel Wendy Slavkin told Cloud Accounting podcast after ValueWise’s collapse.

‘So there was not an alarm when he manipulated that account number. This was something that we just could not foresee.’

Slavkin said Cachet ‘found itself $26 million in the hole.’ She admitted the first time Cachet took the money out it was done improperly, and it assumed banks would reject it, so it went ahead and did it properly. But, in many cases the money was removed from employees’ accounts twice.

The PayrollHR officer explained: ‘You think of a health care worker in, say Idaho. She just got her $500 weekly paycheck. It’s the end of the month so she makes her rent, her car payment, maybe goes out for a couple of drinks for the long weekend.

‘By Wednesday there is not much of that money left, and that’s when Cachet pulled it out, sending her and hundreds of others into overdraft. And then they did it again.

‘In my view that was both illegal and immoral.’

One company officer based in Oklahoma is said to have loaned $150,000 to Mann’s companies and seen its value rise to more than half a million. He lost it all when the company collapsed.

But despite the serious charges Mann faces, those who knew him still say he was a great boss and a nice man.

It was that demeanor that let his alleged fraud slip through the cracks. ‘If he was one of these guys with swagger, they might have said ‘I don’t like him, let’s really scrutinize the loan,’ said the former company official.

‘But in his case, it was ‘It’s Mike, he’s a good guy, let’s get that loan through quickly.’

‘My feeling about him now is on two tracks. What he did was terrible and he is going to have to pay for it. It would be one thing if he was just stealing from his own companies, but he had business partners and he screwed over a lot of people.

‘But my other feeling is that someday, on a human level, I’d like to visit him in prison to see how he is doing. If it was someone I hated, I’d say ‘F..k you, rot in jail.’ But I just can’t feel that way about Mike.’

MICHAEL MANN: THE ‘WARREN BUFFETT’ OF CLIFTON PARK

Mike Mann’s businesses were spread throughout the United States and ranged from payroll companies to those associated with his greatest love — basketball.

As DailyMail.com reported exclusively last month, he ran Lincoln Academy, a school for aspiring hoopsters in Winston-Salem, North Carolina, along with AlwaysLive which organized high school tournaments.

Mike Mann’s businesses include temp agency Hireflux and physical therapy chain Viverant

Hireflux, which was a temp agency for the healthcare industry had eight offices and was advertising for more franchisees right up to the end. Its New Jersey office is still running as the owner there had not signed the franchise form.

But the core was with payroll companies, MyPayrollHr, Southwestern Payroll, ProData Workforce Solutions and Cloud Payroll which produced the software.

There were business advisors such as Heutmaker and Kaningo as well as Viverant, a physical therapy group in Minnesota and FocalPointe, an IT consultancy.

‘I used to describe it as a mini-Berkshire Hathaway. Mike was the Warren Buffett character who invested and let other people run his companies,’ said one officer at the Clifton Park headquarters.

Darin Alred, president of Southwestern Payroll in Tulsa, OK, cut ties with Mann after learning about his alleged fraud

Darin Alred, president of Southwestern Payroll in Tulsa, OK, cut ties with Mann after learning about his alleged fraud 

‘He was always thinking of the next business and he wanted it to be big.

‘When I first started, I would see him three times a day, every day, then it went down to three times a week, then once a month, then hardly ever.’

While some of Mann’s companies have folded, others have cut ties with him and soldiered on. One is Tulsa-based Southwestern Payroll, whose president Darin Alred put out a defiant message on the company website.

‘On September 4, I received a phone call informing me that Southwestern Payroll and many others had been the victims of alleged fraud by Michael Mann,’ Alred said into the camera.

‘I immediately took steps to have a receiver appointed to control the 51% of the company that Mike Mann owned, and separate our operations from anything having to do with Michael Mann or his companies.

‘We have been in communication with the IRS and will be cooperating with the FBI in their ongoing investigation…we are going to cooperate with that investigation as much as possible,’ Alred added.