Where’s our bailout? Companies fleeced by MayPayrollHR’s Michael Mann want federal funds

ALBANY – Two of the biggest victims in the MyPayrollHR bank fraud case are fighting over millions of dollars in cash and 30,000 shares of stock that former CEO Michael Mann has agreed to hand over to the federal government as part of a plea deal that could also send him to prison for decades.

Both Pioneer Bank and Cachet Financial Services have filed court documents explaining why each is owed all or some of the money and stock Mann has agreed to give the government. Cachet, which filed for bankruptcy after MyPayrollHR collapsed, says it has a claim on roughly $12 million from Mann’s holdings, while Pioneer says it has a right to all of the cash and stock, nearly $15 million in total.

“Pioneer Bank is identified in Mann’s plea agreement as one of the largest victims of Mann’s criminal fraud,” Pioneer’s lawyers said in a recent filing requesting a hearing on the money and stock Mann is giving to the government. Prosecutors have yet to respond to the request.

The two companies could also be in line for some of the $101 million in restitution that Mann agreed to pay the victims, although Mann is not believed to have any other assets he accumulated from his crimes, having spent much of it to pay off his fraudulent loans and on his businesses, including a high school basketball academy he ran in North Carolina, where Mann now lives with his wife. 

Mann pleaded guilty last August to 12 felonies in U.S. District Court, admitting to a decade-long scheme to defraud several banks, including Pioneer, to obtain loans for his various businesses, some of which didn’t actually have real operations.

One of his legitimate companies, MyPayrollHR, a popular payroll processing software company based in Clifton Park, collapsed as Mann’s bank fraud scheme was uncovered over Labor Day weekend in 2019. The meltdown dealt massive financial hits to companies that did business with Mann.

The demise of MyPayrollHR led to the lost of paychecks to thousands of workers whose employers used MyPayrollHR to distribute payroll and collect payroll taxes. One of the biggest vendors of MyPayrollHR, Cachet Financial Services, declared bankruptcy after it had to pay the employees of MyPayrollHR’s customers.

Mann’s various companies had been given a $42 million line of credit by Pioneer Bank, and Mann’s crimes were ultimately uncovered when his attempts to use the Pioneer Bank accounts to replenish accounts and repay loans he had with other financial institutions failed.

Mann, who once lived on Great Sacandaga Lake, is expected to be sentenced in August.

Mann could spend as many as 32 years in federal prison. He has also agreed to pay $101 million in restitution to his victims – and forfeit roughly $14.5 million in cash in three Bank of American accounts and 30,000 shares of stock of Pioneer Bank, which are worth roughly $362,700 as of Monday’s trading.