Payroll service provider MyPayrollHR suddenly closes without warning and stiffs $35 million from employees at thousands of companies
- The FBI on Wednesday confirmed it is investigating the Clifton Park, New York-based payroll service provider after it shuttered its doors a week ago
- The company processed payroll deposits for 4,000 businesses nationwide before shutting down without warning on Friday
- Thousands of employees across the nation had funds withdrawn from their accounts instead of deposited
- The total estimated value of the payroll loss is $35 million
FBI administrators on Wednesday confirmed the bureau is investigating MyPayrollHR less than a week after the business shut down without warning, leaving thousands of its company clients across the nation struggling to find ways to pay their workers.
The Clifton Park, New York-based payroll service provider – a subsidiary of ValueWise Corp. – shuttered its doors on Friday after withdrawing funds with a total estimated value of nearly $35 million from the bank accounts of thousands of employees working for its roughly 4,000 business customers across the nation.
The problem started on September 4 when Cachet Financial Services – the California-based third-party firm that doles out funds for MYPayrollHR – received an unusual request for funds totaling $26 million to be sent to an account at Pioneer Savings Bank, according to Krebsonsecurity.
Cachet questioned Pioneer Savings about the deposit and was told MyPayrollHR’s bank account had been frozen.
Payroll service provider MyPayrollHR shut down its business without warning on Friday, leaving thousands of its company clients and their employees across the nation struggling to find ways to pay their workers
A shot of MyPayrollHR’s shuttered offices in Clifton Park, New York
MyPayrollHR’s payroll file still instructed its clients’ banks to pull $26 million from Cachet’s holding account even though the deposits from MyPayrollHR’s client banks had not been made.
Cachet twice requested that the transaction be reversed after the initial reversal request was improperly formatted.
Several banks processed both reversal requests, resulting in many employees at companies that use MyPayrollHR having a month’s worth of payroll payments taken out of their bank accounts.
The predicament has left many employers confused and their workers destitute, struggling to come up with financial solutions to pay their bills and feed their families.
Brooke Taney of Albany, New York was one of thousands of employees who had funds withdrawn from her bank account because of the MyPayrollHR debacle
The FBI issued a statement Wednesday announcing it is investigating what happened with MyPayrollHR
‘I was just checking my bank account all day today just waiting for the money to be returned. I did not think they would try again,’ Brooke Taney of Albany, New York told WTEN on Monday.
The FBI issued a statement Wednesday announcing it is ‘seeking information from business owners who may have suffered financial loss,’ due to MyPayrollHR’s alleged activity.
The U.S. Department of Labor also chimed in Wednesday, saying its leaders are ‘aware o f the situation in Clifton Park.’
‘New York State is investigating and responding to this situation,’ the statement reads. ‘Because of the potential magnitude of the situation, the Wage and Hour Division will continue to monitor the situation and will be prepared to coordinate with our state counterparts should they be unable to resolve the matter expeditiously.’
Robert Cohen, co-owner of the Helping Angels nursing care company in Albany spent hours driving across the metropolitan area giving money to their employees by hand after MyPayrollHR failed to do so.
‘It sounds like something you would hear in a movie,’ Cohen told WTEN. ‘I hope they’re brought to justice. I hope justice can be served.’