Updated: November 21, 2019 09:32 AM
Created: November 20, 2019 11:49 PM
ALBANY - A settlement may be reached in a lawsuit against a local company involved in a national payroll scheme.
Documents filed in Albany County Supreme Court say Michael Mann, the owner of the former MyPayrollHR is close to striking a settlement deal with Pioneer Bank.
MyPayrollHR and Pioneer filed a consent judgement on Wednesday. They are essentially asking the court for permission to work out a settlement payment plan themselves.
But several other companies involved in the massive fraud scheme want to delay that decision.
Complaints filed by both the National Payment Corporation and Southwestern Payroll Service allege Pioneer has illegally frozen millions of dollars of tax payments in a trust. The companies allege Pioneer continued to accept additional payments from employers while the outgoing payments were frozen.
The filing from NatPay said a total of $12 million dollars from 2,500 employers is now in the frozen account. Employers can't access it and neither can the tax agencies.
Melanie O’Malley has heard it all via the Facebook page she set up for MyPayrollHR victims.
O’Malley said many members dipped into savings to pay employees owed wages when the payroll company initially closed. Now they are struggling with back taxes.
"Those tax monies are sitting in a trust account that we have no access to, no updates and spoiler alert the IRS doesn't care," O’Malley said. “You know they want their taxes. I have people in our membership group who are out $30,000."
O’Malley said she's out $1,400. She said it’s a small amount in comparison to total amount stolen, but she’s still likely going to feel that pinch in the spring when sales slow. She's not sure when she'll get her money back, if at all.
"We have a little to no recourse. We are looking at trying to mount a class action lawsuit but so far there isn’t a viable entity for us to sue,” O’Malley said. "We cannot file against the insurance bond for MyPayrollHR because it has a carve-out for CEO fraud."
The documents filed Wednesday said Mann would owe Pioneer over $35 million. That breaks down about $8,800 per day for over 11 years.
NatPay, Cachet Financial Services and Southwestern Payroll Service have filed documents: asking for a temporary suspension on proceedings, prohibiting Mann or anyone acting on his behalf from touching 14 bank accounts and demanding a jury trial, respectively.
While they await a decision, O’Malley and other victims are looking to push federal legislation that would set the bar higher for payroll companies.
“At the very least push for any entity or along any payroll lines, so that’s your accountant, your payroll processor, your third-party ACH clearinghouse is all entities on the payroll line to be held to a fiduciary duty,” O’Malley said. “And furthermore that employees have third-party protections.”
NewsChannel 13 reached out to Pioneer for comment on the filings they issued this statement:
"We continue to pursue all available avenues of recourse against Mr. Mann and related entities, and unfortunately we are unable to make any further comment as this is ongoing litigation."
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