A New York-based payroll services provider is accused of abruptly shutting down last week and leaving thousands of employees short of $26-35 million.
The FBI has launched a probe into MyPayrollHR after the company allegedly left employees of nearly 4,000 businesses without their hard-earned cash.
“The FBI is seeking information from business owners who may have suffered financial loss due to the alleged activity of MyPayrollHR and its affiliates,” the FBI’s Albany bureau tweeted on Wednesday. “Please email MyPayrollHRVictims@fbi.gov with company contact information, number of employees, and the estimated financial impact to the business and its employees.”
New York Gov. Andrew Cuomo had previously enlisted federal help, calling on the Department of Financial Services to investigate MyPayrollHR.
“The sudden and unexplained shutdown of MyPayrollHR in Clifton Park is disturbing and completely unacceptable. Its reckless actions have left employees across the state and the nation with negative bank accounts and forced businesses who depend on its payroll services to scramble to find ways to compensate their employees,” Cuomo said in a statement. “This is not how we do business in New York, and we will not allow these bad actors to take money away from the hard-working people in this state.”
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Thousands of employees were shocked when paychecks that had already been deposited into their accounts were abruptly withdrawn, twice on some occasions, leaving them with low balances, and in some cases, negative balances, Fox affiliate WTVT reported.
Wendy Slavkin, general counsel for the automated clearing house Cachet Financial Services, explained the trouble to TechTarget, saying that MyPayrollHR uses Cachet to facilitate its electronic payments.
Typically, a payroll firm like MyPayrollHR will tell the clearing house to take money out of an employer’s account, and that money is then moved into a settlement or holding account under the clearing house’s control before it goes into employee accounts.
“MyPayrollHR manipulated the account numbers in that electronic file so that the money was taken out of the employer’s accounts and put into an account controlled by MyPayrollHR, not a Cachet settlement account, as it should’ve been,” Slavkin told TechTarget.
The outlet reports that the company was sitting on about $26 million when it shuttered, but that the total could be as high as $35 million if an additional $9 million in unpaid tax withholding managed by a second clearing house is included.
Meanwhile, victims of the shutdown are struggling in the aftermath, with many finding it difficult to pay mounting bills.
“I tapped out my entire savings account to pay my rent for this month,” Brooke Taney, a manager at B-rads Bistro, told local CBS affiliate WRGB. “This is our money and I shouldn’t have to fight to get back money that I worked for.”
Cindy Foreback, who also said her paycheck disappeared, added to ABC affiliate WTAE, “People can’t pay their rent. They can’t buy food for their kids. A lot of people live paycheck to paycheck, and they didn’t have the money in their accounts to cover the reversal, so they’ve been getting hit with fees left and right.”
Slavkin told WTAE that employees should be reimbursed within days.
Cachet Financial Services and the New York Department of Financial Services did not immediately return PEOPLE’s request for comment. MyPayrollHR and its parent company, ValueWise Corporation, could not be reached for comment.