The MyPayrollHR Financial Scandal

Chuck: Chuck and Kelly joined by our legal analyst, Paul Harding, Martin, Harding & Mazzotti. Hey, Paul, how are you?

Paul: Good morning. Morning, Chuck, morning, Kelly.

Chuck: Good to talk to you. So, there’s a, you know…this is one of the big financial-end, maybe criminal stories, we’ve seen in a while, broke a couple of weeks ago. MyPayrollHR, that locally based payroll firm where all of a sudden, you know, the CEO disappears and people are having money siphoned from their accounts, and there’s all sorts of back and forth on this. Well, I thought it was interesting. It broke last week, in the Business Review, that the CEO, Michael Mann, the owner who had been missing since this scandal broke, with no statements or sightings, has hired an attorney and that they’ve been, I guess, talking to the U.S. Attorney’s office. This seems to me as a novice, like, kind of an unusual dynamic.

Paul: You know, information is coming out in a really uniquely slow fashion.

Chuck: Yeah.

Paul: It’s getting pieces of it. We think we saw that the federal investigators were at Mr. Mann’s house, withdrawing documents. We think we know U.S. Attorney’s office is investigating this. They’ve sort of said…they didn’t say they were not investigating, so, sort of, we can infer that they are. But, here, yeah, hire an attorney, hire a good attorney. And I think it makes sense that attorney reached out to the U.S. Attorney’s office and they are in discussion. We don’t know where it’s going.

Kelly: In the meantime, they are looking at all these victims here. I mean, there’s a thousand people who had, you know, been totaling in millions of dollars, looking at a class action lawsuit.

Paul: Yeah, it’s the perfect remedy for that. I mean, class action shows that people who are similarly situated and folks who have been injured in a very similar way, you get one plaintiff, and there’s some from North Carolina, who’s the plaintiff, brings the claim against all the defendants, like Payroll, this group called Cachet, some other folks and then, other people are [inaudible 00:01:31] going. So if the folks who’ve been affected by this will get stuff in the mail. There’s gonna be [inaudible 00:01:35] this class action, till any monies and damages they’ve had from this. Really it has been a financial disaster.

Kelly: Well, what’s interesting about this, and it’s kinda complicated how the chain of events happened, but, so, MyPayrollHR is the company that’s responsible for distributing the money into this account that’s held by Cachet, and then they distribute the money to the employees, so the employees are also naming Cachet. Cachet says they’re a victim in this.

Paul: Yeah, but, you know, they’re in that chain of withdrawing money. They are the ones who actually withdrew the money. And then they had a little glitch. They sort of withdrew it twice from some people because it didn’t go through the first time. So their knee jerk reaction was great and yes, they prove the money wasn’t in the account, which forced them to do the withdrawal. But question is, what do you do when you’re faced with this kind of thing? Could they have floated the money? Could they have kind of waited a week? Certainly withdrawing it twice from people’s accounts was wrong. You know, they’re almost like, “be careful who you’re hanging out with.” In this case, MyPayroll may be the real bad guys. They’re on the hook.

Chuck: Total speculation and I realize you don’t have anywhere near enough evidence, but do you think eventually somebody somewhere will go to jail in this thing?

Paul: Yeah, it’s still early to have that conversation. I mean, we know that new banking regulations are coming. This is gonna spur new things. And one of the things it’s gonna spur is the ability for the government to go into these payroll companies and do more inspections and more analysis than they’ve been allowed to up to now. So we know that’s coming. But as far as what’s coming, here again, you know with this thing could turn out, we may find that this is a computer glitch and the glitch caused it to happen and then Cachet withdrew the money, and no criminal penalties at all.

Now, the way it’s shaping up and the way that we’re kinda watching it unfold with lawyers, FBI, certainly moving in that direction but too early to speculate.

Chuck: Hey, on a totally different topic, there was a bunch of reports in the Glens Falls’ Post-Star newspaper about a developer who handles a lot of the senior apartments, among other things up there and that he has a policy of not letting people out of their leases when they die. I was just curious, Kelly and I were, about what the law is on leases and, you know, particularly of that kind of a thing for an apartment or home and also like for your vehicle?

Paul: It’s an automatic out of your lease, right?

Chuck: Yeah.

Paul: When you die, the lease ends, you are out of it. Any responsibility that you have, could pass to your estate. The issues we see developing up there is that, you know, if this situation where he’s taking too much of a security deposit. A security deposit’s meant to be, and, you know, [inaudible 00:03:44] situations, waiting for our security deposit to come back. But, it’s meant to be for normal wear and tear, and damage, and then the unpaid rent, right? He had charges in there, you know, $50.00 to clean out the door, did you wipe the door down, clean out your… And, so, there’s are the things that are being looked at. Is the money coming out for things that are just a little bit picayune? And, then, also, you know, when someone dies, did he not return those security deposits? That one and kind of those classic cases we’ve all been involved in waiting for our security deposit to come back. This will be interesting to see how this unfolds.

Chuck: Paul Harding, WGY Legal Analyst, Martin, Harding & Mazzotti, 1-800-LAW-1010. Thanks a lot, Paul.

Paul: Good talking to you guys.