The FBI and the New York State Department of Labor are investigating allegations that a payroll company diverted millions of dollars in employee pay to its own bank account.
The FBI and the New York State Department of Labor are investigating allegations that a payroll company diverted millions of dollars in employee pay to its own bank account, officials said Thursday.that it was"seeking information from business owners who may have suffered financial loss due to the alleged activity of MyPayrollHR and its affiliates."
In some cases, small business employees did not receive their regular direct deposit paychecks at the end of August, and their normal pay was withdrawn from their accounts twice. The second withdrawal was the result of a technical error that has since been corrected, Cachet general counsel Wendy Slavkin said.MyPayrollHR did not respond to a request for comment.
"It was one of those things where everyone was scrambling for answers," she said."We have a new payroll company now."The incident occurred just before Labor Day weekend when MyPayrollHR, which has worked with Cachet for about 12 years, submitted the usual data files for the latest employee pay period, she said.
Not realizing exactly what the problem was, Cachet moved to reverse the Pioneer deposit but found on Sept. 4 that the account had been frozen, Slavkin said. Cachet has worked with employees' banks to correct the reversals and will cover the paychecks until they can recover funds from Pioneer Bank or MyPayrollHR, she said.The firm is also rolling out new protocols that would prevent outside parties from diverting funds.
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