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The FBI and the New York State Labor Department have investigated allegations that a payroll company has embezzled millions of dollars of employee wages into its own bank account, announced Thursday officials.
An FBI spokesman confirmed the investigation after the office's office in Albany, New York tweeted that he "was looking for information from business owners likely to have suffered a financial loss due to the supposed activity of MyPayrollHR and its affiliates".
A spokesman for the US Department of Labor said that labor officials from the state of New York were also investigating.
MyPayrollHR, based in Clifton Park, NY, reportedly shut down last week after direct depository firm Cachet Financial Services said it diverted up to $ 26 million worth of checks. Pay small business employees to one of his bank accounts. Stamp handles direct deposit transactions for many payroll companies.
Last week, MyPayrollHR said in a message to customers, published by the KrebsonSecurity website, that "we are no longer able to process other payroll transactions."
In some cases, small business employees did not receive their regular direct deposit paycheque at the end of August and their regular salary was withdrawn from their account twice. The second withdrawal is the result of a technical error that has since been corrected, said Stamp Chief Attorney Wendy Slavkin.
But MyPayrollHR has still not made the initial payments, she said, and the company has alerted the FBI.
MyPayrollHR has not responded to a request for comment.
Olivia Braund, who works in marketing for the Shafran Realty Group in Carlsbad, Calif., Said that she had received a message from Chase Bank after Payday informed her that her account had been emptied of the amount exact of his usual check.
Her boss, Alan Shafran, was kind enough to cover the amount, she said, adding that she soon realized that the entire office had the same experience.
According to Braund, Chase canceled the charges and paid off his boss, but eventually opened a new account to make sure it did not happen again.
"It was one of those things where everyone was looking for answers," she said. "We have a new payroll company now."
About 4,000 companies that used MyPayrollHR were affected by the situation, said Slavkin.
The incident occurred just prior to Labor Day weekend, when MyPayrollHR, who has been working with Cachet for about 12 years, submitted the usual data files for the employees' last pay period. , she said.
The records would normally place the employer's funds in a Stamp Deposit Account for payment to the workers, but the codes were changed, allowing them to be transferred to a MyPayrollHR-controlled Pioneer Bank account. said Slavkin.
Before the diversion was captured, Cachet initiated direct deposits with workers employed by companies using MyPayrollHR, she said. But the money was not there.
Not realizing exactly what the problem was, Stamp decided to reverse the Pioneer deposit, but discovered on Sept. 4 that the account had been frozen, Slavkin said.
Stamp also submitted applications for cancellation of direct deposits to employees, but after realizing that the initial application contained the wrong code, the company filed a second application, said Slavkin.
Both applications were accepted, which led some workers to find that not only were they not paid, but that twice their normal salary had been removed from their accounts, she said.
Stamp worked with employee banks to correct cancellations and cover payroll checks until they can recover funds from Pioneer Bank or MyPayrollHR, she said.
"Basically, Stamp Money is used to pay thousands of employees across the country," Slavkin said.
The company is also introducing new protocols that would prevent third parties from diverting funds.
It is unclear what will happen to the funds deposited with Pioneer Bank. A spokesman for the institution referred NBC News to a document filed Wednesday by the US Securities and Exchange Commission regarding "$ 19 million deposit activity" that could constitute "a potentially fraudulent activity."
"The company is working with the relevant law enforcement authorities," the SEC said in its report.
The FBI has already heard of potential victims across the country, an official said. The US Department of Labor is monitoring the investigations and is ready to help, said a spokesman.
Michael Kosnar and Jay Varela contributed.
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