The Times Union reported this week that MyPayrollHR financial services partner Cachet Financial Services described itself and another finserv partner of MyPayrollHR as “the biggest victim, and really the only victim” in the sudden shuttering of the payroll company.
Wendy Slavkin, general counsel for Cachet parent company FBG Holdings, told The Times Union that Cachet believes there was electronic tampering with MyPayrollHR’s system only days before the company closed. That tampering, she alleged, caused fund transferred from corporate bank accounts to never be transferred to employee bank accounts via Cachet’s holding account.
“They manipulated the account, so that instead of the money going from the employer to our Cachet settlement account, it went into a different account that was controlled by MyPayrollHR — or Michael Mann, I assume, who is the principal,” she claimed, according to reports.
The Times Union added that it was unable to reach MyPayrollHR or Mann for comment.
According to Slavkin, Cachet initiated a transfer to employee accounts but because Cachet’s holding account was not provided company funds, that process created a “deficiency,” and as Cachet attempted to retrieve those funds, it made a mistake in the coding; Slavkin explained that Cachet assumed banks would reject the transaction, so it initiated a second attempt to reverse the transaction.
That process led Cachet to mistakenly reverse transactions to employee bank accounts twice, with the company receiving notifications from companies and their workers that they have had their accounts withdrawn twice, causing some overdrafts and financial woes for those professionals.
“We’ve had cyber hacking, outside hacking, [but] never experienced anything like this,” she told the publication. “So, what are we doing today? We’re trying to create some sort of protocol in our system that alarms us or [notifies] us when a payroll company tries to change the banking code.”
She added that employees will receive their money back, but Cachet will not. Slavkin claims that employer funds are being held within MyPayrollHR’s Pioneer Bank account. A spokesperson for Pioneer Bank told the publication that it did not have any information to provide.