Payroll Handler Pleads Guilty in $100 Million N.Y. Fraud Case


A New York man will be ordered to repay $100 million embezzled from client payroll accounts after he pleaded guilty to a massive money laundering scheme that put companies out of business and left workers without paychecks, the state’s top law enforcement officer said.

Michael Mann, who owned payroll servicing firms such as ValueWise Corp. and LLC, used shell companies he controlled to siphon customer funds, New York Attorney General Letitia James said in a statement on Friday. Mann diverted more than $1 billion in wages and taxes from 2016 to 2019, James said.

Mann, 50, carried out the scheme in an effort to repay millions of dollars in loans he’d obtained fraudulently, according to James. He initiated hundreds of transactions on a near-daily basis to keep the scam afloat before a suspicious bank froze his accounts, she said.

“Thousands of employees in New York and across the country were left in financial distress in the Fall of 2019, when Mann’s scheme came to light,” James said, calling his fraud a “web of deceit.”

Mann, whose companies were mostly based in Clifton Park, New York, pleaded guilty before Judge James A. Murphy in Saratoga County Court, records show. As part of his agreement with prosecutors, he’ll pay $100 million in restitution to victims, James said. Mann is expected to get as many as 15 years behind bars when he’s sentenced Dec. 10.

Michael L. Koenig, Mann’s attorney, didn’t immediately respond to a message seeking comment.

According to court records, Mann exploited the “float,” or the time between when he took a customer’s money and when it needed to be paid out. He did so using a web of fake companies and falsified assets, emails, audits and bank exams, prosecutors said.

In August 2019 alone, Mann diverted a total of $28 million in payroll that more than 800 companies -- including health-care providers, restaurants and religious institutions -- had entrusted with his operations.

The extra money allowed Mann to keep ValueWise afloat and finance purchases of other companies, including a physical therapy chain, records show. But the businesses all racked up multi-million dollar losses each year.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.