Class Action Filed Against Cachet Financial Services Over MyPayrollHR Fiasco

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September 19, 2019 – Los Angeles, CA – A class action lawsuit was filed in Los Angeles Federal Court alleging that Cachet Financial Services failed to abide by industry and federal regulatory standards which allowed for MyPayrollHR to exact a scheme to fraudulently withdraw $26 million from 250,000 employees nationwide.

Cachet is a payroll processing and financial services company that processes $150 billion annually for more than 110,000 employers. A company called MyPayrollHR subcontracted its payroll processing work to Cachet but in August of 2019, MyPayrollHR executed a massive $26 million fraud. The lawsuit alleges that this fraud was only made possible because Cachet failed to abide by industry and federal regulations which would have provided safety protocols to prevent this sort of disaster. MyPayrollHR has since shut down, its founder Michael Mann has disappeared, and the FBI is currently investigating the company and Mr. Mann.

“This financial nightmare is ruinous to the employees who did nothing wrong and earned their pay to which they were legally entitled,” said attorney Alfredo Torrijos of Arias Sanguinetti Wang & Torrijos LLP. “Cachet failed to abide by federal standards which would have prevented this nightmare and even attempted to claw back payments from the employees.”

According to the complaint, after doing business with MyPayrollHR for 12 years, Cachet was given a completely different set of deposit and withdrawal instructions which it executed without any scrutiny. As a result, on August 29 and August 30 of 2019, MyPayrollHR was able to fraudulently take $26 million meant to cover the payroll of a quarter of a million people. After discovering what had occurred, the complaint goes on to state that Cachet panicked and tried to perform “claw back” withdrawals from employees. Those attempts to claw back the money happened almost a full week later and were performed so poorly that one member of the class who had under $1,000 in a bank account was overdrawn by nearly $1,000,000 after repeated reversals were attempted by Cachet.

Many members of the class still do not have access to their pay from that period which has impacted their ability to pay bills, care for their families, pay child support, travel to work and more. They have incurred costs of fees, interest, missed payments and impacts to credit scores.

To read the complaint:

The case is Veleta Stevens et al. v. Cachet Financial Services, Financial Business Group Holdings, U.S. District Court Central District of California, Case No. 2:19-cv-08120.