Updates Regarding Frozen Bank Accounts

We will use this web page to ensure you have the most up-to-date information about the frozen bank accounts related to the alleged banking fraud impacting several payroll companies in the United States, including us.

The first thing we want you to know is that your ongoing payroll will not be impacted. Payroll processing has continued and will continue. We have separated and secured all funds moving forward.

This page will be updated as changes occur and will include contact information and links to additional information. This is the fastest way to ensure our customers have the right information in the fastest timeframe. Click here to jump to the most recent update or read Important Information below.

Updates

12/11/19 at 2:30pm

  • Our legal team continues to pursue our lawsuit against Pioneer Bank and Michael Mann’s entities. Our first hearing, originally scheduled for Friday, December 13th, was rescheduled by the courts for Monday, December 16th. NatPay, an industry leader in ACH processing that was also impacted by Pioneer Bank and Michael Mann’s actions, will be joining our lawsuit. This is a positive development as we can share information and resources. NatPay has uncovered important and helpful information that benefits our case. At this time we are beginning to receive many notices from various authorities. We are responding to each one as quickly as possible. If you receive any notice from any tax authorities, please email it to tax@swpay.com.

11/14/19 at 2:00pm

  • Yesterday we filed a request for an expedited initial conference in our suit against Pioneer Bank and Michael Mann regarding the frozen tax funds.  Originally the court had set this for February 3, 2020.  Given the urgency of the matter, we petitioned our assigned Magistrate Judge in the Northern District of New York to move the conference to December 13, 2019 and our request was immediately granted by the Judge. This is a significant positive step and we look forward to taking the next steps in this process.

11/1/19 at 12:00pm

  • Today Southwestern Payroll filed a lawsuit against Pioneer Bank in Albany, New York. We sent an update email to all clients, which you can view online here. We continue to work on behalf of our clients with all the relevant tax agencies to deal with notices, abate penalties and take whatever actions that we can as they become necessary. We also continue to provide email updates to clients as developments occur.

10/16/19 at 5:00pm

  • Today we sent a recap file to the Oklahoma Employment Security Commission with a list of all clients that are affected by having some of their third quarter Oklahoma Unemployment taxes frozen at Pioneer Bank.  After speaking with our local representative, we are hopeful they will be able to offer some support or relief from notices and penalties.  We will update further as we learn more.

10/15/19 at 6:00 p.m.

  • On October 14, Southwestern Payroll sent data requested by the IRS Collections Office about which clients have been affected with regard to federal tax deposits, both those related to 941 deposits (Social Security, Medicare and Federal Income Tax Withholdings) and also Federal Unemployment. We provided a list of clients with funds that are under the control of Pioneer Bank. We are hopeful this will help the IRS minimize the impact of these events on our clients with respect to notices and penalties.
  • We will update you further as developments warrant.

10/11/19 at 3:30 p.m.

  • On October 10th, Southwestern Payroll made a formal demand to Pioneer Bank to release the majority of the Southwestern Payroll’s client’s tax trust funds that are frozen at Pioneer Bank. This demand was based on research conducted over the last several weeks and documentation of specific client funds and amounts that the bank allowed to be deposited into the bank after the bank had frozen all outbound transactions.
  • We have stated a very clear an undeniable case for the return of these funds. However, at this stage, we cannot force Pioneer Bank to comply. This may take regulatory or civil action against the bank in a New York court. Therefore, we have no updates on the timeline for the return of these funds.
  • As we continue our audits and produce documentation, we will be making additional demands for the remaining client tax trust funds in their possession.
  • We will update you with any further developments as we continue to fight for our clients and work through the process to correct this unfortunate event.
  • We thank you for your understanding, patience and support that so many have expressed to us.

10/2/19 at 3:00 p.m.

  • Last week the FBI released its criminal complaint against Michael Mann. In the complaint, the FBI asserts that there is a basis for a finding of probable cause that Michael Mann committed bank fraud. The affidavit states “In sum and substance, Mann stated that he wished to accept responsibility for his conduct and confess to a fraudulent scheme that he had been running for years.”
  • As a reminder, nobody working at Southwestern Payroll or any of the affected payroll companies committed any crime. We are victims of this scheme. We continue to seek resolution of this matter and work to regain access to the client funds that are frozen.

9/24/19 at 4:00 p.m.

  • We are providing personal details to our affected customers; we have connected with many who were impacted and continue this communication as fast as possible. Thank you for your understanding as we work through this.

9/23/19 at 5:00 p.m.

  • Michael Mann has been arrested and charged with bank fraud (as reported by various news and media outlets).

9/20/19 at 3:00 p.m.

  • All customers notified of the alleged fraud via email from Darin Alred
  • Accounting continues to be processed and our team continues to call all customers.
  • Web page developed to ensure accurate information
  • Southwestern Payroll employees calling all customers.
    • Our employees are committed to reaching all of our customers quickly about this situation.

9/20/19 at 5:30 p.m.

  • Some Southwestern Payroll clients have received emails stating that someone is accessing their state withholding or unemployment accounts online. This is a normal part of regaining independent access to our clients tax accounts with the states. Susan Wall is the name you will generally see associated with this process, but there may be others. Please do not be alarmed, but always call us any time you are unsure. We are happy to clarify as needed and confirm that all is well with your online accounts.

Contact Information

Customers:

  • Your representative is rapidly calling and emailing every one of his/her clients. If possible, please use this page for data updates.
  • If you need to contact us about a specific need, call or email your personal representative.
  • All others call the main line to be transferred or leave a message for a callback: 918.587.3321

Media:

  • Call/text Hannah Jackson at (918) 606-8721 or email hannah@schnake.com.

Other:

  • If you’re neither a member of the media or a customer and you aren’t sure who to contact, please email tax@swpay.com and provide your name, phone number and question and we’ll assist.

Important Information

On September 4, 2019, an allegation against our parent company Cloud Payroll regarding fund misappropriation came to our attention. A formal investigation has begun, and will be ongoing for quite some time.

Southwestern Payroll has severed all ties with Cloud Payroll, and we are once again operating independently as Southwestern Payroll.

  • Most importantly: your payroll has continued and will continue to be processed without interruption.
    • The only impact on Southwestern Payroll Service, Inc. customers is that some tax funds are not available for deposit because they are frozen by Pioneer Bank.
  • Who is impacted?
    • Customers with payrolls dated August 28, 2019, through Sept. 3, 2019, are impacted the most. Almost all deposits resulting from those payrolls are frozen.
    • Unemployment taxes which are deposited at the end of October will be impacted because some of those funds are among the deposits frozen. We will deposit the funds that remain in our custody as the states permit.
    • Some tax codes with monthly deposit frequencies for August payroll are affected because those funds were in the Pioneer account awaiting deposit in September.
  • What happened?
    • We are a victim of alleged financial fraud perpetrated by Michael Mann (as reported by various news and media outlets). Michael Mann owned interest in several payroll companies across the U.S., including Southwestern Payroll Service, and allegedly committed millions of dollars in fraud of various forms in an ongoing scheme whose boundaries and nature we do not yet know (as reported by various news and media outlets).
    • The FBI recently raided Michael Mann’s home.
    • His bank, Pioneer Bank in Albany, NY froze all of his and his company’s bank accounts.
    • For Southwestern Payroll specifically, his actions caused the inability to access the various funds which we had stored in a Pioneer bank account for the payroll dates listed above among other taxes. As a subsidiary of Mann’s company, our client tax funds were deposited in this account as an interim step to being paid in to tax authorities when due by a centralized corporate tax team.
  • At our request, a Tulsa County Judge has appointed a Receiver.
    • David Rhoades is a Certified Turnaround Professional, a Certified Fraud Examiner, and a Certified Forensic Consultant. State and Federal courts recognize him as an expert in the operation and viability of companies, in the area of corporate governance, alter ego and corporate veil issues, and in the viability of bankruptcy and business plans. Rhoades has served the Courts as trustee, examiner, special master, special administrator and receiver.
  • When do you expect to get the money back? What will happen if you don’t get the money back?
    • At this time, we do not have enough information and we do not want to speculate. As soon as we have the available information regarding this matter, we will provide an update.
  • What are we doing?
    • We’re continuing to make sure your payroll is processed on time and correctly and that all future funds are handled securely under our control. All employee payments will be made as directed.
    • We will be working hand-in-hand with authorities to do all we can to get this money unfrozen and released to the taxing authorities.
    • We are calling and emailing all of our customers to make sure they know what is going on and how they are impacted specifically.
    • We will be updating this page regularly with updates.