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MyPayrollHR CEO arrested and charged in $70 million bank fraud scheme

MyPayrollHR abruptly shuttered earlier this month, leaving hundreds of small businesses across the country scrambling.

The CEO of a New York payroll company was arrested and charged Monday in a $70 million bank fraud scheme that left hundreds of small businesses across the country scrambling, federal authorities said.

Michael Mann, 49, allegedly obtained millions in bank loans and lines of credit over the last decade that he diverted to fake companies, the United States Attorney for the Northern District of New York said in a statement.

Mann was CEO of MyPayrollHR, a payroll processing company that abruptly shuttered on Sept. 5 after Mann’s banks, suspecting him of fraud, froze his accounts, authorities said.

The company handled payroll for roughly 1,000 businesses across the United States, authorities said.

The owner of one of them, a real estate company in southern California, told NBC San Diego earlier this month that he was “freaking out” over MyPayrollHR’s sudden shutdown.

Alan Shafran, owner of Shafran Realty Group, told the station that his company’s 15 employees received their paychecks as usual — and then their money disappeared from their bank accounts. He then received a notice from Mann’s company saying he needed to find a new payroll processor.

Shafran paid his employees himself, he told the station, although that money was also withdrawn after banks froze Mann's accounts.

The Federal Bureau of Investigation set up a webpage for businesses that lost money in the alleged fraud, while Gov. Andrew Cuomo called on the state’s financial services department to investigate and provide answers to victims.

“This is not how we do business in New York,” he said.

Mann did not enter a plea on Monday, his lawyer, Michael Koenig, told NBC News.

Koenig said in a statement that Mann voluntarily met with federal prosecutors and has cooperated with authorities “to fully and accurately detail what occurred.”

Mann faces up to 30 years in prison, a maximum $1 million fine and five years of post-release supervision, authorities said.