It's a jam-packed episode of accounting and bookkeeping news, including: CPA Practice Advisor announces the 2019 "40 Under 40"; Sage acquires AutoEntry; a CPA exam in Canada that turned into the "Fyre Festival for accountants"; VLOOKUP is dead, long live XLOOKUP; the best job in America turns out to be an accounting job; and last but not least, a special interview with two of the frontline reporters covering the MyPayrollHR payroll fraud saga — get the latest updates on Michael Mann's confession, his web of business lies, and what's next.
- 01:44 – Another five-star review!
- 02:52 – Some familiar faces made CPA Practice Advisor's 2019 40 Under 40 list | CPA Practice Advisor
- 04:10 – AICPA held a not-so-time-zone-inclusive webinar on diversity and inclusion | Accounting Today
- 04:59 – David's Home Away from Podcast, AutoEntry, just got acquired by Sage! | Sage
- 07:18 – Better late than never - Blake finally files is taxes!
- 10:15 – Fyre Festival - Accounting Version | Financial Post
- 11:17 – Testing, testing … Is this thing on? CPA Canada failed to test its test-taking software before unleashing it on test-takers | Going Concern
- 14:45 – Wanna play with numbers AND carry a gun? | Journal of Accountancy
- 14:56 – AICPA has released new standards for forensic accountants | AICPA
- 15:21 – Tipalti raises $76 million in a recent D funding round | CPA Practice Advisor
- 15:46 – Fundbox packs a bigger punch now with $176 million in Series-C funding |
- 17:23 – Speaking of Intuit, QuickBooks Online is now offering mileage tracking, and if adding some other performance-enhancing elements in its September round of updates | QuickBooks
- 19:31 – Not-so-thrifty glitch in TurboTax results in a $216 million tax bill for one probably very unsuspecting thrift-store employee | Forbes
- 21:53 – Out with the V, in with the X ... Microsoft ushers in a newer, shinier function for Excel | Microsoft
- 24:35 – Wells Fargo and Plaid's new data-sharing agreement gives customers even more data control | Bank Innovation
- 26:00 – BBVA wants to be a lover, not a fighter, using its Open Platform, and further innovation to help fintech startups | Bank Innovation
- 28:45 – Sharing the love, fintechs are pairing up with smaller banks to overcome the no-charter hurdle | L.A. Times
- 31:54 – It’s a numbers game – accounting-related positions are the best jobs to have in America! | MarketWatch
- 35:57 - A position that allows you to learn and move upward leads to the highest amount of job satisfaction
- 37:57 – Tech is top priority … Really, it is! | Deloitte Controllership Digest
- 40:11 -- Make sure you come back next week for more important survey results, like the third-quarter AICPA Economic Outlook Survey!
- 40:36 – The moment you've been waiting for! More news and insight on the MyPayroll fiasco!
- 41:32 – Meet two of the frontline reporters in the MyPayrollHR situation - Chelsea Diana, and Michael Williams
- 47:44 – It's important to note that there is no indication that the employees of MyPayrollHR knew what was going on.
- 49:16 – It's still not clear where all that money went, or if parties, like Cachet, who eventually covered the missing payroll, will be reimbursed
- 49:40 – Just how big of a tangled web did Michael Mann weave?
- 50:22 – At least three banks claim a combined loss of $36 million due to fraud, but did not name Mann, or MyPayrollHR in their disclosures
- 50:58 – This Michael actually laid eyes on that elusive Michael, and can confirm he is human, sort of ...
- 51:40 – The Big Chill - Mann's check-kiting antics resulted in frozen accounts at both Bank of America, and Pioneer Bank
- 52:55 – Mann, and MyPayrollHR's parent company, Valuewise, had their hands in a variety of business, ranging from staffing to healthcare, and beyond
- 57:22 – Though Mann has admitted to $70 million worth of fraud, it's up in the air what will happen next
- 59:27 – No matter Mann's motive for committing this fraud, the key takeaway for accountants and bookkeepers recommending payroll services to clients is to know exactly who you're dealing with!
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Chelsea Diana: I think there's one really important line from the complaint that says a lot about what's happening here, and it's that Mann said he used almost all of the $70 million to sustain certain businesses, and purchase, and start new ones, which means that he was using his money on actual businesses, it just wasn't the business that he was saying it was for, essentially.
Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver-
David Leary: And I'm David [00:00:30] Leary. Blake, it's been another week.
Blake Oliver: Another week.
David Leary: More accounting news.
Blake Oliver: More accounting news, more coverage of MyPayrollHR. You secured us an interview with two of the reporters on this case, right?
David Leary: Yes. We have a special interview we'll drop in towards the end of this episode, so stay tuned to the end, and you can hear that. It really ties into some of the articles I brought ... What else did I bring? I had some stuff tied into criminals and CPAs.
Blake Oliver: I filed my taxes on TurboTax Live. I'll tell you all about that. We [00:01:00] have to talk about the Fyre Festival for accountants up in Canada.
David Leary: I think I saw that go by on social.
Blake Oliver: That was crazy. Some disaster with CPA Canada, the exam they do there.
David Leary: We have app news, as always. We have some banking tech news.
Blake Oliver: You've got a big announcement with AutoEntry. I'll let you share that. Excel has a new feature that's super-nerdy, super-cool. It's a new function, actually; we've got some QuickBooks Online updates. I wanna talk later about the number-one job in America-. [00:01:30]
David Leary: Podcaster?
Blake Oliver: It's not podcaster. It's not podcaster.
David Leary: YouTube star?
Blake Oliver: Almost.
David Leary: 40 under 40 came out.
Blake Oliver: Oh, yeah, some people got 40 under 40. First, we gotta talk about the review we got.
David Leary: Yes.
Blake Oliver: This is from Tom- five stars - "I really enjoy your Cloud Accounting Podcast. I am a CPA & CMA working in industry my entire career and I'm looking for ways to apply my background in accounting operations, process improvement, and process automation, [00:02:00] including RPA, to help others. Your podcast is a great way to catch up on current issues and challenges. Thanks, David and Blake." Thank you, Tom. We really appreciate that review and the feedback.
David Leary: Like always, go to iTunes, or Apple Podcasts, and leave reviews; go to Podchaser and leave reviews. They really help spread the word and help us get new listeners.
Blake Oliver: We will read it on the air.
David Leary: The new listeners are important because if ... The 40 under 40 list was released this week. I don't know if you saw that at all, Blake?
Blake Oliver: Yeah, some friends [00:02:30] of the show on the list, who made it.
David Leary: Some friends of the show on the list.
Blake Oliver: By the way, this is CPA Practice Advisor. They annually create a list of the top 40 accountants under 40. Then there's a separate list of 20 folks who are related to the accounting industry, often the vendor side, who are also under 40.
David Leary: So, some of the people who have either been on the show, or we've talked about on the show before ... Caleb Jenkins is on the list. Hector Garcia's on [00:03:00] the list. Will Buckley from Xero. Ben Richmond from Xero, who we interviewed that time.
Blake Oliver: Cathy Iconis is on there. Aaron Berson, great to see you on the list. Elizabeth Pittelkow Kittner-.
David Leary: Joshua Lance is on there.
Blake Oliver: Ingrid Edstrom, Garrett Wagner, Lindsay Stevenson, Patrick Lee. Who else am I leaving out? So many names-.
David Leary: Does Eric Green have the most additional letters behind his name?
Blake Oliver: Well, let's see-
David Leary: He has five?
Blake Oliver: How many designations? [00:03:30] Five designations. That's a lot.
David Leary: He wins. It's cool, because what I like about this, it's easy to click on people, and there's a small summary; especially for people you don't know, it's nice to click down, and drill down, and see who they are. One takeaway for me, and that I wanna thank everybody that's on the list that said the way they stay on top of accounting news, they mentioned The Cloud Accounting Podcast in their profile-
Blake Oliver: That is awesome.
David Leary: Got the little chills from that. Thank you, everybody who threw out a plug and put us in their ... Maybe this is like a chicken and egg thing. Maybe they're on the list because they [00:04:00] listen to The Cloud Accounting Podcast.
Blake Oliver: Yeah, it's possible ...
David Leary: I have a teeny story, just to throw it out there, to get it out of the way, before we really jump into the big, big news.
Blake Oliver: Okay. What's that?
David Leary: AICPA held a free webinar on diversity and inclusion.
Blake Oliver: Okay.
David Leary: I was like, "Very interesting!" I clicked on it. I was gonna RSVP to it, but guess what time it started at? 7:00 a.m. Pacific.
Blake Oliver: Yeah, that's not very inclusive of the folks on the West Coast. Come on.
David Leary: Or maybe-
Blake Oliver: Or the [00:04:30] night owls-.
David Leary: Night owls, exactly. So, I did not attend the webinar. I just thought that was a little entertaining, that it's an inclusion webinar, and it was done at 7:00 a.m..
Blake Oliver: Well, David, let's get to the news.
David Leary: All right.
Blake Oliver: I wanna talk to you about the big news that happened today. It's Friday, and I woke up to news that AutoEntry, who you are affiliated with, who you work with ... People know you as- you're the resident thought leader at AutoEntry. They just [00:05:00] got acquired by Sage.
David Leary: Yes, it's huge news, right? Because Sage is one of the big players in the cloud-accounting space we talk about all the time. There's Intuit; there, Sage; there's Xero. Now, Sage has acquired AutoEntry. So, as of now, I work for Sage; AutoEntry's a part of Sage. We're part of the Sage Family, the Sage team, which is interesting.
Blake Oliver: There weren't a lot of details in the post. You probably can't say, if it's not public yet, but how much money this was for, what's [00:05:30] the nature of the deal, what's gonna happen to all the AutoEntry people?
David Leary: Yeah. As you can imagine, things have gone very fast. I don't know much more than what's on those- out on the official Sage press release that went out. Because this was done- It's in Ireland and England, right? This is 1:00 a.m., my time. My phone's been kinda buzzing all night. I woke up, saw it, went to the gym ... There's a lot happening really fast, and I don't have all the details, but I can definitely see the big takeaway [00:06:00] is how Sage is committed to AutoEntry being part of an open ecosystem.
Blake Oliver: Mm-hmm.
David Leary: For me, personally, I feel like that was always a big kick I had when I was at Intuit about being committed to an ecosystem that's open. If you think about it, 15 years ago, an acquisition like this would just be- that would be it. AutoEntry, from that point forward, would only work with Sage, right?
Blake Oliver: Right.
David Leary: I think all of these players in this industry now have a more mature view to where it's okay, because maybe you're an accountant, or an accounting firm, and you have lots of clients on Sage; maybe [00:06:30] you have some clients and QuickBooks, and some on Xero, and some on other products. You can still use AutoEntry across all your clients. You're not gonna have to ... If you switch to these clients, now you have to use different software. It's just a more mature thinking by all the companies involved, nowadays.
Blake Oliver: Yeah, I saw some of that speculation on Facebook; like, "Oh, now that AutoEntry is part of Sage, am I gonna be able to use it with QuickBooks? I think the answer is definitely- is gonna be definitely yes, right? It's not [cross talk]
David Leary: Yes, it's very clear. It's the same, in [00:07:00] a way, like how TSheets- when QuickBooks bought TSheets, TSheets still works with Xero, and other products. The same thing, when Xero bought Hubdoc, right? Hubdoc still works with QuickBooks. That open-ecosystem mindset is really, really still there.
Blake Oliver: That's your news of the day. My news of the day is that I finally filed my taxes. I used TurboTax Live this year, and-
David Leary: Did you talk to Claudell?
Blake Oliver: No, not Claudell. It was Clifton. [00:07:30] I talked to Clifton today ... I had procrastinated on actually filing, because I didn't owe anything. I'm pretty good about prepaying, so I'm not due until October 15th, because I did an extension. I scheduled my call with a CPA named Clifton. I didn't have any errors in my file, so basically, we had a 10-minute discussion, in which he said, "Yeah, you did a great job!" Then I filed my return.
David Leary: Was it a video conference?
Blake Oliver: Yes.
David Leary: What was that experience [00:08:00] for you like, as the consumer, the customer?
Blake Oliver: The way it works is I go inside of TurboTax, where I'm working on my return, and I say that I want a review, and it gives me some options for times. I select a time and day that works for me. It happened they were available today. Put in your phone number, and then, at that time, you get a call from the TurboTax Live hotline, or whatever it is, and it connects you to somebody via phone. Then, [00:08:30] from inside of the TurboTax application in your web browser, you can press a shortcut that then displays a six-digit code. You provide that code to whoever you're speaking with on the phone, and then they can see your screen. You can see them through their webcam, like a small version of them, like icon view.
David Leary: It's like joining a Zoom or a webinar, but it's right inside ... You're not getting extra software; you're not getting separate downloads; you're just doing it inside TurboTax, itself. Wow ...
Blake Oliver: Yeah, and it's [00:09:00] smart, because they're using the phone for the audio. Even if you lose the computer connection, or there's a problem with the browser, you can still talk. They don't see you; you see them, and then, they can direct you as to what to do on the screen. They can't actually control the screen, though.
David Leary: So, you use the phone, which eliminates a lot of possible complications if somebody doesn't have the microphone configured right, or their computer-
Blake Oliver: Very slick.
David Leary: Yeah, that's a really smart idea. Okay.
Blake Oliver: He went through some of the typical concerns with me. I [00:09:30] was comfortable that it looked right. They have an option where you can actually- you can upload the return to them and send in all of your documents, and they will actually verify that you put in the numbers correctly, but it takes three to five days, and I didn't really want to go gather all the documents again and send them, so I didn't bother doing that. I could have had a CPA sign off on my return and file it for me, if I'd wanted to, as part of the extra fee I paid, but I declined not to.
I'm not sure if I'm gonna do it again next year. I think [00:10:00] I might just go it alone, because honestly, unless the return kicks up an error, or you have like a really complicated situation ... Definitely, as an accountant, I was pretty comfortable that I had done it right, but this time, I just wanted to see. I wanted to see how it worked. I had a very good experience.
You know who didn't have a good experience recently? It was a bunch of CPAs, or wannabe CPAs in Canada, who were taking the exam to become CPAs, which I understand is called the CFE exam. That stands for [00:10:30] Common Final Examination. I don't know if you saw this article in Going Concern? The headline is, "Let’s Talk About How CPA Canada Totally F*cked Up Last Week’s CFE."
I don't mean to laugh at this, because it sounds like, actually, a terrible experience for these students and professionals. I didn't realize this, but in Canada, they still do their CPA exam in three days, and it's annually, which is way more intense than what we have here in the US, where it's four [00:11:00] parts, and you can take them at different times of the year-
David Leary: Basically, this is like it happens in these three days; if something goes wrong, you can't, next month, just come back and take your test. This is the- it's an event.
Blake Oliver: Yeah, it's more like the bar exam here, right? Which is-
David Leary: What went wrong?
Blake Oliver: Long story short, the CPA Canada started using new software this year, called Surpass, and apparently Surpass, or Surpass, didn't surpass expectations, because [00:11:30] they rolled it out, and it failed miserably. They had massive IT issues to the point where ... Just to give you one example, in Edmonton, the exam was supposed to start on day one at 9:00 a.m., and they couldn't get it to work until 1:00 p.m.. The exam test-takers had to sit in the examination center for four hours with nothing to do with very little food or water, because you can't leave. There are snack bars, but I guess there wasn't enough food-
David Leary: That is the Fyre Festival! There's [00:12:00] no food, there's no water; they just had to sit there. It's the same thing.
Blake Oliver: It was described on social media and Reddit as the Fyre Festival for Accountants, which is a nod to the spectacular concert debacle in the Bahamas, where tents were provided instead of luxury accommodations-.
David Leary: That's a Netflix special, right [cross talk]
Blake Oliver: -watch it on Netflix. If you wanna see ... If you want to feel better about your business, or if you feel like a failure, ever, just go watch the Fyre Festival documentary on Netflix, because it'll make you feel a lot better about that. Now, when anything gets screwed up [00:12:30] like this, then it's compared to the Fyre Festival. Yeah, apparently, it was just a terrible rollout. You can see how that could be a problem, right? When the exam's only given once a year, there's not really an opportunity to test if the examination software works very well, and there's a lot of room for risk.
We have solved that, I think, in the US, because we use Prometric for our CPA exam, which is a professional testing center that tests a lot of exams; hundreds of [00:13:00] licenses and certifications ... You can go to a Prometric testing center. It's basically outsourced testing. They maintain the testing centers, the software; if anything goes wrong, it only affects the people at that center at that day, not everybody taking the exam. There's all these questions as to whether or not the students, or the test-takers are going to get another chance; if their scores are gonna be invalidated. Some people had to take the exam, writing it on paper. They couldn't actually write into their [00:13:30] laptops, and all this crazy, crazy stuff; miserable experiences.
David Leary: So, the certifications, though, matter, right? We've been talking a lot about the MyPayrollHR.
Blake Oliver: Mm-hmm. Yeah, yeah.
David Leary: ... Here's the plug, again - stay to the end for the interview ... Special Agent Matthew J. Wabby, of the Federal Bureau of Investigation, he actually wrote the affidavit for arrest of Michael [00:14:00] Mann, who was involved in the bank fraud - the MyPayroll bank fraud. What's nice about this, and I think it's exciting ... "Prior to becoming a special agent, I worked in public accounting for approximately seven years, where I became a certified public accountant. I am still a licensed CPA, and also a certified fraud examiner."
Blake Oliver: This doesn't actually surprise me, David. A lot of the people who work in the FBI, in financial crimes, are CPAs. It's pretty awesome. You get to be a CPA and carry a gun. There's not a lot of jobs where you get to do that.
David Leary: Yeah, and I hit him up on LinkedIn. I was like, "I should have him come [00:14:30] on the podcast!" That would be exciting.
Blake Oliver: Yeah, I don't think it's gonna happen.
David Leary: No bite whatsoever, right now. There's two other things that came out, kind of related to this. The Journal of Accountancy has an article. It's a little older one, but Jeff Drew sent it to me, about criminal-pursuing agents. If you wanna see about some of this undercover work, or maybe you want a career change, check out that- it's an older article from October 1st of 2015, but it's all about CPAs that are pursuing criminals. Then, related to that, the [00:15:00] AICPA has just announced that there's gonna be new forensic standards to boost CPAs' credibility when they're actually on witness stands testifying in court. There's a lot of ... It all ties back to MyPayrollHR, which apparently ties to everything these days.
Blake Oliver: Should we talk about some more fundraising/app news?
David Leary: Oh, yeah ...
Blake Oliver: Tipalti is a global payables automation solution. They have successfully raised another $76 million in capital, led by [00:15:30] Zeev Ventures. It's a D round of funding. The press release says that Tipalti's gonna use this additional funding to continue to set the pace for innovation in the payables automation space and solidify itself as the leading solution for fast-growing and mid-sized companies across the globe.
David Leary: Did you see that Fundbox had a big raise? Fundbox, they raised $326 million, between debt and equity. They actually took on $176 million in equity, and then an additional $150 million in [00:16:00] credit, but they didn't disclose who's providing the credit. Fundbox is ... Before, they were in that instant-loan game. So, if you have invoices; your customer owes you $1,000; you need that cash now ... For a small fee, they'll provide the cash, and then, when you get paid for that invoice ...
Really, their goal is to eliminate that, because there's about $3 billion just locked up into net 30 [cross talk] putting air quotes up. They're really attacking that, and it's all about ... On [00:16:30] both sides of the fence, they're trying to play a middleman through a network - the big, huge company that needs to automate paying their vendors faster, and then they wanna attack it on the other side for the small business owners that need to be paid. This is a real problem that has to be solved. I remember, when I was at Intuit, Intuit changed their policy to pay all smaller vendors within nine days, because they used to ... Like big corporations, eh, whenever-
Blake Oliver: Stretch it out.
David Leary: 90 days ... Stretch it out. We need to maximize this ... It [00:17:00] really hurt small businesses, so Intuit really changed the way they were doing that for [cross talk]
Blake Oliver: Look, if their mission- stated mission - is to grow and help small businesses succeed, then it kind of sucks if you're not paying your small business vendors on time, so that's a great policy.
David Leary: Then, it looks like Fundbox is now gonna open up an office in Dallas.
Blake Oliver: All right. You mentioned Intuit. I've got some QuickBooks Online updates for you.
David Leary: Okay.
Blake Oliver: QuickBooks is now going to have mileage tracking, which was previously only available for QuickBooks Self Employed. It's [00:17:30] getting rolled out incrementally, so you might not see it right away, but all users should have it in the next several months.
David Leary: I'm opening up mine right now, because I've been waiting for this, because I only do- I only need it once or twice a year, so I don't really need a standalone mileage app. I was dreaming of it being in my QuickBooks. I just unlocked with my fingerprint ... "Never miss a mile ..." I got it!
Blake Oliver: Awesome!
David Leary: I'll have to report on how this goes, next time I drive somewhere.
Blake Oliver: It looks pretty cool, because you can have it use your GPS on your phone to record [00:18:00] your start and end points, and you don't have to put in the actual miles on your car that way. So, let me know how it goes. Also new in QBO, performance of reporting has been improved. There is no more need to click 'Load More,' and closing the 'View/Edit' screen will no longer return you to the beginning of a report. Additionally, it's just supposed to be faster overall, which is nice. Reporting is one of those things that has always been traditionally criticized in the online version compared to the desktop version. So, hopefully this'll [00:18:30] appease some of those folks-
David Leary: Well, especially for accountants and bookkeepers. Did entry is one thing, but if you're really in there trying to run reports, and drill down on things, and run two or three reports at the same time, any report optimizing is gonna be efficient for accountants and bookkeepers.
Blake Oliver: Absolutely. Finally, you can now send customer invoices in multiple languages; six languages are supported - English, French, Spanish, Italian, Portuguese, and Chinese.
David Leary: Wait ... Wow! That seems like it should be a much bigger announcement-. [00:19:00]
Blake Oliver: Bigger announcement there? Yeah.
David Leary: I can create my invoice, as I normally do, in English, and then I can just hit a drop-down and say, "Send it in Spanish"?
Blake Oliver: You know, I didn't dig into that, so I'm not sure, but I'm curious to know.
David Leary: I'll have to experiment with that. I'll send you an invoice in Spanish-
Blake Oliver: Yeah, send somebody an invoice in Spanish, and see-
David Leary: I'll track my mileage, and then send you an invoice in Spanish and see how this goes-
Blake Oliver: All right, do it. There's some more Intuit news. This is a story that Kelly Phillips Erb reported earlier this month, and [00:19:30] the headline is, "TurboTax Glitch Led to $216 Million Tax Bill for a Thrift Store Worker." It's actually related to, I think, my experience today. This is why it's important to have somebody looking over your return or looking over the work that you did in an online product. You shouldn't just be filing without double-checking.
What happened here is that Donna Smith, from Aurora, Colorado, who is a part-time worker at a local thrift store, filed [00:20:00] her taxes using TurboTax last year. She got a surprise when she opened a tax bill from the Colorado Department of Revenue to find that the state claimed she owed $216,399,508 in taxes. Smith, who makes about $10 an hour, couldn't understand the tax bill.
Apparently, what happened is that there was an error with TurboTax, where she actually entered the numbers correctly. A TurboTax [00:20:30] spokesperson said that, "For a small number of TurboTax Online customers that filed their taxes between June 13 and 16, there was an issue that caused select fields on their tax return to be incorrectly transmitted during e-file. The issue was quickly fixed, and we have been working directly with the affected Colorado taxpayers, and the Colorado State DOR to help resolve." Actually, I think I have to take back what I said, because apparently, even if it had been reviewed in the software, it wouldn't have been caught, because this was something that happened during the e-file [00:21:00] process.
David Leary: It's just this one random person it only affected?
Blake Oliver: Just a small number of people-.
David Leary: Oh, so it did hit a couple of people. Okay, got it.
Blake Oliver: Yeah, but only people in Colorado, apparently, and only for a few days out of the month. These things happen, and obviously, you can fix that. Just sort of a funny bug. Can you imagine opening the mail and getting that tax bill?
David Leary: No big deal, just ...
Blake Oliver: Continuing along with app updates, Excel has an update that I think is very [00:21:30] relevant to our audience.
David Leary: This is what we've come to now? The Cloud Accounting Podcast is back talking about Excel again-
Blake Oliver: Look, Excel is not going away, right? We use Excel-
David Leary: No, no ... I prefer Excel. I'm totally- Yeah, I'm down. I'm down.
Blake Oliver: So, David, are you a fan of VLOOKUP? You ever use VLOOKUP formulas in your line of work?
David Leary: Yes. Yes, I have.
Blake Oliver: All right. Well, VLOOKUP has a successor. There's a new generation of VLOOKUP, and it's called XLOOKUP. Microsoft [00:22:00] announced this on their blog, and they started out actually by giving a tribute to VLOOKUP, which is a formula that has been with Excel since the very beginning. It was included in Excel One for Macintosh, released in 1985-
David Leary: It was a tribute or a funeral?
Blake Oliver: Well, no, it's like a shout out to VLOOKUP-
David Leary: Oh, okay, got it, got it.
Blake Oliver: For 34 years, VLOOKUP has been the first lookup function learned by Excel users, and it's their third most-used function. Do you know what the [00:22:30] first two are? Wanna guess?
David Leary: Let's pause there for a second. You said 34 years?
Blake Oliver: Yeah.
David Leary: Is VLOOKUP older than you?
Blake Oliver: I'm 36.
David Leary: Oh, okay ... It's like Pre-VLOOKUP/Post-VLOOKUP; got it.
Blake Oliver: The two most-used functions are SUM, and AVERAGE, and then, it's VLOOKUP after that. VLOOKUP is one of those functions that like - it's super-powerful. Everyone learns it, right? Then there's all those people that say, "Oh, INDEX MATCH is superior ..." Whatever ... Screw those people.
David Leary: Great argument ... What team are you on?
Blake Oliver: So, XLOOKUP, and I [00:23:00] don't know if this is gonna be superior to INDEX MATCH, or whatever ... XLOOKUP is named for its ability to look both vertically and horizontally. So, it also replaces the HLOOKUP formula, which I never even used. Basically, all you need are three arguments for XLOOKUP. You need a lookup value - the cell that you're looking for, or the value you're looking for - then you need to choose an array, a lookup array, and then, a return array - what to return. The formula is smart enough to figure out - if you give [00:23:30] it those three things - how to find what you're looking for and return it. It's pretty cool.
Some of the benefits of this ... You might be wondering, "Why are we talking about XLOOKUP? What was wrong with VLOOKUP?" The blog post does a really good job of talking about the limitations of VLOOKUP, which is- one of the big ones is you can't do column insertions or deletions; it'll break your formula, because VLOOKUP requires you to put in the number of the column that you wanna return. If you change the format of your spreadsheet, it breaks. It can't look to the left, [00:24:00] only to the right. It can't search from the back; can't search for the next larger item for an approximate match, which you can now do with XLOOKUP, with the two optional fields. Just an improvement. Spreadsheets are getting better every day.
David Leary: Still, which is good.
Blake Oliver: Yeah, still, and you still need them. Not going away. Not until we get some AI that can just make all our spreadsheets for us, right?
David Leary: I have some banking news. We talked about, you know, banks lack APIs, on one hand. Then, we're always talking about how these startups now are becoming banks. [00:24:30]
Blake Oliver: Okay.
David Leary: So, three articles that are pooled together. One is Plaid. Wells Fargo's entered into a data-sharing agreement with Plaid. A lot of these apps that you use to connect your bank accounts or bank feeds, et cetera, use Plaid. But, what's happened is the way these aggregators have worked, they've always done screen sharing- not screen sharing; screen scraping to pull down the data from the websites, because banks don't have APIs; the banks don't have data-sharing agreements ... Wells [00:25:00] Fargo has entered into a data-sharing agreement with Plaid, but part of that agreement is giving the consumer a little bit more control over their account information on what information is available to Plaid, and then what information is, in theory, available to third-party vendor API- third-party app companies that are using Plaid's APIs.
Blake Oliver: Plaid is basically becoming like an API of APIs for the bank, or it’s like [00:25:30] a central place where they can all connect to, and then apps can authenticate with Plaid and get the information they need?
David Leary: Yeah, because if you're an app developer and you wanna connect to 15,000 banks ... You don't wanna do that.
Blake Oliver: No.
David Leary: You can just connect to Plaid, and now, you're getting that scale of that.
Blake Oliver: I can see how Plaid could be very, very, very valuable, then.
David Leary: Big companies - Venmo, Acorns, Betterment - are all using Plaid to power their products. So, you have [00:26:00] that on that side. Then, BBVA has rolled out its open-banking platform, and it's gonna have four main APIs for startups to use [cross talk]
Blake Oliver: This is a bank? I'm not familiar with them.
David Leary: BBVA Compass - they've dropped the Compass.
Blake Oliver: They're based in Birmingham, Alabama-
David Leary: Yeah, and they're actually out of South America, I think, originally.
Blake Oliver: So, this is cool. As part of their open banking platform they're going to have four APIs for startup clients. Those include identity verification, a [00:26:30] way to move money, so you can execute custom ACH transactions, bill pay, and real-time transfers, account origination, and card issuance. Well, those are really powerful API calls you can make.
David Leary: I've always said this, these banks that get it are gonna win small business. This is gonna be a good thing for BBVA, because they're gonna get a bunch of app developers that, right now, might have to use four different hoops to jump through to accomplish these things. Really, that's the four main use cases for [00:27:00] interacting with banks. It'll be really interesting where this goes next with those guys.
Blake Oliver: The big hole, for me, has always been the fact that I can't pay a bill from inside of QuickBooks Online, or inside Xero and have that payment go out through the bank. I have to use some separate application or go into my bank's bill pay. Why can't I connect their ability ... Like Bank of America, for instance. I use Bank of America for my bill pay. Why can I not connect Xero to Bank of America, and when [00:27:30] I wanna pay a bill in Xero, I say, "Pay with B of A," and it pays it, just like online banking?
David Leary: At one time, a long time ago, in Quicken, in the olden days-
Blake Oliver: You could do that.
David Leary: You could do this. You had to pay a fee, and the banks would charge Intuit, or you, as the consumer, to do that convenience. But, I think, as time went on, the banks got a little bit more, "It's our data. It's our stuff. We want customers to go to our website, because we wanna sell them other banking products ..."
Blake Oliver: Right.
David Leary: I [00:28:00] think it's been a little of that. Now, this is an interesting move because, ultimately, you want people using your bank ... It's kind of in the way we talked about Stripe, last week, right? Nobody uses Stripe, but everybody uses Stripe. It's kinda that same thing. Maybe people will not actually use BBVA, but they'll be using BBVA ... That's where you wanna be, as a platform. You want everybody using you. That's how Facebook won. Facebook didn't care how you used [00:28:30] Facebook - just use Facebook.
Blake Oliver: Right.
David Leary: "We don't care what apps you use, and add-ons, and all the other stuff," and that's that same type of mindset. So, on the other swing, banks making some strides into tech a little bit. On the other side, there's really kind of a longer article from the L.A. Times. Essentially, the article's about how, "Oh, you don't have a bank charter? No problem.".
What's happening is these fintech companies, the Squares of the world, et cetera, are partnering with small regional and community [00:29:00] banks to help them establish FDIC, handle the deposits, and giving them methods that they couldn't really do on their own. The big banks are not gonna go agree to a company like, Square, or Apple, and these companies that are becoming banks, right?
Blake Oliver: Right.
David Leary: What's happening is the fintech companies are finding these smaller regional banks that probably haven't grown in decades. They see this as a growth opportunity-
Blake Oliver: Right, and they're partnering with them. Interesting.
David Leary: Then, in fact, there's actually a whole 'nother company called CAMBR, and [00:29:30] they're actually providing a whole service to play middleman between these. I'll just read kind of the how it works, so it's a little easier to understand. Here's how it works: "A tech company or startup might give CAMBR as much as $100 billion in customers' cash and could then ask the service to spread the money around to potentially hundreds of different financial institutions. As a result, spreading out those deposits, it's more in the fintech caches insured under the FDIC."
Blake Oliver: Gotcha. [00:30:00]
David Leary: Because you can- $250,000 per account. So, people are specializing in this service, instead of taking all that and just setting it in one bank account.
Blake Oliver: Yeah, that makes a lotta sense. There's a lot of treasury management tools for bigger businesses that do something like this, too; a similar kind of concept.
David Leary: Then, of course, as you know, as always ... We've talked about this with MyPayrollHR, and we've talked about this with the banking stuff, and we talked about this with the instant paycheck players - regulations wanna come. People [00:30:30] are starting to really pry into this and trying to stop innovation.
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Blake Oliver: Let's talk about the number-one job in America. It is not YouTube star. It is not to-.
David Leary: Podcaster host-
Blake Oliver: Podcaster, unfortunately, not yet. This is a story that was published in MarketWatch, and-
David Leary: I've got one more guess. Hold on!
Blake Oliver: Okay. [00:32:00]
David Leary: I wonder if this is like a satisfaction game ...
Blake Oliver: Well, the criteria are important, right? Let me tell you how they define best job, because that's a good question, in and of itself. This survey that this article is based on defines the best job as the one with the best career prospects. Extrapolating that, if you have good careers prospects and the ability to move up that - assuming that you enjoy the work you're doing - you will enjoy your career. So, [00:32:30] what job in America has the best career prospects and also has a high income? And it's not software engineer. That's the surprising part.
David Leary: Some part of me thinks you're gonna say CPA? For some reason, I feel like you're gonna say that-
Blake Oliver: Yeah ...
David Leary: -but I'm thinking maybe it's something healthcare-related? Some part of the healthcare field is highly rewarding financially, but also personally rewarding. I don't know what that would be ... That would be my guess.
Blake Oliver: The number-one job is tax manager. [00:33:00] Tax managers have the strongest career opportunities rating according to employees in this position. They had a median base salary of $112,000 a year and 4,800 job openings on Glassdoor, as of July 5th. This is from a study that was released by Glassdoor, the salary/job site. I thought was pretty interesting because it's not software engineer. The article says, "With the infiltration of technology into [00:33:30] financial services, there's a renewed emphasis for tax managers to build closer client relationships," the report's authors said.
So, basically, what's happening is that tax is becoming much less of a grind. If you're a tax manager, meaning you've gotten to the point in your career where you're allowed to actually talk with clients, then it becomes a fun thing, because you're working with the clients; you're solving their problems; you're answering their questions; you're creating a ton of value, because, as a tax manager, you're tending [00:34:00] to work with larger small businesses, folks who really could use some planning.
I think this buttresses in a lot of ways what we are talking about here on this podcast, that technology can make our jobs a lot better, and it won't necessarily automate them. It's gonna automate the boring stuff, not the fun stuff, as long as you can move up into that role. If you're just churning out returns, putting numbers into boxes, no, that job is gonna go away, but-
David Leary: It means there's a change in skill [00:34:30] set, right?
Blake Oliver: Oh, yeah.
David Leary: You just can't be a tax expert. You need to have some people skills. You need to learn how to do some presentations and storytelling. You need to really be a little bit more well-rounded versus just tax.
Blake Oliver: You wanna know who else is on the list, behind tax managers-
David Leary: Oh, this is like a ranking.
Blake Oliver: It's a ranking, yeah.
David Leary: Oh ... Yeah, rattle off the top 10. I'd love to hear this.
Blake Oliver: All right, number one is tax manager. Following that, we've got salesforce developer, product designer, strategy manager-
David Leary: Salesforce developer is very [00:35:00] specific. Wow!
Blake Oliver: I know, right? Everyone needs a Salesforce developer, because every company's got Salesforce now, and you need an admin for it. Strategy manager, HR manager ... Number six, audit manager - another accounting job, and traditional, right? Tax and audit - the traditional bread and butter of accounting are still great jobs. I think that's because audit is becoming more automated. If you're a manager, it's a pretty nice thing not to have to do a lot of grunt work anymore. Then, there's data scientists, business development manager, Java developer. Number 10, close [00:35:30] to my heart, marketing manager, which is basically what I've been doing for the last couple of years, now that I went from public accounting over to the software side; and product marketing manager, 11; right there, that's exactly what I was doing. I was doing product marketing.
David Leary: Where does CPA or bookkeeper fall into ... Is it on the list anywhere?
Blake Oliver: CPA is not a job title-
David Leary: A title, okay, yeah.
Blake Oliver: -but you can assume that the tax managers and audit managers are probably almost all CPAs, most likely.
David Leary: Yeah, yeah, makes sense.
Blake Oliver: Accounting manager is 15; also [00:36:00] a lotta CPAs in there. Dentists are 18. Physician's assistant, 19. You mentioned healthcare, David. Product manager, 20. Compliance manager, 21. These are jobs with a lot of career opportunity. The point is that it's not really important what you're doing, it's important that you have opportunity in your career, because that's when you have high job satisfaction, when you feel like you can learn, and move up, and make a difference.
David Leary: I think that's a lot of the titles of the people that were in the 40 [00:36:30] under 40. So, full circle - you pulled it back to that.
Blake Oliver: We experienced this, this summer, David, this debate as to ... Not debate, it's just this constant trope, or what people are saying at conferences, which is, "Oh, compliance is being automated and we have to move to advisory.".
David Leary: Yep.
Blake Oliver: I think this shows that it's not true. It's not that compliance is going away. It's that some of it is getting automated, and what do you do with the extra time you have is you are more advisory. It's a fusion of compliance and advisory. That's [00:37:00] where the real opportunity is. Being that-.
David Leary: You actually provide advisory based on the compliance work that you have done.
Blake Oliver: Exactly, yeah. You're adding value to that traditional compliance work.
David Leary: I got no more articles, Blake.
Blake Oliver: Oh, well, I got a few more things. Let's see how we're doing on time.
David Leary: Oh, good, good. We're good.
Blake Oliver: There's one other small thing I wanted to share here, and I'll save the rest for next time. You know that I subscribe to the Deloitte Controllership Digest, as I have been living in sort of the world of the mid-market in the last few years.
David Leary: Yes.
Blake Oliver: They did another one of their [00:37:30] snap polls, where they email out a polling question. The people who read the publication respond, and we can probably assume that most of them are in accounting jobs, and controller jobs.
David Leary: Because nobody would be subscribed to this [cross talk]
Blake Oliver: Why would you? You'd have to hate yourself, I think, to do that, right? It'd be like if you were subscribed to this, David, you'd read it before bed. But, I read it with my coffee in the morning. So this flash poll asked, "As the final quarter of 2019 [00:38:00] approaches, what is the top priority you and your company will be focusing on?" The answer, according to 47 percent of the respondents, is, "Automation or system improvements." Almost half, their top priority is automation or system improvements. Next on the list? Only 15 percent is accounting standards implementation. So, tech is just crushing it, when it comes to top priorities, over traditional stuff, like lease accounting, and revenue [00:38:30] recognition, and all that stuff.
David Leary: I wanna see, at the end of the quarter, how much you actually spent working on the automation, because I feel like this is one of those like, "I'm really gonna automate stuff next week. That's my top priority this quarter," and then, it doesn't happen ...
Blake Oliver: I don't know. I think it's happening. I really do. I think there's a lot of investment going on right now. You can certainly see it with the valuations and investment in these companies we talk about every week that are getting investment. They wouldn't be getting investment, if they weren't gaining customers, in an ideal-
David Leary: I [00:39:00] think it's obvious that so many departments are not automated, so, there's just upside [cross talk]
Blake Oliver: There's a ton ... Half. There's at least half are just traditional.
David Leary: I think this goes to what we were talking about before, when you were talking about different accounting jobs that have been outsourced, and that some of these departments, they're being funded to do the automation, and they're not doing it. Then, two years later, "Let's just outsource the whole thing ..." You're right; you probably need to automate your [00:39:30] systems and make internal improvements, or you're whole department's probably gonna get just wiped out.
Blake Oliver: I'll read the other items on this survey, so that the folks who are saying, "Hey, this doesn't add up to 100 percent," don't get upset, because I would ...
David Leary: Oh, these damned accountants!
Blake Oliver: I know ... I said automation/system improvements as 47 percent; accounting standards implementation, 15 percent. Next, organization changes and talent acquisition, 14 percent. Interesting to see how that's fairly, fairly low. It's third, right? Cost reduction-.
David Leary: Well, wouldn't you need the [00:40:00] talent acquisition to do some of the automation?
Blake Oliver: I mean, maybe ... I don't know. Maybe we'll see. Cost reduction, 14 percent; mergers and acquisitions or other transactions comes in last at 10 percent. Lots more to talk about next week. I'm gonna save this good stuff, including the AICPA Economic Outlook Survey for the third quarter. We'll dig into that next week, hopefully, and an idea that the Federal Reserve should create its own cryptocurrency; because we haven't talked about blockchain in a while. But, now-. [00:40:30]
David Leary: Blockchain's back, because I think Bitcoin's up a little bit, right? Everybody's hot and heavy on that again.
Blake Oliver: But we gotta get to the MyPayrollHR story, which we are continuing our coverage of. David, you have secured two of the reporters in Albany, New York, who have been hot on this story and have been breaking all the news we've been talking about. I'm really excited to talk to [cross talk]
David Leary: They've been to the MyPayrollHR headquarters. One of them sat in court, and actually has seen Michael Mann, [00:41:00] himself. The other one had- they both have talked to Michael Mann's lawyer on multiple occasions. These reporters are heavily involved in this story.
Blake Oliver: All right.
Michael Williams: I'm Michael Williams with the Albany Times Union.
Chelsea Diana: And I'm Chelsea Diana, with the Albany Business Review.
David Leary: Chelsea and Michael, welcome. Thank you for joining us on this special interview regarding the MyPayrollHR fraud. Chelsea, we wanna start with you. Can you explain a little bit who you are and what your role was [00:41:30] in the MyPayrollHR case?
Chelsea Diana: Sure. Like I said, I'm a reporter with the Albany Business Review. I've been covering the intersection of money and technology for the Business Review for about five years. We're part of American City Business Journals, which is a national network of business publications. We're in more than 40 cities across the country. My role in this story is that we got a tip a few weeks ago from a restaurant owner, saying that their direct deposits had been withdrawn. I [00:42:00] called their accountant to see what was going on, and, at that time, there were rumors that it could be some kind of fraud, but it was all real speculation.
David Leary: At that time, yeah. Then, Michael, what you do, and what your role is in the MyPayrollHR case?
Michael Williams: Sure. I'm a business reporter with the Times Union. I've actually only been here for about a month, so I just kind of dived into the deep end with this story. Prior to this, I was a court and crime reporter for The Orlando Sentinel, down in Orlando. I [00:42:30] came into this story pretty much the same way that Chelsea did. We got a tip that payroll deposits had been reversed, and it sort of started from there.
David Leary: Started from there ... The reason I brought both of you on, because I think both of you have written multiple articles, and I think we've used these on the previous episodes. I think we've referenced a lot of your articles, so I was like, we should have you two on, because you guys have probably done the most research and are probably the most prepared to speak to a lot of this.
I'm hoping in the next couple minutes here, we kind of figure out how we went from four weeks ago, like you [00:43:00] both said, employees' paychecks getting un-deposited from their accounts to the latest news ... It's like high school basketball players are having to find new schools, but it's all tied to MyPayrollHR, so I think it's kind of interesting. Blake, did you want to give a quick recap of what we've talked about the previous episodes?
Blake Oliver: Yeah. For our listeners who are not familiar with the MyPayrollHR fraud scandal, quick recap - earlier this month, shortly after Labor Day, the week after Labor Day, MyPayrollHR, [00:43:30] a small payroll processor in New York state with about 4,000 customers, suddenly shut down; sent an email to everybody who was a client saying, "We are no longer going to be able to process your payrolls."
That alone was worrisome, but what really started this whole mess was that employees who were getting paid that week saw their paychecks deposited into their account and then suddenly withdrawn, and withdrawn twice in many, many cases. This [00:44:00] was due to a problem with Cachet, the ACH payment processor that was partnered with MyPayrollHR. Basically, what happened is somebody at MyPayrollHR changed the account numbers in the batch file sent to Cachet Financial Services, causing that settlement account, where the payroll should have come out to the employees, to be underfunded- not funded at all.
Cachet advanced the payroll to the employees without realizing what was happening. Then, when they realized that the employer money had not [00:44:30] been transmitted to that account, tried to take it back; tried do it twice because of an error causing huge problems for many of the employees in this case. Bank accounts overdrawn by large amounts; people unable to pay rent; unable to buy medication. It became a national story on NBC Nightly News, and CBS Morning. We've been covering it for a while now. The money is in a bank controlled by MyPayrollHR, which is frozen. Michael [00:45:00] Mann has been arrested and charged with a crime. We still don't have a photo of him. Michael Mann is the owner of MyPayrollHR [cross talk]
David Leary: Yeah, Chelsea, you and Michael probably have dug just as much as we have. Did he not even take a selfie?
Chelsea Diana: I don't know-
David Leary: How is there no photos of him?
Chelsea Diana: Please send a photo, if you have one!
Blake Oliver: We don't know what he looks like. We do know that he is working with the U.S. Attorney. He has been charged with, I believe, the crime with bank fraud. That kinda brings us up to date [00:45:30] with where we are. with the podcast, and following your coverage, Chelsea, and Michael. Thank you so much for all these amazing articles helping us figure out what's going on for our audience - many of whom are CPAs, who recommend payroll services, or provide payroll services, or bookkeepers who do the same thing. Yeah, so that's where we're at. David, what do we want to get out of this interview? What's next?
David Leary: Yeah, I think one thing is just going back to the shutdown in the building, I think, in our brains, we're imagining [00:46:00] it was a little like that movie Boiler Room, where it was just, everybody vanished. They were gone. So, Chelsea and Michael, did either of you actually go to MyPayroll offices? What was that like there?
Chelsea Diana: Yeah, I went to the offices a few days after it closed. The signs saying where the offices are had been taken off the walls. There were some paper taped to some of the windows looking in. From my understanding, the employees kind of came in for the day like normal and [00:46:30] were called into a meeting, and they were all let go and told to go home.
Michael Williams: Yeah, pretty much the same for me. I went there. The news broke Friday, September 6, and I went there later that afternoon. Pretty much like Chelsea said, the sign had been removed from the wall. Everything was dark inside. It looked like they had sort of started the process of moving out of their offices. I spoke with this one woman who worked for an insurance agency that shared the hallway with MyPayrollHR. She said that she [00:47:00] basically saw people moving stuff out of the office. She said that one employee came to her insurance office and inquired about open positions, and basically that all the employees at MyPayrollHR were sort of blindsided by this. I know that you all had referenced an email sent to MyPayrollHR employees on previous episodes that basically told them to pick up their belongings in a parking lot adjacent to a liquor store to sort of avoid any kind of attention from the fact that the company shut down. [00:47:30]
Blake Oliver: Have either of you've been able to speak to employees that have maybe more insight into what went down inside of MyPayrollHR?
Chelsea Diana: I've spoken with a few employees. They all seemed very shocked and had no idea that this was going on.
Michael Williams: Yeah, same for me. It seems like a lot of these employees had been getting a little bit of flack and a little bit of hate from everybody who's been affected by this. Just to be clear, there is no indication that the individual employees at MyPayrollHR had [00:48:00] any idea that any of this was happening. Basically, from the conversations that I've had with a couple of employees, they walked into work one day not knowing that they were gonna walk out and not have a job.
Chelsea Diana: Their paychecks were pulled back, as well. They don't have a boss to cover their paycheck [cross talk]
Blake Oliver: Oh, wow. I didn't realize that they were affected, too.
Chelsea Diana: Yeah, they were, and now they don't have a job, so it's pretty sad.
Blake Oliver: Where we left things, at least where the ... We've been following the [00:48:30] money trail through your reporting, and it seems that there is a frozen account at Pioneer Bank, which was the bank that was providing services, banking services, to MyPayrollHR. Do either of you have any more insight into where all this money went? It was something like $35 million total for this payroll; $26 million, I believe, was net paychecks to employees, funded by employer accounts; then another, I think, $9 million payroll taxes that were [00:49:00] supposed to be remitted to the IRS. Where is the money right now? Do you think that it's going to be recovered? Is Cachet going to get their money back - the ACH processor that essentially floated the payroll?
Chelsea Diana: I don't think that's clear, at this point. The complaint said that the money had been transferred to Pioneer's bank account, and it had been frozen. Usually, in these investigations, [00:49:30] the money within bank accounts are frozen for quite a while, especially as the person whose name was on the bank account is out on bail. So, I don't think it's really clear at this point.
David Leary: Michael Mann, he was the CEO of MyPayrollHR ... He hired a lawyer, and I think both of you spoke to his lawyer. Then, since that episode, he's been arrested, and he's confessed to $70 million in fraud, and this has taken place over nine years? What is his web?
Blake Oliver: Yeah, help us untangle this, because we're hearing about [00:50:00] all sorts of shell companies. There's this school that he was funding down in Florida. Maybe you can ... Even though we don't know what Michael Mann looks like, maybe you can give us an idea of who he was and what was this whole web of lies he was weaving? Who wants to go first?
Chelsea Diana: As far as the $70 million number, we know at least where $36 million of that $70 million has come from. [00:50:30] We know Pioneer Bank, Chemung Canal Trust Co., and Berkshire Bank have all filed disclosures saying that they had money impacted as part of a fraud.
Blake Oliver: These are banks that were lending money to Michael Mann and his various companies.
Chelsea Diana: None of them mention Mann by name, or MyPayroll by name in the disclosures, but they have been sent to reporters in response to questions.
Michael Williams: Yeah, Michael Mann appeared in federal court [00:51:00] this Monday. I was actually in the courtroom and saw him there [cross talk]
Blake Oliver: Oh, so you have actually seen him?
David Leary: Oh, oh!!!
Michael Williams: I have. He actually does exist. He is a real person. He's not an international fugitive.
Blake Oliver: All right?
Michael Williams: He looked pretty reserved; pretty quiet. I've been in the courtroom, several times, for several different cases, and he didn't really seem anything that out of the ordinary. Spoke very briefly, just sort of greeting the judge, answering short [00:51:30] procedural questions. All said and done, the hearing was only about 30 minutes long.
Blake Oliver: I understand he confessed. What did he confess to, exactly?
Michael Williams: What he confessed to, according to the FBI complaint, was basically- he said that he was going through some business and financial pressures. So, around 2010, he started basically ... What Bank of America is saying is that Bank of America froze Michael Mann's account, because they found that he had been kiting checks.
Basically, he was writing [00:52:00] checks to one account ... Say he was writing a check to a Pioneer bank account, but he deposited that check in the Bank of America bank account, and then he basically reversed that process by writing a second check from the Bank of America bank account to the Pioneer Bank account ... Basically artificially inflating his funds, according to the FBI complaint. Bank of America finds out about this, somehow; freezes his account at that bank. Pioneer also finds out about it; freezes Mann's account [00:52:30] of their bank. That's sort of the domino that got this entire situation rolling were the frozen funds in the account.
David Leary: But he's been doing this kiting for almost a decade and using these inflated numbers to acquire other businesses and get other loans.
Blake Oliver: Can you describe for us ... Chelsea, do you know what are the different types of businesses that he's associated with, at this point, that we're aware of?
Chelsea Diana: Sure, there's a big variety. A lot of the way that I kind of [00:53:00] figured out the web of businesses that he's in is just looking at what other companies were incorporated under Valuewise, which was the parent company of MyPayrollHR. Under Valuewise - this parent company, which says it's a consulting company - there was a physical therapy clinic practice in the Midwest; there were several staffing agencies; there was a staffing agency called HireFlux, out of [00:53:30] North Carolina, that set up RNs with jobs at nursing homes and things like that. There's just all of these different businesses. A lot of them are staffing-related; a lot of them are not; a lot of them are healthcare related; a lot of them are not. It was just kind of fascinating to see how many different types of companies he had his hand in.
Blake Oliver: Do we know if these are legitimate businesses, or just fronts, or shells? Any insight into that? [00:54:00]
Chelsea Diana: Yeah. Of the ones that I have verified, some are definitely legitimate businesses. I always recommend, if you're looking to work with a business, and you go to their web page, if they list who their CEO is, with a picture of who it is ... If they if they have faces of CEOs and things like that, then it's pretty likely a legitimate business; if they've been quoted in other news stories, other media outlets, it's likely [00:54:30] a legitimate business. For a lot of those businesses, I found those details, but some of them, I couldn't. That doesn't mean that they weren't legitimate, it just means that they have less of an online footprint.
Blake Oliver: What's the deal with this school? Is it a school in Florida that Michael Mann was funding?
Chelsea Diana: Yeah, it was an elite basketball academy. He wasn't funding the school. He was just funding the basketball portion of it. So, essentially, [00:55:00] if you want to play D1 college ball for like Georgia or any of the big D1 schools, a lot of kids go to these prep schools. In this case, there were two schools created- two of these academies created under Michael Mann's name. One was in Georgia, outside of Atlanta, in 2017, and another was created - it [00:55:30] was essentially moved to North Carolina over the summer. The schools were connected with religious schools. What I learned is that he essentially paid a coach to- a former college coach to teach these guys how to be a better recruit and how to get on a D1 basketball team, along with paying for the tuition to the private school.
Blake Oliver: Wow, so that's all shut down now? What are these kids gonna do? What happened? [00:56:00]
Chelsea Diana: I saw a story from a paper in South Carolina, where one of the recruits lived. The kid had just planned on going to this school, this fall. After a few days, he was heading back to his old high school.
Blake Oliver: Wow, so lots of people affected; not just the employees of the companies using MyPayrollHR, but employees of these other businesses, and of this school that Michael [00:56:30] Mann was helping to fund.
David Leary: Do we know Michael Mann's background? Does he have ... He's a little bit in temp agencies, a little bit into payroll, a little bit into basketball camps ... I saw he's involved in some big national basketball tournament possibly, as well.
Chelsea Diana: Yes.
David Leary: Then he's got some physical therapy business, I think you said. What's his background? Is he just an investor? What do we know about him?
Chelsea Diana: He worked in healthcare consulting for a while, which is where the healthcare [00:57:00] connection comes in. Then, I know that he played basketball, himself, in college. I don't know where. That may be where the basketball connection comes in?
Blake Oliver: So, Michael, you were in court when Michael Mann was charged with this crime, with the bank fraud crime. You've seen him. What is next in this story?
Michael Williams: Yeah, that's a really good question. It's hard to say where the criminal proceedings are gonna go, although the fact that [00:57:30] he basically, according to the FBI complaint, admitted to committing a $70 million fraud is somewhat indicative of what might happen, but, really, it's hard to tell. Really, the big question right now is which businesses of his were legit and which were basically shell companies for this alleged fraud that he admitted to in this complaint? Also, who knew about this before it was revealed? He's had several business [00:58:00] partners. Right now, it's a bit unclear which of his companies were legit, and which weren't, and who knew about this in the 10 years that, according to the FBI complaint, he says that he was perpetrating this fraud [cross talk].
Blake Oliver: And he is- sorry, go ahead, Chelsea.
Chelsea Diana: I think there's one really important line from the complaint that just says a lot about what's happening here. It's that Mann said he used almost all of the $70 million to sustain certain businesses, and [00:58:30] purchase, and start new ones, which means that he was using this money on actual businesses. It just wasn't the businesses that he was saying it was for, essentially.
Blake Oliver: That brings us to the question of why change this ACH number in the first place? Why? What was the motivation for that? David and I have speculated that maybe diverting the money from the settlement account at Cachet to Pioneer Bank was a mistake; that [00:59:00] perhaps he was doing a search and replace on some other account numbers of ... Maybe there was fraud involved in the payroll with some of these shell businesses, or employees, and he didn't mean to do that, because it makes no sense.
David Leary: Yeah, it's either he made a mistake, and he accidentally moved the entire payroll. Then, obviously, that raised red flags, or it was he just got in over his head, the opportunity was there, and he finally just pulled the trigger.
Blake Oliver: Total desperation move or something. Well, thank [00:59:30] you so much, both of you, for joining us today. Really appreciate your insights and your coverage. It's been super-interesting to observe all of this happening. It's a real cautionary tale for accountants and bookkeepers who rely on payroll services for their clients, because most accounting firms outsource this now. So it's a lesson in know who you are working with. Like you said, Chelsea, if [01:00:00] you can't find the owner of the business on the website, maybe that's a sign.
David Leary: So, if you had to take a guess, are we gonna be having you back on, nine months from now, 18 months from now, four years from now. When is there gonna be closure to this, to where there's a sentencing taking place and that type- the investigation will stop?
Michael Williams: It's really hard to say. I guess that sort of depends on what Michael Mann gives to the FBI, or to the U.S. Attorney's office, as part of a potential deal that he [01:00:30] might make with them. It really depends on what his level of cooperation is with the investigation. This could be a months-, if not years-long process to see the conclusion of the criminal case, at least. And that's not even to say the conclusion of all the civil cases, the lawsuits have been filed against MyPayrollHR, against Michael Mann, himself, against Cachet Financial Services. Yes, we're going to be reporting the story for months, [01:01:00] if not longer. It's definitely gonna be a really long process.
Chelsea Diana: We don't know how he's going to plead yet, either. I think a lot of it depends on if he pleads guilty or not guilty.
Blake Oliver: Right. Well, given that he already confessed, it would be a little bit late-
Chelsea Diana: Right. You would think ...
Blake Oliver: -to plead not guilty, but you never know.
Chelsea Diana: You never know.
Blake Oliver: Well, Chelsea, Michael, thank you so much for joining us. Chelsea, if people want to follow what you are writing and covering online, where's the best place for them to do that?
Chelsea Diana: Yeah, the best place is probably our website, Bizjournals.com/albany. That's B-I-Z journals, with an 'S'. [01:01:30]
Blake Oliver: And Michael, how about you?
Michael Williams: For me, it would be TimesUnion.com, and I would definitely recommend anybody in the Albany area to subscribe to your local newspaper if you haven't already.
Chelsea Diana: Yes.
Blake Oliver: Wonderful. Thank you both and have a great weekend.
Chelsea Diana: Thanks so much.
Michael Williams: Thank you both for having us.