CPA firm blames Pioneer Bank for fueling Mann’s fraud
ALBANY — The accounting firm used by businessman Michael Mann, who pleaded guilty in August to a years-long bank fraud that cost his customers and lenders an estimated $100 million, claims in a new court filing that “systemic management failures” at Pioneer Bank helped to fuel Mann’s scheme.
In December, Pioneer Bank filed a $34 million lawsuit against Teal, Becker & Chiaramonte that accused the Albany CPA firm of “professional malpractice” in preparing the annual financial audits of Mann’s businesses that Pioneer and other lenders relied upon to give Mann tens of millions of dollars in loans for his businesses — some of which existed only on paper and had no operations.
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On Friday, Teal Becker’s attorneys asserted in a 64-page answer to Pioneer’s lawsuit that the bank was to blame for believing Mann’s lies and not doing enough to verify the financial documents he gave them, which he doctored to inflate his borrowing power.
“If Pioneer had simply requested that (Teal Becker) provide copies of its audit reports directly to Pioneer, Pioneer would have discovered that Mann had surreptitiously altered (the) audit reports to cover his fraudulent conduct,” the filing asserts.
Mann’s Clifton Park payroll processing firm MyPayrollHR — one of his few legitimate businesses — suddenly ceased operations in September of 2019 after the fraud was uncovered and his accounts were frozen.
At the time, hundreds of companies across the country that used Mann’s popular payroll management system were thrown into turmoil when their employees weren’t paid as expected. Those companies also face huge tax bills and fines for payroll taxes that also went unpaid.
Jeffrey Kuhn, an Albany attorney who represents Pioneer, stood by the bank’s assertion that Teal Becker’s audits were “false” even before Mann made any changes to them.
“Teal Becker did not adhere to the widely accepted standards of the accounting profession, which caused millions of dollars in damages to Pioneer Bank and others,” Kuhn told the Times Union. “Pioneer Bank looks forward to presenting facts, including Teal Becker’s own auditing documents that Teal Becker cannot obscure with a lengthy story.”
When it happened back in 2019, the MyPayrollHR scandal drew headlines nationwide, although few in the Capital Region had ever heard of Mann or his various ventures, which included a high school basketball academy he was running in North Carolina for top college prospects.
Mann soon confessed to the FBI and pleaded guilty in August to a dozen federal crimes, including bank fraud, wire fraud, identity theft and filing false tax returns. Mann has since sold his home on Great Sacandaga Lake and moved to North Carolina until sentencing later this year, when he faces up to three decades in prison. He has also agreed to pay $101 million in restitution to his victims.
Pioneer and other financial institutions that were victimized by Mann have been scrambling to recover their losses through the courts. Pioneer has already obtained a $36 million court judgement against Mann.
Federal prosecutors say that beginning around 2013 Mann started applying for millions of dollars in loans from lenders across the country using faked invoices, which appeared to show his businesses had substantial revenues that didn’t exist. He then would use the cash flow from his payroll company and a massive line of credit at Pioneer to make payments on those loans.
Mann also used other financial…
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