ValueWise CEO Michael Mann pled guilty Wednesday to orchestrating a years-long fraud that caused more than $100 million in losses to banks, financing companies and other businesses, according to the Justice Department.
U.S. Attorney Grant C. Jaquith for the Northern District of New York and Thomas F. Relford, the special agent in charge of the FBI's Albany field office, brought the charges against Mann.
Mann is slated to be sentenced in December to two years in federal prison on the aggravated identity theft conviction and faces maximum terms of three years for filing a false tax return, 20 years for wire fraud conspiracy, and 30 years for bank fraud.
The sentence will be imposed by a judge based on the particular statute the defendant is charged with violating, the Justice Department said.
Mann, the chief executive officer of ValueWise Corp. based in upstate New York, admitted that from 2013 to September 2019, he engaged in a fraudulent scheme to deceive banks and financing companies into loaning his companies tens of millions of dollars.
Mann was unable to repay the loans with legitimate business revenues, according to the Justice Department, and expanded the fraud by "stealing and diverting millions of dollars that were entrusted to his payroll companies, and engaging in the daily kiting of millions of dollars among bank accounts he controlled."
The Justice Department said Mann's scheme "collapsed" in September 2019, when one of his banks froze his accounts and set off a "chain of events that left his payroll companies unable to make payroll for hundreds of small business customers nationwide."
"Michael Mann's fraud was staggering. He caused more than $100 million in losses and wove a web of deception so complex that it eventually ensnared hundreds of small businesses and several thousand workers across the country," Jaquith said in a statement. "Today's plea is the start of holding him accountable for the terrible harm he inflicted on these victims, as well as the banks and other companies that trusted him with their money and believed his sophisticated lies."
Relford added that Mann's "deception" impacted thousands of people across the country.
"While many of the businesses were able to recover, others experienced irreparable hits to their reputations. Today's admission of guilt is a small step forward in their process to rebuild," Relford said. "The FBI will continue to work with our law enforcement partners to aggressively pursue and charge those who willingly defraud our citizens and banking institutions."
Mann has agreed to an "entry of an order" requiring him to pay $101,038,793.31 in restitution, and to forfeit assets, including $14,522,474.90 already seized by the government, 30,000 common shares of Pioneer Bancorp Inc. already seized by the government, and a 2020 Jeep Gladiator.
Mann is the second person to plead guilty in connection with the case. On Feb. 6, 2020, former Optum employee Luke E. Steiner, 32, of Minneapolis, Minn., pled guilty to conspiring with Mann to defraud two financing companies out of millions of dollars, according to the Justice Department.
The FBI and the Internal Revenue Service are conducting a further criminal investigation, which is being prosecuted by Assistant U.S. Attorneys Michael Barnett and Cyrus P.W. Rieck.