LOS ANGELES (CN) - Paychex, a nationwide payroll company, embezzled tens of millions of dollars from small and medium-sized businesses in a "deliberate and lucrative fraud" by embezzling small sums and claiming, when caught, "that the withdrawals were merely innocent mistakes," a class action claims in Federal Court.
Named plaintiff Ironforge.com claims Paychex targets "small- to medium-sized business that do not have the time or resources to set up in-house payroll systems."
The complaint states: "Paycheck has quietly engaged in a fraudulent scheme to fatten its bottom line by embezzling small sums of money from its customers, small businesses found in every state of the nation. Over and over again, defendant tells complaining customers that the withdrawals were merely innocent mistakes. Yet the consistency of what might total literally millions of withdrawals across the nation over years betrays a deliberate and lucrative fraud. Although each instance may add only a few cents of dollars to Paychex's profits, when aggregated over the life of the scheme for Paychex's half a million customers, the amount stolen adds up to tens if not hundreds of millions of dollars.
"The fraud is simple: Paychex skims small amounts of money, month after month, year after year, from its clients, usually by arbitrarily increasing fees or by charging small, undisclosed fees which customers never agreed to pay. ... Paychex has illegally withdrawn money from its clients' bank accounts - without authorization - and withheld the money until a client complaint about the transaction ... . In many cases, Paychex simply refuses to refund the money. Frustrated and preoccupied with running their own businesses, class members are forced to accept their losses and move on."
Paychex, a publicly traded corporation, is based in Rochester, N.Y. It has 12,200 employees, 572,000 customers and reported $2.1 billion in revenue for the fiscal year ending May 31, 2008, the complaint states.
Plaintiffs demand restitution and punitive damages. They are represented by Lisa Maki.
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