LA Payroll Owner Allegedly Skips Town with Millions of Dollars

LOS ANGELES—In a move that has left a reported 150 local businesses in the lurch, owing tens to hundreds of thousands of dollars in unpaid payroll taxes to the government, the owner of a local payroll company called LA Payroll is nowhere to be found, and has likely skipped town with millions of dollars of ill-gotten gains. The payroll company has been used by mostly small businesses in the area, including adult entertainment companies, for more than a decade. According to the Los Angeles Times, "All had entrusted LA Payroll, a privately held company with a single office, to deal with financial necessities that can be a perennial headache: Issuing paychecks and W2 forms. Handling employment-tax payments. "The firm's clients first realized something was amiss when the IRS and the state sent out late-tax letters," it continued. "LA Payroll employees soon confirmed their fears." "It is a very awful situation, to say the least. A lot of people got hurt," Babak Dardashti, a Los Angeles dentist, told The Times. "I lost $20,000 myself. For a small business, a chunk like that all at once is not easy to swallow." The pain is compounded by the fact that businesses have little recourse in this situation. According to the paper, "Payroll services companies are not subject to rigorous regulation by state or federal bodies that oversee banks and other financial institutions. Nor do most states, including California, require them to be bonded. If the tax money they collect disappears, it is the business owners who are on the hook for the amounts owed, plus interest and penalties."  It is for this reason that trust plays a big part in a company's relationship with its payroll service, something that was not a problem when Gene Moroz, the company's founder, ran the business. "For a monthly fee," reported The Times, "Moroz issued employee paychecks and W-2s for small businesses. He also handled their direct deposits and made their quarterly tax payments to the state and the IRS." But in 2011, after 10 years in business, Moroz accepted an offer to buy his business and "move on to other things." According to The Times, "Moroz sold LA Payroll for $450,000 to Dmitri Paiu, who he said was in his mid-30s and told him he had business interests on the East Coast and in Europe. Moroz, who provided The Times with records of the sale, stayed on as a part-time consultant." Paui soon brought in a partner, Tovmas Grigoryan, 56, an Armenian of whom Moroz recalled, "I didn't know him at all when he came into the picture. Dmitri was a low-key kind of guy. Tovmas was more likely to brag about his wealth, his cars, his lifestyle." Still, Moroz told The Times he saw nothing to be concerned about up until he ended his consulting agreement last year. "After that," former employees told the paper, "neither Paiu nor Grigoryan spent much time in the office. Nor did they say much about their personal lives or other businesses. "LA Payroll's most recent corporation statement lists Paiu as chief executive officer and Grigoryan as chief financial officer," added the paper. "It was filed in January 2013, about the time Grigoryan took over and Paiu stopped showing up." Adding several layers of mystery to an already horrific situation, Paiu could not be reached for comment, and even Grigoryan's brother told The Times that he has no clue where his sibling could be. "I have no idea where he is, maybe Russia. He left about a month ago. We had a merry Christmas together, and he left. He said he had some business in Russia." But another family member told the paper that the missing man was in Armenia, where his wife allegedly lives. Lawyers have been retained, lawsuits brought,  police reports filed, Homeland Security alerted and burned companies have started a Facebook page to share war stories, but no one is off the hook for taxes owed, making this a nightmare impossible to wake up from.