MEMORANDUM DECISION AND ORDER I. INTRODUCTION Pending before the Court is Defendants Pioneer Bancorp, Inc.’s and Pioneer Bank’s motion to dismiss the third cause of action in Plaintiff’s complaint for failure to state a claim pursuant to Rule 12(b)(6) and failure to plead fraud with particularity pursuant to Rule 9(b) of the Federal Rules of Civil Procedure. See Dkt. No. 41. II. BACKGROUND Southwestern Payroll Service, Inc. (“Plaintiff”) is a payroll compliance and support company that contracts with employer-clients to provide payroll processing services. See Dkt. No. 25, Amended Compl., at 20.1 Those services include providing payroll checks to the employer-client’s employees and collecting, processing, and remitting an employer-client’s withheld payroll taxes to the appropriate taxing authorities in an accurate and timely fashion. See id. Generally, Plaintiff processes payroll taxes by withdrawing a payroll client’s tax trust funds from the client’s bank on a particular payroll date and placing the funds in escrow in a bank account until they are due to be paid to the various taxing authorities. See id. at 21. Michael Mann (“Defendant Mann”) owns or controls several payroll and related companies, including Defendants Valuewise, MyPayrollHR, Cloud Payroll, Ross, Always Live, Kaningo, Hire Flux, Hire Flux Holdings, Viverant, and Heutmaker. See id. at 15. On or about April 21, 2017, Defendant Mann, through Defendant Cloud Payroll, LLC — which is wholly owned by Defendant Valuewise, which is wholly owned by Defendant Mann — purchased 51 percent of Plaintiff’s outstanding stock. See id. at 24. Plaintiff alleges that Defendants Pioneer Bank and Pioneer Bancorp, Inc. (hereinafter collectively referred to as “Defendant Pioneer”) provided the financing for Defendant Mann’s majority interest in Plaintiff. See id. at 25. As part of the purchase, either Defendant Mann or Defendant Pioneer insisted that Plaintiff use Defendant Pioneer to house its clients’ federal, state, and local tax trust funds (“Client Tax Trust Funds”) as an interim step during payroll tax processing. See id. Presumably, the purpose of this arrangement was so Defendant Pioneer would receive the interest that the Client Tax Trust Funds generated from the time they were collected from the employers and deposited into the account until they were withdrawn from the account to be paid to the appropriate taxing authorities. See id. at 26. The payroll tax process is complicated, and the funds are transferred several times. Initially, after the funds were withdrawn from the clients’ bank accounts, they would be placed in an account at Prosperity Bank in Tulsa, Oklahoma. See id. at 27. From there, a third-party tax processing service provider, National Payment Corporation (“NatPay”), would transfer the funds to an account at First Premier Bank in Sioux Falls, South Dakota. See id. Next, NatPay would transfer the funds to an account at Defendant Pioneer, ending in 2440, where the funds would remain until they were due to a particular taxing authority. See id. When the funds were due, NatPay, based on instructions from Defendant Cloud Payroll, LLC, would transfer the Client Tax Trust Funds from Defendant Pioneer back to First Premier Bank, and then to the appropriate taxing authorities. See id. On or about September 4, 2019, Plaintiff learned that Defendant Mann had resigned from his officer positions within Defendants Valuewise Corporation and Cloud Payroll, LLC. See id. at 28. Shortly thereafter, Plaintiff learned that Defendant Pioneer had already frozen all accounts it held that were associated with Defendant Mann, including the 2440 account retaining the Client Tax Trust Funds. See id. Plaintiff learned that Defendant Mann allegedly committed fraud by taking out various fraudulent loans with Defendant Pioneer and other banks and by improperly manipulating various payroll accounts held with Defendant Pioneer. See id. According to Plaintiff, Defendant Pioneer froze outgoing payroll tax processing transactions from the 2440 account effective August 30, 2019, but it continued to receive and deposit incoming Client Tax Trust Funds through at least September 4, 2019. See id. at 30. In that six-day period, Defendant Pioneer received $6,740,339.63 in Client Tax Trust Funds from Plaintiff. See id. An additional $3,069,627.45 in Client Tax Trust Funds were also in the account, having been deposited prior to the account’s freeze. See id. at 31. Plaintiff contends that Defendant Pioneer has refused to return the $9,809,967.08 in Client Tax Trust Funds, and the funds have not been remitted to the appropriate taxing authorities. See id. at 32. On October 31, 2019, Plaintiff filed its complaint in the instant action. See generally Dkt. No. 1, Compl. Subsequently, Plaintiff filed an amended complaint on December 10, 2019, which included six causes of action against Defendant Pioneer and six causes of action against Defendant Mann and his companies. See generally Dkt. No. 25 at
