The FBI has raided the upstate New York home of a CEO who allegedly defrauded millions of dollars of small business employee pay through his payroll processing company, officials said Tuesday.

A spokesperson for the FBI Field Office in Albany confirmed to NBC News that agency officials searched the Edinburgh, New York residence of Michael Mann, who currently oversees MyPayrollHR through his parent company ValueWise, in connection with an ongoing investigation.

MyPayrollHR, based in Clifton Park, New York, has been under investigation by the FBI and the New York State Department of Labor for allegedly diverting more than $20 million in small-business payroll funds to one of its own bank accounts.

The company abruptly shuttered earlier this month after direct-deposit company Cachet Financial Services reported to authorities that MyPayrollHR changed account numbers in order to move employee paycheck funds into an account at Pioneer Bank controlled by the payroll company, Cachet general counsel Wendy Slavkin said.

MYPayrollHR submitted data files that would normally place employer funds in a Cachet holding account for disbursement to workers, but codes were changed and funds were sent elsewhere, she added.

Cachet, who had worked with the payroll firm for 12 years, handles direct deposit transactions for numerous payroll firms and claimed it was also a victim of the payroll processing company.

About 4,000 businesses that used MyPayrollHR were left frantic after being unable to pay employees their regular direct deposit paychecks at the end of August.

Cachet has worked with employees' banks to correct the reversals and will use their own funds to cover paychecks until they can recover funds from Pioneer Bank or MyPayrollHR, Slavkin added.

"These businesses and workers deserve answers, and I am calling on the Department of Financial Services to investigate this irresponsible company's actions. This is not how we do business in New York, and we will not allow these bad actors to take money away from the hard-working people in this state," New York Governor Andrew Cuomo said earlier this month in a statement.

The FBI is asking others who may have been affected to come forward.