It's not hard to find local cut-outs in most areas. In most cases, those folks are also patsies.

Another, different party who cashes checks written to their name in exchange for a cut, for example.

As an example, there is still the old in the tooth craigslist 'oops, I sent too large a cashiers check, can you send me the extra?' scam, which is an even more obvious ripoff, and people fall for that all the time.

If approached by law enforcement, their story would likely be they were working for X (different) company as an assistant or in finance, etc. The other company of course will be in a different state, country, or whatever, or maybe not actually exist, depending on the logistics of the money movement.

The scammers could easily have 10-20 different paychecks going to one person without anyone being the wiser - at least until the IRS got the W-2s or the cut-out started thinking about the long term consequences.

Scammers are used to a lot of churn with stuff like this, it's why these scams are hardish to run and aren't even more lucrative. Think breaking bad and 'Walt trying to ACTUALLY make money selling meth'. Lots of surprise expenses, people going sideways on you, competition you didn't expect, paranoia, logistics difficulties.

That's assuming they aren't just forging/stealing SSNs or identities and using some kind of front somewhere, like payday check cashing places willing to look the other way, or whatever.

There are plenty of folks running bad check scams or the like already, and they don't have the benefit of checks that will actually cash (all the time), like a big companies payroll check.

I wasn't even thinking about the fact that it leaves a paper trail. I was just thinking about the fact that the company who ostensibly hired "John Doe" is being given payment details for "Jack Frost".

It wouldn't be hard to have it be John Doe all the way through, at least for folks doing this. Setting up things like this is a common tactic in a lot of common financial crimes now a days.