Interlogic Outsourcing, an Elkhart-based company in the midst of a fraud scandal, will continue operating despite filing for bankruptcy but doesn’t have a full accounting of how much money it owes to clients.
This story by Caleb Bauer originally appeared in the South Bend Tribune.
A federal court hearing Wednesday in South Bend ironed out several issues that will allow IOI, a payroll processing firm, to keep its doors open during its Chapter 11 bankruptcy. The company is accused of pulling money from clients’ accounts for tax withholding but never transferring the funds to the Internal Revenue Service or state tax departments.
IOI has blamed its founder and owner, Najeeb Khan, accusing him of running a “sophisticated scheme” over several years and mismanaging millions of dollars in tax withholding money.
IOI has lost hundreds of clients in the wake of the scandal but says it still has 5,500 nationwide.
Louis DeLucia, an attorney representing three IOI clients — Indiana Beverage, Postle Operating and KZ RV, an RV company — said in court that his clients have lost more than $1 million altogether.
Matt Murphy, an attorney representing IOI in the bankruptcy case, said the legal team for the company isn’t “sure we have perfect visibility into what (customers) are owed.”