Najeeb Khan, founder of Interlogic Outsourcing pictured after being presented with the Community Philanthropy Award from the Center for History in 2009. Staff file photo by Santiago Flores
Najeeb Khan, founder of Interlogic Outsourcing pictured after being presented with the Community Philanthropy Award from the Center for History in 2009. Staff file photo by Santiago Flores
The Elkhart-based payroll provider accused of fraudulent wire transfers has filed for bankruptcy, blaming its founder of a “sophisticated scheme” to mismanage the company’s finances.

Interlogic Outsourcing, Inc., submitted documents Saturday to enter Chapter 11 bankruptcy. Last month, the founder and owner, Najeeb Khan, allegedly initiated $122 million in wire transfers without sufficient money to cover the transactions. IOI handles payroll and other human resources services for thousands of clients nationwide.

“This overdraft has been accumulating for years, and had been effectively hidden by the series of carefully timed account transfers orchestrated by Mr. Khan on a daily basis,” the bankruptcy filing says.

The bankruptcy comes amid attempts to sell the company, which is currently led by consultants brought in to restructure it after Khan resigned as CEO. Chapter 11 bankruptcies provide a way for insolvent companies to reorganize, stay in business and pay creditors.

Seven former clients of IOI have filed their own lawsuits against the company, hoping to recoup money that was withdrawn from their accounts to pay federal and state taxes but was never sent to taxing agencies.

Meanwhile, about 200 of IOI’s 6,000 clients have already decided to terminate their contracts with the company in the wake of the controversy, according to bankruptcy documents.
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