CASSOPOLIS, Mich. — An Elkhart payroll company is facing additional claims from clients who say they are owed millions of dollars, while the wife of the company founder has also asked a judge to freeze his assets.
Najeeb Khan is the owner of Interlogic Outsourcing Inc. The company is seeking bankruptcy protection amid lawsuits from banks and clients who say they risk losing tens of millions of dollars.
KeyBank of Cleveland, Ohio filed the first claim in federal district court in July, saying it could lose close to $100 million after Interlogic overdrafted its account and didn’t repay the money. A South Bend firm, Jones Law Office, filed a lawsuit in Elkhart County court this month on behalf of seven clients of IOI.
That lawsuit claims IOI withdrew funds from the clients’ bank accounts to pay wages and make payroll-related state and federal tax payments, but failed to make any of those payments. It says the company made false statements to gain access to clients’ funds, that it knew those payments wouldn’t be made and that it continued to lie in emails later sent to clients.
A judge granted a temporary restraining order in that lawsuit following a hearing Friday, limiting Khan’s ability to dispose of his assets.
Judge Stephen Bowers also granted KeyBank’s request to become involved.
Fifteen more plaintiffs were added to that suit in an amended complaint filed Monday. They include restaurants, RV parts makers, a rental company, a car stereo store and other companies.
Another five defendants are also named in the amended complaint. It alleges IOI is guilty of negligence, breach of contract and fraud, among other counts.
It also claims that KeyBank bears some responsibility for IOI’s actions, by hiring Timothy Daileader and Daniel Wikel as “independent directors” of the company.
Divided assets and bankruptcy
Khan’s wife, Nancy Khan, filed a complaint for separate maintenance in court in Cass County, Michigan, where the couple lives. She says in the Aug. 9 motion that they have property as well as debt and assets that need to be divided.
“There has been a breakdown of the marriage relationship to the extent that the objects of matrimony have been destroyed,” the filing states, “and there remains no reasonable likelihood that the marriage can be preserved.”
Nancy Khan sought a mutual restraining order prohibiting either party from selling, hiding or destroying any assets while the case proceeds. She also asked that the court prohibit the parties from canceling or making any changes to their insurance policies.
Among other requests, she also sought to be awarded exclusive use of their home, a fair division of property and income and an order that Najeeb Khan pay spousal support and attorney fees.
Interlogic Outsourcing filed for Chapter 11 bankruptcy protection while negotiations for the sale of the company are under way. The company says it owes between $10 million and $50 million to between 5,000 and 10,000 creditors, but has assets worth only $1 million to $10 million.
The company was the victim of a “significant and ongoing scheme of intentional financial mismanagement” by Najeeb Khan, the filing states.