Indiana businessman sentenced to prison for $180million scam that saw him buy luxury cars and planes – with his wife allowed to keep $1M home
Najeeb Khan, 70, founder of payroll processing company Interlogic Outsourcing Inc, admitted in court that he was ‘blinded by greed’ after conducting a $180 million check-kiting scheme
Between 2011 and 2019, Khan began embezzling money from IOI Inc., by writing checks back and forth between accounts he controlled to fraudulently inflate account balances
Ultimately, Khan then siphoned off about $73million for himself
Khan used the scam to fund a lifestyle that included a luxury and classic car collection, private planes, yacht and multiple homes across the US
US Attorney Rebecca C. Lutzko said ‘This defendant essentially gave himself a $150,000,000 loan, spent money however he wanted on himself and his business, then defaulted, all without ever getting the banks’ approval to give him that loan’
Last week federal judge Pamela Barker sentenced him to eight years in prison, after admitting bank fraud and attempted tax evasion
Barker ordered Khan to pay back a total of $150 million – $121 million to KeyBank, $27 million to clients and $9.8 million in back taxes while sentencing him to serve 97 months in prison
Interlogic Outsourcing of Indiana founder, Najeeb Khan [photo], has been was sentenced to eight years in prison, after he admitted he was ‘blinded by greed’ after conducting a $180 million check-kiting scheme that defrauded his clients of $180 million
An high rolling septuagenarian entrepreneur who defrauded clients to build one of the world’s most spectacular classic car collections has been left with just one automobile, a lone 2005 GMC Yukon, as his hubris which lasted over a decade came to a screeching halt.
Indiana businessman Najeeb Khan, 70, starts an eight-year jail term, admitting that he was ‘blinded by greed’ after conducting a $180million check-kiting scheme that led to a loss of nearly $150million from his payroll processing center in Elkhart, Indiana.
The missing funds funded his unbridled love for classic Bentleys, Bugattis and Ferraris. He also acquired a private jet, a yacht, a helicopter, mansions in Arizona and Michigan, and homes in Florida and Montana by ripping off more than 1,700 clients for nearly a decade through his company Interlogic Outsourcing Inc.
However, his wife Nancy will be allowed to keep the couple’s homes and bank accounts worth up to $3 million that were transferred to her before his 2020 bankruptcy under a collective deal struck with creditors.
‘I’m humbled with deep regret and remorse to all the victims whose lives were negatively impacted by my actions and greed,’ Khan said as he was jailed last week after admitting bank fraud and attempted tax evasion.
The scam netted $73M which Khan and his wife spent on a luxurious lifestyle, including 240 collection of classic and luxury car. His cars [photo], were auctioned off, raising $40million
His wife Nancy will be allowed to keep the couple’s homes, including the couple’s $1.1 million Michigan home, as well as and bank accounts worth up to $3 million that were transferred to her before his 2020 bankruptcy under a deal struck with creditors.
Born in Pakistan, Khan migrated to US in 1974 and paid his way through college by working in a furniture factory and as a suit salesman at J.C. Penney before joining an Indiana bank.
He rose to vice president before starting his payroll processing company in 1988.
In a classic case of hubris, between 2011 to 2019, while growing his payroll processing business in Indiana, he began embezzling money by writing checks back and forth between accounts he controlled to fraudulently inflate account balances.
Ultimately, Khan then siphoned off about $73million for himself.
Khan left his job as a vice president at an Indiana bank to start his his payroll processing business, Interlogic Outsourcing Inc. While growing the company, between 2011 and 2019, Khan began embezzling money by writing checks back and forth between accounts he controlled to fraudulently inflate account balances
Khan’s appetite for luxurious lifestyle saw him acquire multiple homes, a yacht and private planes, including a Cessna 560XL
Keybank in Cleveland, Ohio, lost $122 million and other victims included small businesses, nonprofits, four Catholic dioceses and charities including the Boy Scouts of America.
When the scam collapse, about 1,700 clients lost out on money Khan’s company had withdrawn for payroll taxes, according to prosecutors. Some victims had to pay the IRS, pay their employees out of their own pockets or take out of lines credit to cover the taxes.
Some even had to lay off employees, prosecutors said.
A ‘Shaw Special’ American race car from Khan’s car collection. Part of the collection was auctioned off to help pay back the fraud, with the fire sale netting roughly $40million
‘I thought because I was in a position of power, that I was all-powerful,’ Khan said in video testimony ahead of his sentencing on Thursday.
The fraud came to light in 2019 when Keybank finally discovered the $122 million hole in its accounts and was forced to deploy more that 100 staff to trace the missing cash.
Keybank’s Senior vice-president Peter Szafran, said the theft was ‘breathtaking’ and that several bank staff were fired for allowing Khan to get away with it.
‘It was a crime of pure avarice,’ Szafran told the South Bend Tribune.
‘It was not a crime of need but of excessive greed on an epic scale.’
Part of the embezzled money went towards funding Khan’s passion for rare and exotic autos like acquisition of this 1953 Fiat 8V Supersonic by Ghia
1935 Auburn 851 Supercharged Speedster that was part of Khan’s collection
U.S. District Judge Pamela Barker ordered him to pay back Judge Barker also ordered Khan to pay over $150,000,000 in restitution to the victims of his bank fraud and the IRS, and to serve 3 years of supervised release once released from prison.
According to the judge’s order $121 million is due KeyBank, $27 million to clients and $9.8 million in back taxes as she jailed him for 97 months.
She predicted the money owed to the IRS will likely never be paid back as she slammed his ‘greed and self-entitlement’.
She said he had collected classic cars like ‘toys’ but she gave Khan credit for his lack of a criminal history and the $65 million he has so far paid back to victims, helped by the $40 million raised from the sale of his 240 cars.
Under his 2020 bankruptcy settlement his wife will retain the couple’s $1.1 million Michigan home and $650,000 guest house, several vehicles, a retirement fund and a number of bank accounts.
Khan will keep his own retirement account, two laptops, clothes, a Glock handgun and his 2005 GMC Yukon, as part of the deal.
”This defendant essentially gave himself a $150,000,000 loan, spent money however he wanted on himself and his business, then defaulted, all without ever getting the banks’ approval to give him that loan,’ U.S. Attorney Rebecca C. Lutzko said in announcing the sentence.
‘These types of financial crimes undermine the well-being of our financial institutions and harm our entire community. This office will vigilantly investigate and prosecute persons who engage in such conduct to protect and prevent harm to financial institutions locally and nationwide.’