The wife of the founder of Interlogic Outsourcing, Inc. says in court documents that she had no prior knowledge of her husband’s alleged fraud and that she expects him to soon be “criminally prosecuted.”
Nancy Khan filed for an order in Cass County stipulating that neither she nor her husband, Najeeb Khan, sell any assets without permission of the other, and a judge this week granted her request. The couple own a home in Edwardsburg.
Najeeb Khan, who founded IOI in Elkhart in 2003, has been accused of a multimillion-dollar fraud involving tax withholding money for clients. IOI handles payroll and other human resources functions for hundreds of companies nationwide.
The fraud allegations came to light last month, after a massive overdraft by IOI through KeyBank and a subsequent lawsuit by the bank.
“Approximately 30 days ago, I learned through my husband and his attorney that my husband had been involved in a multimillion dollar fraud,” Nancy Khan said in a legal filing Tuesday. “I had no knowledge of the alleged fraud nor did I participate in the actions of which he is being accused.”
She also said in the documents, “I believe my husband will imminently be criminally prosecuted for the fraudulent scheme.”
In addition, Nancy Khan expressed concerns that her husband is trying to sell off assets.
“I learned just hours ago that … my husband cooperated with KeyBank for the sale of an aircraft that I believe is marital property,” the filing says. “I am fearful that similar liquidation of marital assets are underway.”
Khan owns a pair of airplanes based at the Elkhart Municipal Airport — a 2008 Cessna Model 560 jet that can seat nine people and a 1975 Cessna Model 421B — according to public records. He also owns several classic luxury cars and homes in Florida and Arizona.
Khan’s assets were already frozen as a part of the KeyBank lawsuit. But that freeze stipulated Khan could still sell property and assets with KeyBank’s permission to pay back the bank.
Now, Nancy Khan’s legal filing also freezes those assets without “a mutual agreement of the parties in writing.”
Nancy Khan's lawyer, Richard Roane, said in a statement to The Tribune that his client "still loves her husband and is not asking for a divorce."
"She was blindsided to learn of the alleged fraud," the statement said. "As you can imagine, this is deeply personal and painful for my client. She extends her concern to the other innocent parties who have been caught up in this extremely unfortunate situation."
IOI declared Chapter 11 bankruptcy over the weekend, after Khan stepped down as CEO last month. New leaders were brought in to prepare the company for a possible sale.
The new head of the company said in bankruptcy filings that Khan pursued a “sophisticated scheme” of financial mismanagement for years. KeyBank has accused Najeeb Khan of a $122 million overdraft. Several clients have complained that money withheld by IOI for taxes was never forwarded to the Internal Revenue Service or state tax agencies.
How much money is owed to clients remains unclear, and IOI attorneys said in a bankruptcy hearing Wednesday that they still don’t know the amount of money clients lost.