Ex-payroll company CEO sentenced to 8 years for $150Mn scheme
MICHIGAN, UNITED STATES — Najeeb Khan, former CEO of payroll processing firm Elkhart, was sentenced to eight years in federal prison for bank fraud and tax evasion related to a check-kiting scheme that caused nearly $150 million in losses.
Khan pleaded guilty earlier this year. He owned Interlogic Outsourcing Inc. (IOI), which provided payroll services to around 6,000 clients.
In 2014, Khan engaged in check-kiting, writing checks, and wire transfers between accounts he controlled at various banks to artificially inflate balances and obtain funds fraudulently. This allowed him to access over $70 million for planes, cars, homes, and other luxuries.
His actions caused major financial losses to businesses nationwide and Cleveland-based KeyBank. The scheme was also dubbed the “largest and longest-running case of blatant check kiting in United States history” by prosecutors.
Khan’s attorneys argued for 18-24 months in prison, adding that five years could be a death sentence given his age. However, the judge determined eight years was appropriate, given the scale of the fraud. In addition to his prison sentence, he was also ordered to pay over $150 million in restitution.
Still, many victims felt 10-12 years would not be enough time given the harm caused.
“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,” said U.S. Attorney Rebecca Lutzko.
“These types of financial crimes undermine the well-being of our financial institutions and harm our entire community,” Lutzko added.
Khan’s case was investigated by the Federal Bureau of Investigation (FBI) and the Internal Revenue Service (IRS) Criminal Investigations.
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