CLEVELAND — The U.S. Justice Department in the Northern District of Ohio has announced that Najeeb Khan of Edwardsburg, Michigan, has been charged with one count of bank fraud and one count of attempted tax evasion on Tuesday.
These charges were brought against Khan for running a check-kiting scheme that caused a financial loss of nearly $150 million to businesses around the country including KeyBank of Northeast Ohio.
According to court documents, Khan was the owner of Interlogic Outsourcing Inc. (IOI), a payroll processing company that served, at one point, as many as 6,000 clients.
Starting in 2014, Khan allegedly used his company's business bank accounts to fraudulently obtain funds from financial institutions, including KeyBank. He is accused of using those funds to prop up the growth of his business and for personal use to fund a lavish lifestyle that saw him purchase automobiles, aircraft and vacation homes.
Kahn wrote checks and made wire transfers between various accounts that were in his control at various banks, also known as "check-kiting".
Check-kiting is the process of continually writing checks between accounts back and forth to fraudulently inflate account balances, thus deceiving banks into honoring checks written with insufficient funds.
KeyBank was one of the many banks Kahn used to perform the check-kiting scheme.
As a result of the fraudulent activity, Khan caused a total financial loss of nearly $150 million according to court documents,
Khan was also charged with failure to report income gained from the check-kiting scheme on his annual tax return for the tax years 2014-2017 according to the Department of Justice.