Philly homeless shelter bilked by IOI Payroll fraud of over $4,000

Philadelphia Interfaith Hospitality Network, a social services group and homeless shelter, lost over $4,000 in stolen payroll taxes handled by IOI Payroll, an Indiana-based firm whose CEO has been accused of fraud, the shelter’s executive director Rachel Falcove said Wednesday.

Falcove said she received an unexpected notice from the I.R.S., saying the nonprofit owed taxes.

It turned out IOI Payroll took that tax money “out of our bank account, but they [the taxes] were not paid. We are out $4,015.49 plus $78.74 in penalties for unpaid taxes,” Falcove said.

“We are a small nonprofit agency, raising most of our funds from foundations and individual donations. This will hit us hard since almost every dollar we raise goes to direct support of vulnerable families,” she said.

“Needless to say, we don’t have money to waste, nor do we have sufficient staff time available to spend time dealing with the IRS and attorneys. I consider this an outright theft. They took our payroll tax money from our account and they did not pay the taxes. Given the amount of wire fraud the CEO was accused of, I am praying that our taxes were paid for the previous two quarters.”

Philadelphia Interfaith Hospitality Network was using IOI’s office out of Fort Washington. The staff “have taken our calls, but basically have little information to share,” Falcove said. The non-profit is located on the 7000 block of Germantown Avenue.

IOI also has an office location in Bensalem on Street Road, but an employee who answered the phone on Tuesday declined to answer questions and then hung up.

Victims of IOI Payroll can call 1-800-CALL-FBI, visit their closest FBI office and speak to the duty agent, or use tips.fbi.gov, a spokesperson for the FBI said.

Nneka Sutherland, an IRS spokesperson, said affected businesses should contact the local Philadelphia IRS office and make an appointment with an agent.

To find your local office, visit the I.R.S. website: https://apps.irs.gov/app/officeLocator/index.jsp.

The homeless shelter is the latest client to run afoul of IOI Payroll.

Coming Attractions Jewelers, a Lehigh Valley Mall tenant, says IOI has failed to deliver $3,600 owed to employees.

Coming Attractions has used IOI Payroll as its third-party vendor for at least a decade to pay employees and deduct their local, state, and federal taxes. Last month, employee checks started bouncing.

“Everything had been fine for years. Then I noticed irregularities in how money was coming out of my payroll bank account" at Embassy Bank, said the owner, who asked not to be named.

IOI Payroll removes money every pay period for wages and taxes, but on July 12, the jeweler said, “there was no money in the account.”

“I had to pay my employees out of another account, and now there is $3,600 missing that they should have been paid,” he said. “IOI stole from me and from the IRS. And I still can’t get a straight answer from them.”

Coming Attractions also received a notice from the Internal Revenue Service that the business owed taxes — money that IOI should have forwarded to the federal government.

“They charged us $55 per payroll period, and they service thousands of small businesses,” the owner said. “I’m sure there are others affected.”

IOI, also known as Interlogic Outsourcing Inc., processes payrolls and is based in Elkhart, Ind.

IOI Payroll last month was sued for fraud in federal court by KeyBank, which charged that IOI sent through wire transfers for more than $120 million despite not having the money in its accounts to actually pay workers.

KeyBank filed a lawsuit against the company on July 9, claiming that Interlogic “fraudulently initiated wire transfers,” and that Interlogic chief executive Najeeb Khan knew there weren’t sufficient funds to cover the transfers.

KeyBank, which has numerous branches from Philadelphia to Collegeville, saw its shares drop on the news last month, after the Cleveland-based bank said it discovered fraudulent activity involving “a business customer" of KeyBank National Association,” without naming IOI Payroll. The parent firm for regional lender KeyBank said it is investigating to determine its exposure, now estimated at up to $90 million.

A spokeswoman for IOI in Indiana didn’t return calls for comment. The company’s CEO Kahn hasn’t been seen publicly since the stories broke about alleged fraud at IOI, according to news reports. A spokesman for the U.S. Attorney’s office in Indiana also declined to comment on whether criminal charges have been filed against him.

Are you a business affected by IOI Payroll? Contact us and the IRS.