INDIANAPOLIS, Ind. (WNDU) - Some victims of a $100-million payroll fraud scheme are fighting back.
Three South Bend area business owners testified this morning at the Indiana Statehouse.
They hope to prevent what happened to them from happening to anyone else.
LaSalle Grill owner Mark McDonnell told members of the Indiana Senate Tax and Fiscal Policy Committee that he had to dig deep into his retirement savings to cover the $35,000 his payroll processing firm removed from his bank account to pay taxes—but failed to do so.
“If your payroll processor does not pay the taxes you withheld from your employee’s paycheck, you’re liable,” explained Ind. Sen. Linda Rogers, (R) Granger.
Senator Rogers is offering SB 234 that would require payroll companies to make tax payments more frequently on behalf of their clients. It would also require that employers be notified more quickly when a tax payment is missed. “My main purpose and objective was to put some guard rails around payroll processing companies and ensure that there is some state oversight, you know, to the industry. I mean up until now, it is completely unregulated.”
It’s a situation Najeeb Kahn apparently took full advantage of at his Elkhart based payroll processing firm known as IOI. Hahn owned 10 homes, more than 250 automobiles, and a fleet of private aircraft.
Golf course owner Joe Thomas testified that he had been a client of IOI for 29 years and never before had a reason not to trust them. Thomas lost $20,00 to the scam.
South Bend Attorney Andrew Jones is a fellow IOI victim of what he described as a check kiting or a Ponzi scheme, “where you deduct money today to pay much later.”
“What happens is that employers, you know, they outsource that part of their business, you know, they don’t have time for it. Especially, small employers so it’s kind of, out of sight out of mind,” Senator Rogers said.
The committee members did not vote on the bill today but will consider amendments at a meeting next week.
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January 27, 2021 at 05:34AM
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Bill aims to put oversight into payroll processing industry - WNDU
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