Turnstone out nearly $50k in IOI payroll scandal

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FORT WAYNE, Ind. (WANE) – Turnstone has been caught in the aftermath of a scandal involving their payroll company, leaving the non-profit with an unexpected $50,000 tax payment.

Turnstone CEO Mike Mushett tells WANE 15 that Elkhart-based Interlogic Outsourcing Inc. (IOI) failed to pay federal, state and local employee taxes for one payroll cycle.

“Turnstone was shorted about $47,000 in payroll taxes,” says Mushett. “There was access by IOI but (the money) was not submitted to the IRS.”

To avoid fees and penalties, Turnstone paid the taxes.

“The IRS is not very sympathetic if a payment is not made,” Mushett added. “They’re not concerned about the circumstances.”

IOI and its former sole director, Najeeb Khan, have been hit with a lawsuit, accusing Khan of making off with money earmarked for client taxes.

Turnstone has been writing payroll checks by hand since learning of the trouble in July.

“Laura Ramsey, our financial officer, was on top of this early on and limited the damage that we would have been responsible for,” Mushett adds.

The Community Foundation of Fort Wayne also was hit but to a lesser degree.

Heidi Ludwig tells WANE 15 that IOI has paid the missing federal taxes but the foundation kicked in just over $2,000 to cover state and local taxes owed.

“We are hoping to be made whole by IOI,” Ludwig emailed. “IOI has indicated they will reimburse us for all late fees and penalties.

“Because the exposure is minimal this has not impacted our operations. The bigger impact is the time and effort it has taken our finance staff to make a change so quickly to a new payroll provider and to spend countless hours on the phone with IOI confirming timing of payments, in addition to getting established with federal and state agencies to remit payroll tax payments ourselves.”

South Bend attorney Michael Misch tells WSBT-TV that he believes there is an impending bankruptcy filing for IOI. Should that happen, it will be more difficult for people to get their money back.

IOI published more details on its website.

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