Bank with 25 branches in Philly area may have lost $90 million as a result of a customer overdraft

KeyCorp, the parent company of Key Bank which has 25 branches in the Philadelphia region, disclosed in an earnings call Tuesday that it had been hit by a fraudulent wire-transfer that may ultimately cost it $90 million.

Key, headquartered in Cleveland, filed a federal civil suit on July 10 against customer Interlogic Outsourcing, Inc, a payroll processing company based in Indiana. In the lawsuit, Key alleged that Interlogic’s founder Najeeb Khan made a set of complicated wire transfers to other financial institutions on July 5 and July 9 totaling about $220 million. That was about $100 million more than the company had on deposit.

In a call with industry analysts, Key said it may be exposed to a $90 million loss if it is unable to recover the funds. In a statement, Key said it was “currently investigating a processing irregularity that indicates fraud has been perpetrated by a single business client.”

The company believes it was “an isolated incident,” but could not comment further. Interlogic did not immediately respond to requests for comment.