Koss fires top executive for US$20 million personal shopping spree

Headphone maker Koss has fired a vice-president of finance who allegedly took US$20 million from company coffers to make purchases of expensive clothing, jewellery, and other items for personal use.

In a criminal complaint filed by the US Attorney’s Office in Wisconsin, Sujata “Sue” Sachdeva, who held the position since 1992, has admitted she used her position at the company to authorise company funds to pay her credit card bills. She then falsified Koss’s bank account records to hide the act, according to a report by news agency Reuters.

Between January 2008 and December 2009 alone, Ms Sachdeva allegedly accumulated a credit card bill of more than US$4.5 million. Bills often amounted to hundreds of thousands of dollars. They included nearly US$1.4 million at a high end fashion retailer in Wisconsin called Valentina Boutique, US$670,000 at women’s clothing store Au Courant in Milwaukee, US$649,000 at Zita Bridal Salon in Wisconsin, and US$255,000 at Karat 22 Jewellers in Texas.

Preliminary estimates have put the amount of unauthorised transactions since 2006 at more than US$20 million, according to the criminal complaint. The company, which posted first quarter sales of US$10.8 million, has said that as a result its financial statements since the end of its 2006 fiscal year will need to be restated. It has also placed two members of its accounting staff, who reported to Sachdeva, on unpaid administrative leave, the report said.

The unauthorised transactions was first spotted by American Express, with which Sachdeva paid her purchases with, when they noticed that her personal credit bills were being settled by large cash payments from Koss’s corporate bank accounts.
They notified Koss’s chief executive, Michal Koss, who began an internal investigation, and found boxes of women’s clothing in Sachdeva’s office, some with price tags still attached. They also found credit card statements in Sachdeva’s name.
Koss told the news agency that it is continuing its internal investigation of the matter, as well as efforts to recover the merchandise purchased using company funds. Sachdeva’s lawyer, Michael Hart, has declined to comment.