The case of the alleged $31 million embezzlement by Koss Corp. Vice President of Finance Sue Sachdeva continues to shock many. How does a company with annual revenue in the $40 million range lose such a large amount of money over a 5 or 6 year period?
In this interview with Milwaukee’s ABC affiliate, WISN 12, Tracy Coenen talks about the autonomy Sachdeva apparently had at Koss, and how that facilitated the fraud and the cover-up.
Expert: Regular Audit Wouldn’t Catch Wrong-Doing
The scandal at Milwaukee’s Koss Corporation has ballooned to some $31 million.
The company’s former vice-president is facing federal charges and is accused of embezzling $4.5 million.
On Tuesday, the company admitted that number is conservative.
Koss Vice-President of Finance Sue Sachdeva was fired just days after she was charged in federal court with embezzlement.
Prosecutors and the FBI who raided Sachdeva’s Mequon home last month claim she spent millions on expensive clothes and jewelry.
In a filing Monday with the Securities and Exchange Commission, CEO Michael Koss said, “Preliminary estimates indicate that the amount of unauthorized transactions since fiscal year 2005 through the present has exceeded $31 million.”
Though Koss fired its accounting firm Grant Thornton, that company issued a statement saying they weren’t hired to evaluate internal controls at the company and blamed Koss itself stating, “Establishing and maintaining effective internal control is management’s and the board’s responsibility.”
WISN 12 News talked with an expert to find out how someone can embezzle millions and not be noticed.
“She could really manipulate the entire process because she is the top finance person at the company,” Sequence, Inc. President Tracy Coenen said.
Coenen said a regular audit checks the math and accounting practices and wouldn’t catch the kind of fraud alleged at Koss, suggesting there should have been more checks within Koss’ structure.
“She could probably have made any transactions, any entry she wanted to. In addition, she had control over the employees and could probably coerce them into participating, could trick them into participating without their real knowledge of it,” Coenen said.
Although Michael Koss isn’t doing interviews on the current scandal, last January he told 12 News the company was doing what it could to weather the economic storm.
“I think anybody running a business today that isn’t concerned or worried is not paying strict attention,” Koss said.
His statement 11 months ago about the troubled economy might apply now.
“Try to do the best you can, continue to make great products, and hope for the best,” Koss said.
Michael Koss today did not return any calls or e-mails for comment on this story.
The trading of Koss stock continues to be suspended on the Nasdaq exchange.