Search Results for ‘koss’

Expert in Koss Case Blames Michael Koss and Management for Fraud

It has been almost four years since the massive fraud committed by Sujata Sachdeva against her employer, Koss Corp., was uncovered. A year after the discovery, Koss sued Park Bank for failing to find the fraud.  The company says that Park Bank should have known that a fraud was occurring when Koss employees with proper authority withdrew funds from the Koss bank account and had Park Bank make out cashier’s checks with the funds. Koss says that Park Bank should have realized that the endorsements on the cashiers checks did not match the payees. (For example, a cashier’s check made out to N.M. was endorsed by Nieman Marcus.)

If you know anything about fraud, you know how absurd these claims are. It is the company’s responsibility to prevent and detect fraud. This is not the first time that the company made silly claims against parties it was suing in order avoid taking responsibility for Michael Koss’s own mismanagement of the company. Mind you, the company was sanctioned for its own part in the fraud, including lack of oversight, inadequate accounting controls, failure to reconcile accounts, and failure of Michael Koss to review figures before certifying the financial statements.

Koss Fraud Coverup Deemed “Complex” By the Government

Yesterday the government’s sentencing memorandum in the criminal case against Sujata Sachdeva (the woman who stole more than $34 million from her employer, Koss Corp.) was released.  It had a number of items of interest. Prior to sentencing, the prosecution and the defense each get to make their case for a higher or lower sentence.

The defense’s arguments were absurd. They argued that Sue Sachdeva should get a lighter sentence because:

a. she’s been a law-abiding citizen until now

b. the fraud was “simple”

c. and poor, poor Sue has a “compulsive shopping disorder”

Koss Fraud: We Didn’t Bother to Look at the Endorsements On Our Own Checks, But Grant Thornton Should Have!

The latest news in the Koss Corporation fraud committed by ex-VP of Finance Sue Sachdeva is a lawsuit filed by the company against Sachdeva and auditors Grant Thornton. It’s unlikely that the company will collect much from Sachdeva, but the auditors are a great target because they have deep pockets (especially in the form of a professional liability insurance policy).

Everyone expected Koss to sue Grant Thornton. It’s just standard procedure to sue the auditors after a fraud is discovered. It never matters to the companies that audits are not designed to detect fraud and the auditors tell management this over and over.

It never matters to the companies that they are the ones responsible for establishing and maintaining internal controls over financial reporting, as well as putting procedures in place to prevent and detect fraud.

Update on Koss Fraud

VIDEO: World of forensic accounting unveils how companies are cheated out of millions

The story of the alleged $31 million fraud at Koss Corp by the company’s former VP of Finance, Sue Sachdeva, hasn’t gotten much air time over the last month or so.  Aside from the usual class action lawsuits when there is a fraud discovered at a public company, the only bits of news that are remotely notable at Koss are the continued declaration of dividends and the filing of a 10-Q without any financial statements included.

Koss is a public company, but the stock is thinly traded. The Koss family apparently owns about 70% of outstanding shares of stock. The declaration of a dividend, therefore, is nothing more than the Koss family publicly announcing that they are going to pay themselves.

More Fallout From Koss Fraud, But Michael Koss Stays on Strattec Board

The latest news related to the $31 million fraud committed by Koss Corp.’s ex-VP of Finance Sue Sachdeva is activity at Strattec. Laughably, Michael Koss was the chairman of Strattec’s audit committee since 2003. In January, he was removed as head of that committee, but still remains on the board and on the audit committee. It’s interesting that Strattec didn’t announce the developments related to Michael Koss anywhere, and we’re only finding about it now because Journal Sentinel reporter Cary Spivak started asking questions.

So Koss was removed as audit committee chairman but remains on the board and on the audit committee. I think it’s time for the Strattec board members to ask themselves a serious question: If Michael Koss didn’t care enough about his own company to pay attention to the financial statements, what makes you think he’ll pay attention at Strattec?

I’ve been more than happy to publicly state that Michael Koss and the rest of the executives were asleep at the wheel while Sachdeva was stealing at least $31 million from them in a fraud scheme that lasted over five years.  And amazingly, the executives don’t seem to have plans to change much in wake of the fraud, as they stated in their most recent 10-Q (bold added by me):

Although numerous actions were taken beginning in late December 2009 following the discovery of the unauthorized transactions, including changes relating to the Company’s banking procedures and certain other internal policies and procedures, as well as the other actions described in the Explanatory Note, the Company implemented no formal changes in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Koss Says They’ll Be More Profitable Now That Their VP of Finance Isn’t Stealing $31 Million From Them

Koss Corporation (NASDAQ:KOSS) filed a 10-Q with the Securities and Exchange Commission yesterday that pointed out the obvious… Now that their VP of Finance isn’t stealing at least $31 million from them, they think they’ll be more profitable.

The company says they’ll be restating the financial statements for the fiscal years ended June 2008 and June 2009, at the very least, and also restate the quarterly reports filed so far for fiscal 2010. The company says their numbers will improve now that Sue Sachdeva isn’t stealing from them (bold added by me):

Compliance Week Article: Koss Fraud Spotlights Small Filers’ Internal Control Issues

An article in today’s Compliance Week, Koss Fraud Spotlights Small Filers’ Internal Control Issues (subscription required), quotes me on internal controls and the auditors as it relates to the huge fraud committed by VP of Finance Sue Sachdeva at Koss Corp (NASDAQ:KOSS).

I’m no fan of Sarbanes-Oxley because I believe it was ridiculously expensive, and hasn’t really produced any meaningful results. Fraud is just as rampant as before SOX became law, and the only thing companies have to show for it is a huge bill from auditors and consultants.

Sachdeva and Koss Corp.: The Indictment, the Clothes, and the Auditors

handcuffsThe case of the alleged theft of at least $31 million by Sue Sachdeva from Koss Corp. (NASDAQ:KOSS) carries on. Last week, Sachdeva was charged with 6 counts of wire fraud. Experts are saying this indictment came much faster than usual, as the Feds usually spend much more time thoroughly investigating cases. They’re speculating that a guilty plea is going to come quickly, and the indictment was the first step toward that.

The indictment is interesting. Not only did she use company funds to pay her American Express bill as we had heard, she’s also been accused of getting cashier’s checks from a bank account belonging to Koss, writing Koss checks to Petty Cash and keeping the funds, and using Koss traveler’s checks for personal purposes.

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