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. Continue reading
The 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. Continue reading
I’ve been talking here, at DailyFinance.com, and to the media about the massive fraud at Koss Corp. and how I think it may have been committed and covered up. The time has come to get more specific about how I think it happened, and why I think the auditors did not find it.
Disclaimer: I have no inside knowledge of the situation at Koss. I have never worked for or with them, and I have never worked for or with Grant Thornton, the auditors. I haven’t seen anything other than what’s been released publicly by the press. I am merely speculating.
The contention has been made that the auditors should have found this fraud, as they are required to consider fraud in planning and performing their audits. Further, the fraud is at an estimated $31 million (my guess is it will end around $50 million), which is clearly material to Koss. “Material” generally means it’s big enough to matter to the overall financial picture of the company. With annual sales hovering around $40 million a year at Koss Corp., $31 million (or more) stolen over a 5+ year period is certainly material.
So how did the auditors miss it? That’s easy. Three simple steps by Koss VP of Finance Sue Sachdeva could prevent the auditors from encountering evidence pointing them to the fraud. Continue reading
I have been criticized for “defending” Grant Thornton, the auditors of Koss Corp, which has suffered a fraud loss of at least $31 million at the hands of the company’s Vice President of Finance, Sue Sachdeva. In fact, my comments relating to this case are not a defense of Grant Thornton, in the least. They are meant to point the finger squarely at Koss management, which is wholly responsible for this fraud.
I’m not saying that Grant Thornton did a bang-up job when it comes to Koss. I couldn’t possibly know that without knowing exactly how the fraud was carried out (Koss still hasn’t said) and without seeing GT’s workpapers and taking a good look at what they actually did. What I am saying is that audits have so little usefulness and are so awful at detecting fraud, that it’s a given that a woman like Sue Sachdeva would easily be able to get away with a massive theft. Continue reading
Overstock.com (NASDA:OSTK) is truly the gift that keeps on giving if you are a fraud investigator. The company and its wacky and incompetent CEO Patrick Byrne have been caught in yet another lie.
The antics of Overstock, Byrne, and paid stalkers Judd Bagley and Mark Mitchell have been documented over and over. I’ve really only touched the surface of this issue. Journalist Gary Weiss and reformed criminal Sam Antar have documented all the gory details. Continue reading
Today’s Milwaukee Journal Sentinel provides additional insights into the alleged fraud committed by Koss Corp. VP of Finance Sue Sachdeva. Initially the fraud was estimated at $4.5 million, but that was quickly revised upward to more than $20 million. It is alleged that Sachdeva spent millions in corporate funds on clothing, jewelry, and other items.
My comments in the article: Continue reading
UPDATE: Overstock.com just issued a press release in which Patrick Byrne calls Grant Thornton a bunch of liars. Add them to his list of “miscreants.”
No longer can Patrick Byrne, wacky CEO of Overstock.com (NASDAQ:OSTK) claim that those pointing out his lies and materially misleading financial statements are just “miscreants,” operatives of an imaginary “Sith Lord,” or [insert any of a number of Jewish slurs that Byrne is prone to use]. Now national auditing firm Grant Thornton is calling Patrick Byrne and his clowns liars. He’s collecting quite a slew of admirers.
Yesterday, Overstock filed an 8-K with the Securities and Exchange Commission regarding their firing of Grant Thornton. Here’s what Overstock.com has to say about the accounting issue that led to the firing, and I have placed in bold the most important part: Continue reading
Sam Antar has often referred to Overstock.com and CEO Patrick Byrne as the gifts that keep on giving. And he sure is right! There is never a dull moment when it comes to wacky conspiracy theories and accounting woes that never end.
Last week, Overstock (NASDAQ:OSTK) announced that it wouldn’t be filing its 10-Q for the third quarter on time. The reason? Patrick Byrne had created another clever (but completely wrong) accounting treatment for another accounting error recently discovered, and the auditors wouldn’t sign off on it. Continue reading
Mannatech Inc. fired its auditors, Grant Thornton, after refusing to comply with GT’s demand that Sam Caster be removed from all duties. Caster is the founder of Mannatech and the current chairman of the board. He resigned as CEO two months ago after Texas started legal proceedings against the company for making illegal health claims about their products.The Board says it didn’t remove Caster from his duties because it wasn’t “in the best interest of shareholders.” Mannatech’s SEC filing regarding the firing of the auditors said that there were no disagreements about accounting principles, audit scope, or financial disclosures.
The new auditors for Mannatech will be BDO Seidman.