{"id":4437,"date":"2010-01-28T08:02:13","date_gmt":"2010-01-28T14:02:13","guid":{"rendered":"http:\/\/www.sequenceinc.com\/fraudfiles\/?p=4437"},"modified":"2011-10-08T23:10:04","modified_gmt":"2011-10-09T04:10:04","slug":"sachdeva-koss-indictment-clothes-auditors","status":"publish","type":"post","link":"https:\/\/www.sequenceinc.com\/fraudfiles\/sachdeva-koss-indictment-clothes-auditors\/","title":{"rendered":"Sachdeva and Koss Corp.: The Indictment, the Clothes, and the Auditors"},"content":{"rendered":"

\"handcuffs\"<\/a>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.<\/p>\n

The indictment<\/a> 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.<\/p>\n

People are suggesting Sachdeva had some sort of sickness, an addiction to shopping. Her attorney is quoted<\/a>:<\/p>\n

“It is obvious there are some unusual facts and some unusual behaviors being alleged,” Michael F. Hart said in an interview. “We intend to show that mental health issues played a substantial role in Ms. Sachdeva’s conduct.”<\/p><\/blockquote>\n

My guess is that it was something else. I think she was reselling the merchandise paid for with money stolen from Koss.\u00a0 There were massive amounts of clothes found in storage, including 461 pairs of shoes and 34 fur coats.<\/a> The clothing she bought ranged in size from 8 to 14. She couldn’t have worn that range of sizes, but that range would have been perfect for someone retailing the merchandise. I bet we’re going to hear soon that Sachdeva was selling this merchandise to domestic and overseas retailers at a fraction of their wholesale value.<\/p>\n

And what happened to all the money? The media and federal indictment report some of the personal use of the funds: travel, hotels, airfare, home renovations, personal services, and household furnishings. My guess is that there will be another use of the funds revealed soon. These things don’t seem to add up to all the money missing from Koss.<\/p>\n

There still are no clues as to how Sachdeva hid the fraud from Koss management and Grant Thornton (the auditors). The indictment merely says:<\/p>\n

(f) To conceal her fraud, Sachdeva made, and directed other Koss employees to make, numerous fraudulent entries in Koss\u2019s books and records to make it appear that Sachdeva\u2019s fraudulent transfers were legitimate business transactions.<\/p>\n

(g) Sachdeva concealed, and directed other Koss employees to conceal, her fraudulent transfers, as well as the fraudulent entries in Koss\u2019s books and records, from Koss\u2019s management and its auditors.<\/p><\/blockquote>\n

There is no hint as to what kind of entries were made on the books to conceal the fraud. There is also no information regarding whether the employees knew that they were doing something wrong. (They may have just been doing their jobs, with no inkling that Sachdeva was directing them to do something shady.)<\/p>\n

The fraud seemed to be going along fine until Sachdeva got too greedy. The amount of theft gradually increased each year, which probably made it easier to hide.<\/a> Then in late 2009 (which is fiscal 2010 for Koss) she got greedy and stole much more in a six month period than she ever had in one year.\u00a0 Of the $10 million she allegedly stole in late 2009, here are the wire transfers from Koss to Sachdeva’s personal American Express card that were listed in the indictment:<\/p>\n