Tag: Sue Sachdeva

Koss: Financial Results Will Be Better Now That the Whole Fraud Thing Is Over

Hopefully! Headphone master Michael Koss officially announced that things are back to business as usual at casa de Koss now that Sue Sachdeva’s sticky fingers aren’t around.

“The company has continued to operate in the normal course of business despite the disruption resulting from the discovery of the unauthorized transactions,” Chief Executive Officer Michael J. Koss said in a statement. “We believe that the elimination of these unauthorized transactions will enhance our future operating results.”


What a relief! No mention of how the pending lawsuits against Koss will affect operating results, however. We understand that it could be a sensitive issue at the moment.

The Company filed its 10-Q yesterday and an 8-K today that explains that those restated, not-so-good results that you’re expecting will be done pronto. Don’t expect to see anything before April but not past June, swear.

After that, watch out everybody, Koss will be on fire, blowing those analyst estimates out of the water. In the meantime things are moving along and those internal controls, yeah, they’re working on them but they reminded everyone in the 10-Q that even if they designed the best internal control systems on Earth, it still wouldn’t guarantee that bad stuff won’t happen:

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. It is possible for even the best control system to be circumvented by those with the intent, knowledge and opportunity to do so.

Not to put to fine a point on it but a half-assed control system would have detected this fraud, never mind the “well conceived and operated” part.

With fraud claims exposed, Koss expects better financial results [Milwaukee Journal-Sentinel]

Koss Investors Lining Up for Litigation; Will Grant Thornton Join the Party?

Investors in Koss Corporation are lining up in the pending litigation against the company and a press release from law firm Carney Williams, announced this morning that those interested in as lead plaintiff have until March 12th to make their desires known.

Form the press release, “The Company and certain key executives are alleged to have violated federal securities laws by issuing false financial statements and failing to maintain adequate internal and financial controls.”

Many, like Tracy Coenen, have argued that the internal controls are management’s responsibility and Grant Thornton was not engaged to audit these controls but does that mean that GT will dodge these investor lawsuits?


We spoke with Randy Pulliam, a partner at Carney Williams on the case if he expected Grant Thornton to be named in the litigation, “the lead plaintff will ultimately decide as to who will be named in the litigation, including the accountants.”

There’s nearly a month until the deadline so it’s far too early to tell who will decide whether Grant Thornton needs to be included but we’ll go on record saying that we’d be shocked(!) if GT manages to get forgotten in this whole matter. Regardless of your feelings on the firm’s responsibility (i.e. GT should have discovered the fraud or not) the fact that Sue Sachdeva is accused of embezzling $31 million over a period of five years while Grant Thornton was auditing Koss will not be lost on the investors or their attorneys.

“This is a five year class period so many investors are eligible to participate,” Mr. Pulliam told us. Plenty of investors out there would like to see someone make things right. Grant Thornton seems like a decent candidate especially since their pockets are far deeper than Koss’. So if you asked us to put a wild-ass guess on the odds of Grant Thornton being named in the lawsuit, we’d put it somewhere in the nabe of 10-1. Not Mine that Bird territory but not Secretariat either.

We left a message at Koss and dropped an email to Grant Thornton seeking comment and neither have gotten back to us at this time. We’ll continue to update you on the developments, shopping addictions and otherwise.

Koss VP Sue Sachdeva: Shopping Addict or Burgeoning Retail Queen?

It’s been a few days since we had read anything on embezzler of the year 2009, Sue Sachdeva. We figured the whole thing was on the fast track to getting resolved since her attorney started claiming that the woman has an addiction. Well today, we checked in over at Fraud Files Blog where Tracy Coenen has come up with a theory that blows the whole shop until you die argument out of the water

Since Sue had 461 different pairs of shoes that ranged from sizes 8 to 14 (!) and 34 fur coats, Tracy is thinking that S-squared didn’t have a shopping problem; she was simply working on achieving an entrepreneurial dream:

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.

It’s already a matter of record that SS was having garage sales at her desk, so Tracy’s logic makes sense. We’re now convinced Sue had bigger plans.

Obviously enamored with the idea of a Sachdeva Goodman’s, Suze may have gotten a little ahead of herself as Tracy notes, “[I]n 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.”

The indictment lists six wire transfers (total of nearly $3 mil) from Koss accounts directly to her personal AMEX accountant, so girl was definitely burning up the plastic. That’s not an addiction; that’s inventory. Besides, isn’t a shopping addiction a faux-addiction? The real tragedy here is that a dream was not reached and an accounting firm was fired. Neither makes us feel very good.

Ladies and Gentlemen, Stephen Chipman’s Blog is Live

As promised, Stephen Chipman has started his blog with the first post going up today.

I am excited to provide this interactive Blog designed to foster thoughtful dialogue and information sharing between you and me. My Blog enables me to share with each of you my personal thoughts about our business and other important matters. I hope you find this Blog informative as well as useful. Please check back every Wednesday for a new post.


Unfortunately for you non-GTers out there, the blog is not public like Jeremy Newman’s so not just anyone can help him with his grammar (which we’re sure is impeccable) or spelling.

Despite being the blog being for GT eyes only, he’s still excited about spreading the good word through this new medium:

I’m delighted to be writing my first blog. One of the aspects of our modern culture is the ease of informal communication. As I noted in the announcement, I have no pre-planned features or stories, I’m just going to blog the way others do — in the moment.

It’s disappointing that Chip didn’t start the blog a little earlier, say, when he got the news about Sue Sachdeva’s shopping sprees. Catching him in the moment of that particular bit of news would have made for a good post, no? Plus, since he’s so close to Milwaukee, he might have run up their to see some of this loot himself in order to tell us what he thought of Suze’s taste in clothes, jewels, etc.

Our one beef with Steve-o’s first post is that it has too much of a journal feeling to it. Personally, we’d prefer he got on his soapbox about how the Big 4 isn’t all that, or why he thinks Davos is overrated. We realize that he’s new at this so we’ll give him a little time to get it together. In the meantime, be sure to inform us about his words of wisdom going forward.

Report: Accountants Responsible for Two-thirds of Embezzlements

Sue_Sachdeva.pngOkay auditors. No more excuses. You should already be giving everyone the stink-eye the second you walk in the door but now we’ve got a REPORT about embezzlement in the US of A that gives you all kinds of hints on who you should suspect — provable or not — of being the next Sue Sachdeva.
The Marquet Report on Embezzlement is an annual report put out by Marquet International, Ltd., a “an independent investigative, litigation support and security consulting firm” according to the company’s website.


Here are some of the key findings in the report:

• Women are more likely to embezzle than men.
• Men embezzle significantly more than women.
• Perpetrators typically begin their embezzlement schemes in their early 40s.
• By a significant margin, embezzlers are most likely to be individuals who hold
financial positions within organizations.
• The two broad industry categories that have the highest risk for a major
embezzlement are Financial Services and Government Agencies/Municipalities.
• The Financial Services industry suffers the greatest losses from major
embezzlements.
• On average, major embezzlement schemes last about 4½ years.
• California and Florida are consistently the states that experience the greatest
losses from major embezzlements.
• The vast majority of major embezzlements are caused by sole perpetrators
• Gambling is a clear motivating factor in driving some major embezzlements.
• Fewer than 10 percent of embezzlers have a criminal record – less than expected, but enough to suggest that pre-employment screening has merit.

Some takeaways: 1) Immediately suspect anyone that gambles. Even if it’s bingo games in the church basement; 2) If you’re in California or Florida you’ve got your work cut out for you; 3) By “a significant margin” they mean accounting/finance personnel were responsible in 67% of the cases. Executives were second, in 13% of the cases.
Annnnd since we know you’re wondering: the largest embezzlement case in 2009 was none other than our Suz. Based on the criteria above, it appears that she should have been under suspicion from day one but you can’t fault Grant Thornton too much. This is only the second report that Marquet has issued so chances are she still would have made off with $20 million. Oh well, you’ll get ’em next time!
The top ten from 2009:
Picture 2.png
Report On Major Embezzlements 2009.pdf

Koss VP Got Busted Just When She Was Getting Really Good at Stealing Money

Sue Sachdeva had this stealing money thing down so cold that she continually outdid herself, stealing greater sums of money every year until she was caught last month (thanks AMEX!).

If you need more evidence that everyone near this company (we’re looking straight at you Koss Family and Grant Thornton) was completely clueless, this should satisfy you.

Here’s the run down for the last six fiscal years ending June 30:

• 2005 – $2,195,477

• 2006 – $2,227,669

• 2007 – $3,160,310

• 2008 – $5,040,968

• 2009 – $8,485,937

• Q1 and Q2 of 2010 – $10,243,310

Jesus, she was really getting good those last six months. Girl couldn’t spend it fast enough.

We’d really like to hear from GTers from the Milwaukee/Chicago offices to let us know how TPTB are handling everything. Maybe it’s NBD to them but we just want to know. We thought this story would stop getting ridiculous but so far it continues to impress.

Koss: Unauthorized transactions increased over years [The Business Journal of Milwaukee]

Unfounded Rumor of the Day: Fired Koss VP Had Garage Sales at Her Desk

Or something like that. Guest 28 put it out there that Sue Sachdeva was flipping those designer threads to fellow employees for low low prices.
On the one hand, maybe the two employees on leave that worked for Suze were the bargain shoppers. On the other, how hard up for extra money was this woman? Maybe she just wore it out once with the tags on and said “I don’t love it”? Can anyone in the Milwaukee area that hasn’t already gone to happy hour confirm this? Get on the horn.