Litigation

Koss Corporation Sues Former Employee, Auditor Alleging $30 Million Theft

CHICAGO - Koss Corporation on June 24 filed a lawsuit in the Cook County Circuit Court against the company's former vice president of Finance, Sujata Sachdeva, and Grant Thornton LLP, its former auditor, alleging fraud and deceit, professional negligence and breach of fiduciary duty (Koss Corporation vs. Sachdeva Sujata, No. 2010-L-007342, Ill. Cir., Cook Co.).

Koss said it discovered in December that Sachdeva had embezzled tens of millions of dollars from the company to fund a lavish lifestyle complete with furs, jewelry and high-end clothing.

The complaint alleges that Sachdeva, who presently faces federal criminal charges relating to her conduct, embezzled the funds across at least five years and purposely concealed her fraud from the company, its board of directors, audit committee and management. The complaint further alleges that Grant Thornton, the company's auditor during those same years, failed to properly perform audits of the company's financial statements and failed to properly assess the company's internal controls, thus allowing the embezzlement to continue and the damage to the company to escalate. In particular, the lawsuit claims that Grant Thornton repeatedly assured Koss' management and its board that the company's internal controls were effective and that Koss could rely on those same internal controls and Grant Thornton's work.

Koss is represented by Michael Avenatti of Eagan O'Malley & Avenatti LLP in Newport Beach, Calif.

Headquartered in Milwaukee, Koss Corporation is known for its high fidelity stereophones and audio accessories.