As you know, convicted embezzling-mother-of-all-hoarders, Sue Sachdeva, had a bit of a shopping problem. She […]
Tag: Sue Sachdeva
Koss (Man and Company) Settles with SEC for Four Years Worth of Trainwreck Financial Statements
One-man C-suite Michael Koss and the company that bears his name settled with the SEC […]
Get Yourself a Piece of Koss Embezzlement History
Remember the good ol' Koss fraud? It's been quite some time since we were on […]
Grant Thornton Dodges the Koss Bullet, Is Dismissed From Shareholder Lawsuit
U.S. District Judge Lynn Adelman has dismissed Grant Thornton as a defendant in a class-action shareholder lawsuit against GT, Koss Corp. and CEO Michael J. Koss, filed in January 2010 on behalf of plaintiff David Puskala and other Koss shareholders.
In his ruling, Adelman stated that the plaintiffs failed to make a case for GT’s epic failure to detect former Koss executive Sue Sachdeva’s $34 million embezzlement/hoarding scheme. Reasonable, considering GT auditors scared the crap out of old Sue, even though they were sticking newbies on the gig. “Fear was one thing. I thought it was imminent,” she said in a court deposition last year. “Their auditors, every time they walked in, I’d say, ‘This is it. They’re going to catch me.’” Shareholders’ issue – we assume – is that they didn’t. Year after year after year after year until 2009 rolled around and the whole house of cards came tumbling down.
The judge also dismissed claims of willful or reckless behavior against Michael Koss, saying “I conclude that the innocent explanations are more compelling than the inference of recklessness.” Meaning Mike couldn’t possibly have known Sue had been siphoning off millions in company money over a six year period, absent hanging out at her house and noticing all the fancy new shit she had strewn everywhere. And stashed in closets. And bursting out of her garage.
As for Grant Thornton, the judge wrote that the occurrence of fraud and failure to detect it doesn’t imply recklessness on the part of the accounting firm, but rather that the firm was negligent. While it is clear that Sachdeva used her position with Koss to bypass the company’s not-rock-solid internal controls, it is also believed that the controls were sufficient so as not to be obviously unreliable to a reasonable person (or auditor fresh out of accounting school). We’re looking forward to hearing how audit professors use this decision to emphasize the cavernous depth between “negligence” and “recklessness” on the part of auditors.
Sachdeva is still a defendant in the Puskala lawsuit and is currently serving 11 years for the fraud.
Grant Thornton dismissed from Koss shareholder lawsuit [Milwaukee Journal-Sentinel]
Australian Accountant’s List of Items to Spend Stolen Money on Pretty Typical with the Exception of Sequined Gloves, Autographed Thriller Albums
Rajina Rita Subramaniam seemed to be Down Under version of Sue Sachdeva until I got to “Michael Jackson memorabilia.”
A Sydney accountant is set to plead guilty to defrauding her employer of $45 million [USD 47.9 million] before spending the money on several beachside apartments, champagne, diamond jewellery and Michael Jackson memorabilia.
Rajina Rita Subramaniam was working as a senior accountant with the financial group ING Australia in October 2009 when she was arrested for allegedly siphoning tens of millions of dollars from the company into a number of private accounts.
Police allege that a search of ING’s Kent Street office uncovered a cache of luxury items, including 600 pieces of jewellery from Tiffany & Co, Tag Heuer, Bulgari and Paspaley Pearls, 200 perfume and make-up items from Chanel and a bottle of Dom Perignon champagne.
Court told of $45m shopping spree [Sydney Morning Herald]
Sue Sachdeva Was Needlessly Paranoid About Grant Thornton’s Fraud Detecting Abilities
About a year ago at this time, we just started learning about Sue Sachdeva, the convicted embezzler extraordinaire of headphone cobbler Koss. It took a little less than a year for everything to get sorted out including quite the inventory of luxury loot, her emerging talent for stealing money, lawsuits, a guilty plea and a sentence of 11 years.
Since all that’s settled it’s on to the lawsuits and Suze was recently deposed in Koss’s lawsuit against Grant Thornton where she testified about many interesting things, including being a nervous nelly from the get-go:
Former Koss Corp. executive Sujata “Sue” Sachdeva worried each day that she would be caught embezzling money that eventually totaled $34 million.
“Fear was one thing. I thought it was imminent,” she said in a recent court deposition. “Their auditors, every time they walked in, I’d say, ‘This is it. They’re going to catch me.’
Turns out, S-squared was paranoid for no good reason because – as we all know – GT had no clue that she was lifting millions every year to pay off her AMEX, partly, she says, because they were throwing green auditors at the company every year:
Sachdeva said in the deposition that Grant Thornton considered Koss to be a well-run company and a good training ground for its new auditors.
“Every year, we’d have at least one or two new auditors come through, and I know Michael (Koss) and I both objected to that – getting kids right out of college and had to explain the business to them every time,” Sachdeva said.
Sachdeva said she never held back documents from the auditors. They didn’t question the amounts of money flowing in and out of the company, nor did they question the internal controls, she said. The lack of inquiries surprised her, she said.
Then there were the allegations that she was having regular three-vodka-shot lunches, according to an October article in Milwaukee Magazine:
Retailers who lunched with Sachdeva say she downed vodka shots at the North Shore Bistro with Julie and Tracy. “Then they all went back to work bombed,” says one shop owner.
One consignment shop owner recalls picking up Sachdeva and taking her to Harvey’s restaurant in Mequon. “Sue told the waiter she wanted her ‘juice.’ They knew that meant vodka,” says the shop owner, who was surprised by how much Sachdeva drank.
Well, it all kinda makes sense now doesn’t it? She was either paranoid because she drank or drank because she was paranoid. OR the amateur auditors drove her so batty and she had no choice but to get a little loaded. Anyway you slice it, the auditors seem to be ones to blame, which seems like a trend these days.
Koss embezzler feared discovery from start [MJS]
The Diva [Milwaukee Magazine]
(UPDATE) Sachdeva Defense Team Throws a Hail Mary
With a sentence coming down circa any minute, the Koss embezzlement queen is probably starting to freak just a tad.
Accordingly, her attorneys are pulling out all the stops. The defense is now claiming that Sue’s assistant, Julie Mulvaney was “an enabler” and kept SS from having a nervous breakdown when things got dicey around the scam:
•In May of each year — a few weeks prior to scheduled visits from Koss outside auditors — Sachdeva would review the cash in the company’s ledgers, compare it with the cash in the company’s bank accounts and then determine the difference between the two. Sachdeva would presume the shortfall was equal to her theft of company funds.
“She would then call Julie Mulvaney into her office in a panic, and tell Mulvaney that cash was ‘off’ by a certain amount,” the memo states. “Mulvaney would respond by saying ‘let me look at everything and get back to you and don’t worry.’”
Mulvaney would then alter figures in the ledgers, the memo states.
•Sachdeva’s attorneys contend Mulvaney worked independently and without direct supervision “and only minimally shared her methods with Sachdeva.”
“Sachdeva, who was preoccupied with the fear of being discovered and too emotionally distraught to manage the fraudulent entries, would constantly ask Mulvaney at work if everything had been ‘fixed,’ and would frantically call Mulvaney at home, sometimes late at night, to see if the cash had been reconciled,” the memo states.
Sue was so emotionally distraught throughout the ordeal that she wandered into Valentina Boutique on a number of occasions and spent $1.4 million. Yeah, that makes sense.
UPDATE, circa 5:30 pm: From Milwaukee public radio, Suz gets 11 years.
Sue Sachdeva’s Defense Team Provides Hysterical Argument for a Lighter Prison Sentence
Koss embezzlement mastermind Sue Sachdeva will receive her prison sentence tomorrow for ripping the headphone cobbler off to the tune of $34 million. Yesterday, the government’s sentencing memorandum (full document after the jump) was released and the prosecution and defense each made their arguments for a heavier/lighter prison sentence.
Naturally, the prosecution is seeking the maximum sentence, as is Koss CEO Michael Koss, who wrote a letter to the court with his thoughts:
“She stole from the hardworking employees of the company and their families, and ultimately the stockholders of the company,” Koss wrote. “They are the true victims of her crimes.”
Yes! The shareholders! Including the Koss family members who 67% owned of the stock ! Especially the ones who held five executive positions at once!
But never mind that for two. Tracy Coenen breaks down the defense’s argument for S-squared to receive a lighter sentence and it’s a hoot:
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”
Jump over to Tracy’s post for more analysis but our take on these three reasons are as follows:
A. “Until now,” as in “right up to the moment she pleaded guilty”? If so, that sorta ignores a scam that went on for over a decade.
B. Again, so simple that it went on for over ten years? You’re really making the Koss management look like a bunch of idiots…Wait, maybe they’re on to something here.
C. Please. Show us someone who wasn’t addicted to shopping in the 90s and 00s.
Koss Demands Sue Sachdeva’s Help Winning Their Civil Case Against Sue Sachdeva
The least convicted embezzler-cum-recovering shopaholic Sue Sachdeva could do is help out the company that she ripped off to the tune of $34 million.
Despite how Suz feels about it, her lawyers do not want her to be deposed in Koss’s civil case against her and Grant Thornton until after she is sentenced to prison for the rest of her worthwhile shopping days. Doing so would jeopardize putting her back at Nordstrom’s sooner than they would like:
Sachdeva anticipates receiving a two-level decrease in the federal court sentencing guidelines by accepting responsibility for her actions, her Madison attorney Jack Williams said in court documents filed last month. She reached a plea agreement on the charges in July.
“Submitting to a deposition could jeopardize Mrs. Sachdeva’s opportunity to receive that decrease,” Williams argued.
Koss Corp. vehemently opposes Sachdeva’s motion on the grounds that she needs to cooperate not only with prosecutors in her criminal case, but also with her former employer in its efforts to win a civil judgment against her and former Koss auditor Grant Thornton LLP.
Sachdeva tries to delay her deposition in Koss suit [The Business Journal of Milwaukee (partial subscription required)]
Accounting News Roundup: More Tax Cuts for Small Business?; Scenes from a SaaS Meltdown; SEC Files Charges Against Sachdeva | 09.01.10
No Charges for Moody’s in Ratings Violation [NYT]
“The Securities and Exchange Commission said Tuesday that it had declined to charge Moody’s Investors Service for violating securities laws by failing to comply with its own procedures for rating complex derivative sec e decision followed an S.E.C. investigation, and the commission used the opportunity to warn all of the national credit rating agencies that it would use new powers under the Dodd-Frank banking law to take action against similar conduct, even if it occurred outside the United States, as the Moody’s case did.
The S.E.C. said it had declined to pursue a fraud enforcement action in the case because of jurisdictional issues. The securities in question originated in and were rated and sold in Europe, the S.E.C. said.”
Tax Cuts Weighed to Spur Economy [WSJ]
“The Obama administration is considering a range of new measures to boost economic growth, including tax cuts and a new nationwide infrastructure program, according to people familiar with the discussions.
The president’s economic team has met frequently in recent days to list ways to bolster the struggling recovery, according to government officials.
On the list of possible actions: additional tax cuts for small businesses beyond those included in a $30 billion small-business lending bill before the Senate. It’s not clear what those tax breaks would target or how much they might cost in lost revenue to the government.
Also in the mix: a possible payroll tax cut for businesses and individuals, as well as other business tax breaks, according to people familiar with the discussions. Currently, income taxes are scheduled to rise with the expiration of Bush-era tax cuts at the end of this year.”
Lessons from ClearBooks failure [AccMan]
What happens when a SaaS provider has a blow-up? Well, it depends.
“Non-Combat” Troops Remaining in Iraq Will Still Receive “Combat Zone” Tax Treatment [Tax Foundation]
The troops that remain in Iraq will still receive combat zone treatment (i.e. ‘designated hostile fire or imminent danger pay areas’).
Brainiest Cities [The Daily Beast]
Boulder #1; DC #3; Boston #4. Austin comes in at a paltry #16 behind Ames, IA. What’s up with that?
Former Rothstein CFO Stay Gives Up Boat [SFBJ]
Convicted Ponzi Schemer Scott Rothstein’s CFO had to give up her 28-foot 2008 Southport boat in order to settle a claim against her for the $154k loan she received from the firm to buy said boat.
SEC Charges Two Accounting Professionals at Milwaukee-Based Company with Fraud [SEC]
The SEC got around to filing civil charges against Sue Sachdeva. The Commission also charged Senior Accountant Julie Mulvaney with helping S-square conceal the fraud through bogus journal entries.
Sue Sachdeva Guarantees That She’ll Be Able to Watch It’s the Great Pumpkin, Charlie Brown a Free Woman
And the World Series too!
Maybe we’re unfairly assuming that Suze is a fan of the Peanuts gang or baseball but what else is going on in between October and November 18th? A few Badger football games?
Koss Corp. embezzler Sujata “Sue” Sachdeva will get a one-month reprieve on her sentencing after requesting, and receiving, an order from U.S. District Court Judge Lynn Adelman.
Adelman said in a brief order that federal prosecutors did not oppose Sachdeva’s request to adjourn the sentencing to Nov. 18 from the previously scheduled Oct. 18.
Koss’ Sachdeva gets sentencing reprieve [Business Journal of Milwaukee]
Accounting News Roundup: GM Still Lacks Effective Internal Control System; The Ten Highest State Income Tax Rates; How to Know When Your Boss Is Lying | 08.20.10
GM filing warns on reporting [Detroit Free Press]
This may come as a shock but General Motors, despite filing paperwork for its IPO, admits that they still don’t have effective internal controls.
“[I]n regulatory filings about its upcoming initial public offering, GM warned potential investors that ‘our internal controls of financial reporting are currently not effective.’
Experts are divided on whether the warning — one of about 30 risk factors identified by GM in a document describing a planned sale of shares — is just an obscure accounting matter or a red flag that taints GM’s financial reporting
The 10 Highest State Income Tax Rates For 2010 [Forbes]
If you’re single and make $200k or $400k and married in Hawaii, you get dinged for 11%, the highest ranking state on the list. Dark horse Iowa comes in at #5 gets 8.98% of taxable income over $64,261. That’s above New Jersey and New York tied at #6.
Transocean accuses BP of withholding data on Deepwater Horizon and oil spill [WaPo]
Just when you thought the ugliness was slowing down (at least in the media coverage), ” Even as they work together to kill the Macondo well in the Gulf of Mexico, the oil giant BP and the deep-water drilling rig company Transocean are in an increasingly bitter battle over what went wrong on April 20 to trigger America’s worst oil spill.
The conflict flared Thursday when Transocean fired off a scathing letter accusing BP of hoarding information and test results related to the Deepwater Horizon blowout that killed 11 people, including nine Transocean employees. Signed by Transocean’s acting co-general counsel, Steven L. Roberts, the letter says that Transocean’s internal investigation of what went wrong has been hampered by BP’s refusal to deliver ‘even the most basic information’ about the event.
‘[I]t appears that BP is withholding evidence in an attempt to prevent any entity other than BP from investigating the cause of the April 20th incident and the resulting spill,’ the letter states, and it demands a long list of technical documents and lab tests.”
How to tell when your boss is lying [The Economist]
Apparently cursing is a good sign.
Koss reports smaller quarterly loss on 14% sales decline [Milwaukee Journal Sentinel]
The company lost $423,450 for the six months ended June 30th. They spent $1.12 million on legal fees related to Suzy Sachdeva.