Send the link below via email or IMCopy
Present to your audienceStart remote presentation
- Invited audience members will follow you as you navigate and present
- People invited to a presentation do not need a Prezi account
- This link expires 10 minutes after you close the presentation
- A maximum of 30 users can follow your presentation
- Learn more about this feature in our knowledge base article
Koss Fraud Case
Transcript of Koss Fraud Case
Preventing the fraud
Koss Corporation Background
There should have been approval for wire transfers and cashier's checks.
Their computer systems could have been updated so the accounting system at the end of the month could have been locked.
Michael Koss could have conducted a better review of Koss's accounting in connection with the certifications that Sachdeva provided him for his review.
American Express noticed that Sachdeva was paying for large balances with wire transfers from a Koss account.
Hiding the embezzlement
Sue's level of oversight as an executive allowed her to conceal the fraud effectively.
Sachdeva started relatively small and increased her theft over the years.
Julie Mulvaney would cover up the shortfall that resulted from Sachdeva's theft by depositing all money received in June, just before the annual audit, into cash accounts rather than posting entries to the appropriate accounts
Grant Thornton is an independent accounting and consulting firm which provides assurance, tax, and advisory services to privately held businesses, public interest entities, and public sector entities.
Koss Corporation sued Grant Thornton for $8.5 million and won the lawsuit.
As a result Grant Thornton lost respect in the financial industry.
Companies that were involved
Koss Corporation is a consumer electronics company that is recognized as the leading U.S. manufacturer of high fidelity stereophones. Those stereophones introduced the concept of personal listening to the audio industry, forever changing the audio world.
CHS: Koss Corporation
Former executive at Koss Corporation. She was the centerpiece of the financial scandal that rocked the Koss Corporation.
The son of the founder, Michael Koss is the CEO of Koss Corporation.
A co-worker of Sue that helped to hide the scandal.
People that were involved
American Express notified Koss’ CEO, that the firm was making very large wire transfers of cash to pay off a personal American Express card.
Companies that were involved cont.
John C. Koss is the founder and the
CEO & CFO of Koss Corporation.
The company has recovered this money from insurance settlements and proceeds from several auctions of Sue's merchandise, mostly clothes and jewelry.
Koss also recieved money from the Grant Thornton settlement.
Koss still has potential to get more money back since they still have outstanding lawsuits against their former bank Park Bank of Milwaukee and American Express.
Impact on Koss's Stock
After the scandal was found the trading of the stock was temporarily halted.
Stock prices then plummeted, stockholders of the company received $1 million in a settlement as a result of the embezzlement and the low price of stock.
Reputation of Koss Corporation
Koss not only lost a lot of money but their reputation as a trustworthy company was destroyed.
The public does not want to invest in a company that is/was involved in fraud.
American Express was key in helping reveal evidence that Sue Sachdeva was embezzling money from Koss Corporation.
Without them, the scandal could have gone on much longer and possibly bankrupt Koss Corporation.
Koss Corporation Fraud
In December of 2009, Koss Corporation discovered that someone with-in the company was embezzling money from the company.
Could have faced a max of 120 years in prison
By admitting to stealing approximately $50 million she signed a plea deal
The plea deal states she was hired by Koss Corporation in 1992
She started taking money in 1997 until she was caught in 2009
The grand jury accused Sue on only 6 counts of wire fraud but from 2008-2009, she authorized 206 wire frauds
In the end, Sue was sentenced to 11 years in federal prison
Plus restitution to Koss Corporation of $34 million.
Where did all of the merchandise go?
2012 $1.47 million
2013 $ 7.59 million
TOTAL: $9.88 million
(After legal fees)