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The Fraud of Koss Corporation

In: Business and Management

Submitted By yintianwawa2000
Words 378
Pages 2
Koss Corporation filed a lawsuit in the Circuit Court of Cook County, Illinois 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. The lawsuit stems from Koss’s discovery that Sachdeva had stole of more than $30 million from the Company in order to fund a lavish lifestyle complete with furs, jewelry and high-end clothing. Sachdeva embezzled the funds through a variety of means, including fraudulent cashier and traveler’s checks, fraudulent wire transfers, and unauthorized payments from petty cash. The Company further alleged that Grant Thornton, the company's auditor during those same years, failed to properly conduct its 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, it claimed 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. Grant Thornton fails to properly investigate, audit and report to the Koss board of directors and audit committee on Sachdeva’s embezzlement and fraud through (i) improper use of cashier’s checks drawn on Company accounts at Park Bank;(ii) improper wire transfers from company accounts at LaSalle National Bank;(iii) the improper use of traveler’s checks;(iv) the improper use of manual checks drawn on company accounts at Park Bank. Grant Thornton recklessly disregarded, or was negligent in not apprehending, the manipulation and fraudulent use by Sachdeva, and the concomitant waste, diversion and damage to Koss in material monetary amounts. Also, Grant Thornton made false reckless and/or…...

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