Sujata Sachdeva, Koss Corporation Vice President of Finance Arrested for Embezzlement and Fired!

December 31, 2009

As the year and decade draw to a close the news of unethical activity just keeps on coming.  And…as a business ethics speaker who studies ethics and ethical trends, I don’t see any end to these type of reports.  Whether we have a robust economy or an economic crisis, it seems that the personal motivation for money (or what it represents) outweighs the simple ethical choices that should be made daily.

According to a report in the New York Times, “the Koss Corporation, a maker of headphones and equipment, said it fired its vice president of finance after she was accused of embezzling more than $20 million from the company for a multiyear shopping spree of expensive clothes, jewelry and other personal items.”

Sujata Sachdeva, vice president of finance at Koss since 1992, was charged with wire fraud, said Assistant U.S. Attorney Matthew Jacobs, prosecutor in the case. She appeared in federal courtand was released on an unsecured bond, Jacobs said.

The maker of stereo headphones said in a brief statement that the request to halt trading followed its discovery of “unauthorized transactions” and fired Sachdeva following the discovery of unauthorized financial transactions.  Sachdeva served as the company’s Principal Accounting Officer. Also, two members of the company’s accounting staff who served under Sachdeva were placed on unpaid administrative leave.

The firm said its board has appointed a special committee of independent directors to internally investigate the transactions and determine their effect, if any, on Koss’ financial statements.  Preliminary estimates indicate that the amount of unauthorized transactions since fiscal year 2006 through the present may exceed $20 million.

According to a Forbes report – Sachdeva’s income was slightly in excess of $170,000 per year.

WHY – WHY – WHY?

Whenever there is such a high profile ethics breech and fraud the question that is often asked is why?  What would cause someone, who otherwise knows better, to do such a thing?  Much as I hate to admit it…that question was asked of me many years ago when my fraud scheme came to light.  And like Sachdeva…I, too, lived an illusory life style.

According to published reports, Sachdeva reportedly used much of the money to purchase luxury items, and was ballsy enough to often leave her price-tagged clothes casually strewn about her office. When confronted by authorities, Sachdeva confessed, saying she covered up her two years of embezzlement by falsifying company financial statements.  Ouch…  I can speak from experience, the comfort that she might have enjoyed from her high flying lifestyle bring no lasting joy when facing the reality of prison – a place she is most certainly headed.

QUESTIONS:

1.  For those close to the situation, is it possible that Sujata Sachdeva suffered from Oniomania. (Oniomania is the technical term for the compulsive desire to shop, more commonly referred to as compulsive shopping, compulsive buying, shopping addiction or shopaholism.)

2.  Do you believe that others were involved in the fraudulent cover up associated with Sachdeva’s scheme?

As always…YOUR COMMENTS ARE WELCOME.