Sujata Sachdeva and Julie Mulvaney

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21640 / September 1, 2010

Accounting and Auditing Enforcement Release No. 3180 / September 1, 2010

SEC v. Sujata Sachdeva and Julie Mulvaney, Civil Case No. 10-CV-0747, USDC, E.D., Wisc.

SEC CHARGES OFFICER AND EMPLOYEE OF MILWAUKEE CORPORATION IN $30 MILLION EMBEZZLEMENT

On August 31, 2010, the Securities and Exchange Commission ("Commission") filed a civil action in the U.S. District Court of the Eastern District of Wisconsin charging Sujata Sachdeva and Julie Mulvaney with accounting fraud, books and records violations and related misconduct arising from Sachdeva's embezzlement of over $30 million from their employer, Koss Corporation.

The Commission's complaint alleges that, since at least 2004, Sachdeva - the former Principal Accounting Officer, Secretary and Vice-President of Finance at Koss - stole over $30 million from Koss. Sachdeva used the embezzled funds to finance an extravagant lifestyle, including lavish spending sprees at department stores, designer boutiques, jewelry stores, and other high-end retailers. Sachdeva and Mulvaney - Koss's senior accountant - concealed and facilitated the theft from Koss by preparing materially false accounting records. Mulvaney, working in concert with Sachdeva, prepared false journal entries to disguise Sachdeva's misappropriation of funds. Sachdeva and Mulvaney attempted to hide the embezzlement on Koss's balance sheet and income statement by overstating assets, expenses, and cost of sales, and by understating liabilities and sales. Based on the fraudulent records prepared by Sachdeva and Mulvaney, Koss prepared materially false financial statements and filed materially false current, quarterly, and annual reports with the Commission. After discovering the embezzlement, Koss amended and restated its financial statements for fiscal years 2008 and 2009 and the first three quarters of fiscal year 2010.

The Commission's complaint seeks an order to permanently enjoin Sachdeva from violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5, 13b2-1 and 13b2-2, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13. Similarly, the Commission's complaint seeks an order to permanently enjoin Mulvaney from violating Sections 13(b)(5) of the Exchange Act and Exchange Act Rule 13b2-1, from aiding and abetting violations of Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13. Further, the Commission seeks an order directing Sachdeva and Mulvaney each to disgorge their ill-gotten gains obtained through their misconduct, plus prejudgment interest thereon, and to pay a civil money penalty. Finally, the Commission seeks an order permanently barring Sachdeva from acting as an officer or director of any public company.

On July 27, 2010, Sachdeva entered into a plea agreement with the United States Attorney's Office for the Eastern District of Wisconsin in a parallel criminal proceeding and pleaded guilty to six counts of wire fraud. Sachdeva admitted her multi-million-dollar theft from Koss, and admitted her scheme to falsify Koss's accounting records to hide her embezzlement. Sachdeva is scheduled to be sentenced on November 18, 2010.

The Commission acknowledges the assistance of the U.S. Attorney's Office for the Eastern District of Wisconsin.

See Also: SEC Complaint