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U.S. Securities and Exchange Commission

U.S. Securities and Exchange Commission

Litigation Release No. 21810 / January 13, 2011

Accounting and Auditing Release No. 3230 / January 13, 2011

SEC v. Sujata Sachdeva, et. al., Civil Case No. 10-CV-747, USDC, E.D., Wisc.

SEC Obtains Permanent Injunction and Officer and Director Bar Against Sujata Sachdeva, Former Koss Accountant

The Securities and Exchange Commission ("Commission") announced that on January 11, 2011, the Honorable Judge Rudolph T. Randa of the U.S. District Court of the Eastern District of Wisconsin entered an order of permanent injunction against Sujata Sachdeva, the former Principal Accounting Officer, Secretary and Vice-President of Finance at Koss Corporation in Milwaukee, Wisconsin, arising from her embezzlement of over $30 million from Koss.

On August 31, 2010, the Commission filed its complaint against Sachdeva alleging that Sachdeva:

  • stole over $30 million from Koss;
  • 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;
  • concealed and facilitated the theft from Koss by preparing materially false accounting records, hid the embezzlement on Koss's balance sheet and income statement by overstating assets, expenses, and cost of sales, and by understating liabilities and sales; and
  • falsified accounting records, causing Koss to file 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.

Sachdeva consented to the injunctive order without admitting or denying the allegations in the Commission's complaint. The order:

  • enjoins Sachdeva from violating the anti-fraud and books and records provisions (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 the reporting, books and records and internal controls provisions (Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13) of the federal securities laws; and
  • bars Sachdeva from acting as an officer or director of a public company.

In a related criminal matter in the U.S. District Court for the Eastern District of Wisconsin, on November 17, 2010, Sachdeva pleaded guilty to six counts of wire fraud and was ordered to pay $34 million in restitution and was sentenced to 11 years in prison.

The Commission acknowledges the assistance of the U.S. Attorney's Office for the Eastern District of Wisconsin, the Federal Bureau of Investigations and the Public Company Accounting Oversight Board.

 

http://www.sec.gov/litigation/litreleases/2011/lr21810.htm


Modified: 01/13/2011