Shopaholic CFO agrees to felony charges

Submitted by Caleb Newquist, republished from Going Concern, Accounting News for Accountants and CFOs.

Late on Friday, it was reported that Sue Sachdeva will plead guilty to six felony counts in the Koss embezzlement case that was discovered at the end of last year.

[Milwaukee Journal Sentinel]

The agreement with prosecutors brought some new things to light, including that the scam began in 1997 and she issue over 500 cashiers cheques, including $10 million to American Express but also to charitable groups.

Also, from February 2008 to December 2009, she authorized 206 wire transfers totaling $16 million from Koss accounts to American Express to cover items she bought with the credit card.

Koss employees worked "in concert with Sachdeva or at her direction" to make fraudulent entries to the company's books to conceal the embezzlement. "These entries would falsely overstate assets, understate liabilities, understate sales, overstate cost of sales, and overstate expenses," the agreement said. The agreement notes that the false entries "concealed the actual receipts and profitability of Koss," allowing the scheme to continue.

To keep auditors off her track, Sachdeva did not fraudulently take money from Koss accounts at Park Bank during the month of June, because transactions during that month were reviewed by outside accountants.