Koss Corporation (NASDAQ:KOSS) filed a lawsuit today 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’ discovery in December of last year that Sachdeva had embezzled tens of millions of dollars from the company in order to fund a lavish lifestyle complete with furs, jewelry and high-end clothing. The Complaint alleges that Sachdeva, who presently faces federal criminal charges relating to her conduct, embezzled the funds across at least five years and purposely concealed her fraud from the company, its Board of Directors, Audit Committee and Management. The Complaint further alleges that Grant Thornton, the company’s auditor during those same years, failed to properly perform 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, the lawsuit claims 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. “There is no question that Sachdeva stole from Koss and there is no question that without Grant Thornton’s failures, the theft would have never occurred,” said lead attorney Michael Avenatti of Eagan O’Malley & Avenatti, LLP, the law firm representing Koss. “Grant Thornton was paid hundreds of thousands of dollars to properly audit the company’s financial statements and they failed miserably. This failure included repeatedly assuring the company and its board that the company’s internal controls were effective. A company should be able to rely on its auditors.” About Koss Corporation Headquartered in Milwaukee, Wisconsin, Koss Corporation is known worldwide for its high fidelity stereophones and audio accessories. Koss Corporation markets a complete line of high-fidelity stereophones, speaker-phones, computer headsets, telecommunications headsets, active noise canceling stereophones, wireless stereophones, and compact disc recordings of American Symphony Orchestras on the Koss Classics label.
About Eagan O’Malley and Avenatti, LLPMichael J. Avenatti, Esq. is a founding partner of Eagan O'Malley & Avenatti, LLP, a firm of trial attorneys that specialize in litigating a variety of high profile legal disputes in courts throughout the United States. Most recently, the firm won a nearly $40 million jury verdict after a five week jury trial in New Jersey. This press release contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "forecasts," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of such terms and other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating forward-looking statements, you should specifically consider various factors that may cause actual results to vary from those contained in the forward-looking statements, such as general economic conditions, in particular, consumer demand for the Company's and its customers' products, competitive and technological developments, foreign currency fluctuations, and costs of operations. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. In addition, such uncertainties and other operational matters are discussed further in the Company's quarterly and annual filings with the Securities and Exchange Commission.