Ex-Koss Executive to Plead Guilty in $34 Million Wire Fraud Scheme
The former Koss Corp. executive indicted in January for embezzling $34 million from the company to buy herself expensive clothes, jewelry, cars and vacations (CED Feb 2 p1) will plead guilty to all six counts of wire fraud against her and pay “full restitution” for her crimes, says a plea agreement filed Friday in U.S. District Court in Milwaukee. Company CEO Michael Koss didn’t respond to requests for comment about the plea agreement, and he hasn’t replied to numerous inquiries about how the crimes went on for five years without being discovered.
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The former executive, Sujata “Sue” Sachdeva, 46, was Koss’s vice president of finance until she was fired in late December when the crimes were discovered. Sachdeva won’t fight a request by prosecutors that she receive a prison sentence of at least seven years, says the agreement, signed by the prosecutors, Sachdeva and her attorney. A conviction after trial could have produced a sentence up to 120 years, it says. Prosecutors plan to ask the court to tack on several additional years of prison time because Sachdeva’s crimes “involved sophisticated means” and “substantially jeopardized the solvency and financial security” of Koss Corp., it says. But Sachdeva reserves the right to oppose those recommendations, it says.
Prosecutors will ask the judge to reduce Sachdeva’s sentence if she cooperates with the government “in its investigation and prosecution of this and related matters,” including by testifying truthfully to a grand jury and at any future trials, if asked to do so, it says. Koss has said two former employees in its accounting department “colluded with” Sachdeva to cover up the crimes. The company fired them in January but hasn’t identified them publicly, and Assistant U.S. Attorney Matthew Jacobs told us in a recent e-mail that Sachdeva was the only person criminally charged in the embezzlement scheme.
Under the plea agreement, Sachdeva will get to keep her Mequon, Wis., home, but she will have to forfeit $269,334 as part of the restitution for home improvements she paid for with money pilfered from Koss. “The defendant understands that the money judgment anticipated to be entered in this case will substantially exceed her net worth,” it says. “Accordingly, the defendant acknowledges and agrees that any and all items of property in which she has an interest, and which are not subject to direct forfeiture as property constituting or traceable to proceeds of her wire fraud scheme, shall be subject to forfeiture as substitute assets,” it says. These include all the money in her Koss 401(k) retirement and employee stock ownership accounts, it says, without specifying how much money is in those accounts. The agreement’s forfeiture terms also “shall be binding” on Sachdeva’s “heirs, successors and assigns” if she dies before the full restitution is paid, it says.