Chicago - Koss announced today it has filed a lawsuit against its former finance VP, Sujata Sachdeva, and its former auditor, Grant Thornton.
The lawsuit, which was filed in the Circuit Court of Cook County, Ill., alleges fraud and deceit, professional negligence and breach of fiduciary duty. According to a statement by the headphones manufacturer, the suit stems from the company's "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."
Sachdeva is currently facing federal wire-fraud charges and is accused of embezzling $31 million from Koss.
Koss' suit alleges that she purposely concealed her fraud from the company, its board of directors, audit committee and management.
The suit also alleges that Grant Thornton "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," Koss said.
"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 attorney Michael Avenatti of Eagan O'Malley & Avenatti, 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."