Forensic Accounting Competition to take on Koss headphones scandal
- Published: March 7, 2014
It was a white collar crime so spectacular, it made headlines for months, captivated accountants around the nation and begged the question: How in the world could this happen?
How could a company's vice president of finance embezzle $34 million over a five-year period? Those questions continue to surround the infamous Milwaukee-based Koss headphones scandal, which included a high-profile arrest, a plea bargain and multiple lawsuits in 2010.
On Monday at Lakeland College, high school students from 17 schools, along with two FBI agents who worked the Koss case, will visit campus for the second annual Lakeland College Forensic Accounting Competition. Teams of students from each school were given information on the Koss case in advance, and on Monday they will present to a panel of judges their findings about what went wrong and how this crime could have been prevented.
Schools participating are Chilton, D.C. Everest, Edgerton, Franklin, Greendale, Kohler, Lake Mills, Manitowoc Lincoln, McFarland, Menomonee Falls, Middleton, Milton, Monroe, Oconto, Oregon, Plymouth and Port Washington.
"This is a great way for high school accounting teachers to show their students that there's a really exciting part of the accounting world out there, and that accounting isn't just about debits and credits," said Bob Martin, Lakeland's adjunct instructor of accounting and event organizer. "The Koss case is such a great case, such an interesting case."
The Lakeland event, which has grown from 12 participating schools last year to 17 this year, will run from 8:30 a.m. to 3:30 p.m., with presentations and breakout sessions throughout the day. The top four teams will be announced in the afternoon, with an awards ceremony capping off the day.
Highlighting the event will be a presentation by FBI agents Jennifer Walkowski and Julie Andreoni, who will discuss the investigation that led to the arrest and eventual incarceration of Sujata Sachdeva, the former Koss vice president of finance who was fired and initially charged by federal agents of embezzling $4.5 million. As the mountain of evidence against her grew, she was indicted by a federal grand jury of defrauding $31 million.
Eventually, in July 2010, Sachdeva reached an agreement and pleaded guilty to embezzling $34 million. She was sentenced to 11 years at Dublin Federal Prison in California, according to the Milwaukee Journal Sentinel.
Sachdeva's embezzlement had a wide-reaching effect on Koss and rippled through the accounting, law-enforcement and regulatory agency communities. In addition to the FBI, the U.S. Marshals Service was involved and the U.S. Securities and Exchange Commission (SEC) also charged Sachdeva with fraud and misconduct.
As details of the crime began to emerge in 2009, Koss fired and later sued its auditor, Grant Thornton LLP. Later, Koss also filed suit against American Express, Sachdeva's card of choice when she went on extravagant shopping sprees. Koss, meanwhile, was sued by shareholders.