Ex-Koss Executive Gets 11 Years for $34 Million Embezzlement

U.S. District Judge Lynn Adelman in Milwaukee sentenced Sujata “Sue” Sachdeva to 11 years in prison for embezzling more than $34 million from Koss Corp., where she had worked as vice president of finance 19 years before her crimes were discovered last December. Prosecutors had sought a 15-20-year prison term. Sujata’s lawyers had argued for six or seven, pointing to her guilty plea and what they described as her remorse and her psychological problems.

Stories about how Sachdeva spent the money she embezzled “have captured the media’s attention,” Koss Corp. CEO Michael Koss told Adelman in a letter urging the stiffest possible sentence. “But what has received little attention … is that when Ms. Sachdeva embezzled from the company, she stole from the hardworking employees of the company and their families, and ultimately from the stockholders of the company,” Koss said. “They are the true victims of her crimes.” As a result of the embezzlement, he said, the company had to curtail its wage and salary increases and its profit-sharing program. The harm she caused the company “continues to this day,” Koss said. The “reputational damage” her crimes have caused “will continue to tarnish the company and subject it to ridicule long after Ms. Sachdeva’s criminal sentence ends,” he said.

Sachdeva’s lawyers had urged a lenient sentence, saying her “longstanding mental health issues eventually led to her engaging in extravagant buying sprees,” they told Adelman in a letter. “Sachdeva’s theft was an after-the-fact attempt at paying for irrational, compulsive spending that she could no longer control, and which in turn led to even greater spending. The impetus to commit her crimes was the product of an undiagnosed, untreated and increasingly severe mental disorder.” By 2009, Sachdeva was prescribed Prozac for the panic attacks that accompanied the rise in her criminal activities and her fears that she soon would be discovered, her lawyers said. But to Sachdeva, Prozac became “the pharmaceutical equivalent of putting out a fire with gasoline, and her compulsive behaviors increased exponentially,” they said. When she was arrested in December, they said, “it came as a genuine relief.” Sachdeva’s lawyers had successfully argued throughout the case against releasing documents that discussed her mental condition.

But prosecutors urged Adelman to take a hard line. Sachdeva was “not charged with compulsive shopping,” they told the judge in a letter. “She is charged with stealing to feed her habit. While mental health issues, including a compulsive shopping disorder, might help explain Sachdeva’s conduct, it does not excuse it.” Sachdeva, the prosecutors said, “is like most criminals, who know right from wrong, but choose to violate the law because of the benefit or ’thrill’ they receive.” Throughout her fraud, they said, Sachdeva “repeatedly demonstrated that she could, if necessary, control her behavior."

For example, Sachdeva “consistently stopped issuing fraudulent cashier’s checks during the last month of Koss’s fiscal year (June) because she knew Koss’s outside auditors would be examining that month’s bank records,” the prosecutors said. “Moreover, she had sufficient control over her extravagant spending not to use her own money to pay for it, perhaps because her husband would learn of it.” By any measure, prosecutors said, “Sachdeva’s criminal conduct is extremely serious. The amount of actual loss Sachdeva personally and directly inflicted on her former employer is very large by any standards. Published reports indicate that this is the largest embezzlement uncovered in the United States during 2009. Government counsel is personally unaware of a larger embezzlement case in the Eastern District of Wisconsin in the past 25 years.”