Koss Corp. loses appeal in $34 million Sachdeva embezzlement

Koss Corp. has lost an appeal in which the stereo headphone company sought to hold Park Bank partly accountable for losses Koss sustained in the massive embezzlement by former executive Sujata “Sue” Sachdeva.

In a decision released Tuesday, the State Court of Appeals upheld a 2016 ruling by Milwaukee County Circuit Judge David Borowski, who found that the bank was not legally responsible for determining whether Sachdeva’s transactions were legitimate.

Sachdeva stole $34 million from Koss, spending it on extravagant shopping and luxury vacations until her arrest in 2009. She was sentenced to 11 years in prison, a term that was reduced for her cooperation with federal authorities and for good behavior. She was released last April.

Koss is “exploring our options as it relates to a further appeal” of the latest ruling, Michael Avenatti, lead attorney for the company, said in an email.

Besides Park Bank, Koss also sued American Express Co. and accounting firm Grant Thornton, alleging that they should have alerted Koss to Sachdeva's misappropriation of company funds.

Grant Thornton, which had audited Koss' books during part of the time Sachdeva was stealing, agreed in 2013 to pay Koss $8.5 million. In 2016, American Express agreed to pay Koss $3 million to settle its lawsuit.