SEC charges two US accountants with fraud

Two US accountants have been charged with fraud by the Securities and Exchange Commission (SEC) amounting to more than $30m (£19.5m) at a Milwaukee-based headphone manufacturer.

The SEC alleges that Sujata Sachdeva, the vice president of finance and principal accounting officer at Koss Corporation, stole money from company accounts to make millions of dollars in payments on her personal credit card and for other extravagant personal purchases from luxury retailers.

The SEC also alleges that Koss senior accountant Julie Mulvaney assisted Sachdeva to hide the theft on Koss’s balance sheet and income statement by overstating assets, expenses, and cost of sales, and by understating liabilities and sales.

Koss prepared and filed “materially false” financial statements and current, quarterly, and annual reports with the SEC based on the records prepared by Sachdeva and Mulvaney. The alleged fraud ran from 2004 to December 2009. Both Sachdeva and Mulvaney are no longer employed by the company.

“Sachdeva brazenly stole millions from Koss Corporation with Mulvaney’s assistance and then used crooked accounting to cover up the theft,” said Merri Jo Gillette, director of the SEC’s Chicago regional office. “Sachdeva and Mulvaney abused their positions of trust and defrauded Koss shareholders who rely upon corporate filings for accurate information about the company’s financial condition.”

The SEC said that Sachdeva admitted her multi-million-dollar theft from her employer and her scheme to falsify the company’s accounting records to hide the embezzlement. She is scheduled to be sentenced on 18 November.