The Wisconsin Supreme Court on Tuesday upheld lower court rulings that dismissed a lawsuit filed by Milwaukee-based Koss Corp. against Park Bank for its handling of Sujata “Sue” Sachdeva’s $34 million embezzlement from the company.
Koss had alleged Milwaukee-based Park Bank had acted in bad faith in its handling of Sachdeva’s actions. Over a 12-year period, the former vice president of finance at Koss had used her position to embezzle millions from the company, using the funds to pay for her own expensive shopping purchases.
Sachdeva eventually pleaded guilty to embezzlement charges and was sentenced to 11 years in federal prison. She was released in 2017 after serving six years.
Sachdeva used other Koss employees to request and pick up cashier’s checks and petty cash from the bank along with making improper wire transfers. She was caught when an American Express employee notified Koss Corp. in 2009 that she had been using the company’s accounts to pay her personal credit card.
Koss originally filed its lawsuit against Park Bank in 2010. In 2016, Milwaukee County judge David Borowski granted the bank’s motion for summary judgment. In 2017, a state appeals court upheld the decision.
Borowski found that while the bank’s actions may have been negligent, Koss had not shown the bank acted in bad faith. The appeals court reached a similar conclusion, noting that while the transactions might “appear suspicious or odd in hindsight” they were not enough to put the bank on notice of Sachdeva’s misconduct.
The lead opinion from the state Surpreme Court, written by Chief Justice Pat Roggensach, agreed with the lower courts, finding that Koss had not shown “Park Bank willfully failed to further investigate compelling and obvious known facts suggesting fiduciary misconduct because of a deliberate desire to evade knowledge of fiduciary misconduct.”
Justice Dan Kelly, joined by Rebecca Bradley, wrote a dissenting opinion, arguing that the case should have been allowed to go to a jury. He contended that a jury could have found that doing business with Koss employees not on the company’s signature card amounted to bad faith.
“The undisputed facts reveal a pattern of conduct that should cause any corporate officer’s heart to fearfully skip a beat, or several,” Kelly wrote. “Park Bank said, unapologetically(!), that its policy is to remain intentionally and steadfastly ignorant of whether an individual has the authority to transact business on a fiduciary account. Avoiding that knowledge takes some effort because the information resides in the bank’s own records.”
