Attorneys for Koss Corp. and Park Bank this week traded attacks after the Milwaukee-based headphone maker announced plans to appeal a decision dismissing its lawsuit against the Milwaukee-based bank.
“If I had money at Park Bank, I would not be able to sleep at night – it is not safe,” Koss attorney Michael Avenatti said.
“When attorneys lose, some have a tendency to make silly comments out of frustration for their loss,” Park Bank attorney Dean Laing said.
The lawsuit stems from the embezzlement of $34 million by former Koss vice president of finance Sujata “Sue” Sachdeva. Koss alleged the bank ignored “obvious red flags,” violated its own polices and should have been suspicious of Sachdeva’s activities.
Sachdeva embezzled millions from the company to pay her own personal credit card bills and to finance the purchase of luxury items. She pleaded guilty to embezzlement and was sentenced to 11 years in federal prison in 2010. Her sentence was reduced to eight years and three months in 2015 after she helped prosecutors in at least two cases involving other individuals involved in her embezzlement.
Milwaukee County Judge David Borowski granted the bank’s motion for a summary judgement last week and dismissed the case after finding Koss failed to set forth “any factual basis” suggesting the bank acted in a deliberate or unjustifiable way.
“Although Park Bank may have been negligent in its treatment of the Koss accounts, Koss has not provided any evidence that Park Bank intentionally ignored Sachdeva’s embezzlement,” Borowski wrote.
Avenatti said he plans to file a notice of appeal in the coming days. Asked if there was any particular portion of Borowski’s ruling he objected to, Avenatti said, “the entire decision.”
Laing said the ruling was supported “by the facts and the law, and Park Bank is confident it will be affirmed.”
“It is no surprise that Michael Koss continues to refuse to accept responsibility for the embezzlement. Instead of being embarrassed about his gross failures as the president, CEO and CFO of Koss and as Sue Sachdeva’s direct supervisor, he continues to want to blame everyone but himself for failing to detect the embezzlement,” Laing said in an email.
The case against Park Bank is the only one of three lawsuits filed by Koss Corp. after the embezzlement came to light in 2010 to not reach a resolution. Koss recently announced the settlement of a lawsuit against American Express for $3 million. The company also settled with Grant Thornton LLP, the company’s auditor during the time of the embezzlement.
Avenatti said Laing “seems to have a fundamental misunderstanding of the law” when he was asked about the Park Bank attorney’s comments.
“He continues to do anything in his power to distract from his own client’s gross misconduct in allowing non-signatories to withdraw money from Koss accounts and violating practically every banking standard in the western world,” Avenatti said.
Laing, when asked about Avenatti’s comments, reiterated his position that Koss should have detected the embezzlement earlier.
“As Judge Borowski found, Park Bank is not liable for the embezzlement,” Laing said. “Had Michael Koss been doing his job properly, the 12 year embezzlement would have been detected at its inception. As Judge Borowski stated on several occasions, it is surprising that Koss has never sued him.”
