A Milwaukee County judge has dismissed Koss Corporation’s lawsuit against Park Bank, finding the financial institution did not act in bad faith when former Koss executive Sujata “Sue” Sachdeva embezzled $34 million from the company.
“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,” Judge David Borowski wrote.
Borowski granted the bank’s motion for summary judgement Friday and dismissed the case. It was the last of three lawsuits the Milwaukee-based headphone and speaker maker filed after Sachdeva’s embezzlement came to light to settle.
“We believed from day one that the lawsuit was wholly without merit and we are pleased that the court agreed and dismissed the lawsuit in its entirety,” said David Werner, Park Bank president and chief executive officer.
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.
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.
In the Park Bank case, Koss had alleged the bank ignored “obvious red flags” in issuing Sachdeva a high value and a high volume of cashier’s checks. The company also argued the bank violated its own policies and should have been suspicious of the amount and frequency of petty cash checks Sachdeva requested.
Borowski wrote that he “understands Koss’s plight” but found that Koss failed to set forth “any factual basis” suggesting the bank acted in a deliberate or unjustifiable way to avoid knowledge of the scheme.
“There were many people – including Koss employees – and many entities who could have discovered Sachdeva’s criminal scheme at any point,” Borowski wrote. “But just because Park Bank could have discovered Sachdeva’s embezzlement does not mean Park Bank intentionally ignored it.”
“Amazingly, no one, including Koss employees, caught on to Sachdeva’s embezzlement for a decade, at which time she was eventually prosecuted and convicted in Federal Court.”