Shopaholic NRI VP of US firm in soup over $4.5m fraud

WASHINGTON: She was with an American corporation that made the Koss stereo headphones for nearly 18 years and worked her way up becoming vice-president of finance; she earned a six-figure salary, was the wife of a well-heeled physician, and they owned a million-dollar suburban home. She was an adjunct professor at a well-known university and a pillar of local civil scene, supporting local charity events and helping the poor. Sujata Sachdeva's life defined immigrant-Indians' success in the United States.
 
Yet, last week, in a case that had the American corporate world aghast, Sachdeva, 46, stood accused of embezzling up to $4.5 million from Milwaukee-based Koss Corporation. She spent most of the money at high-end stores, buying expensive clothing and accessories.
 
How could she, you ask? Although the sum involved is small beer by modern American corporate standards, it's her likely defence that has everyone slack-jawed: it's 'oniomania' or simply, an addiction to shopping. According to a criminal complaint last week, Sachdeva spent hundreds of thousands of dollars at boutique stores in and around Milwaukee over the last two years, buying expensive items some of which she did not even unpack fully, much less use. The spending spree included $1.3 million at a store called Valentia and $600,000 each at Au Courant and Zita.
 
Her urge to splurge came to light when she put the tab on her American Express card and paid it off by transferring money from accounts of Koss Corporation, where she literally held the purse strings. American Express executives reportedly contacted the CEO of Koss and told him that Sachdeva was paying down her balances with large wire transfers from a Koss bank account. Koss CEO Michael Koss then personally went to Sachdeva's office and found many American Express credit card statements and several large piles of women's clothing with attached price tags, some for more than $2,000.
 
Confronted by FBI agents at her Mequon home last Monday, Sachdeva acknowledged she had bought clothing, jewellery and other personal items with money she diverted from Koss Corp, according to local media reports.
She said she carried out the scheme on her own, directing her assistant to make the fraudulent wire transfers. Sachdeva apparently said she concealed the transfers by falsifying the balance in Koss' bank account.
While Sachdeva's spending extended over two years, the fraudulent wire transfers occurred over just three months last fall, according to the complaint. Because of Sachdeva's shenanigans and her position as VP finance, who signed the company's financial statements, Koss, a publicly traded firm, has had to halt trading till its books are re-examined. Some reports suggest Sachdeva's embezzlement may go further back in the company's history and may run up to $20 million.
 
A loss of $4.5 million could be huge for Koss, which, despite its brand name, is a relatively small company with annual revenues of less than $40 million and only around 75 employees. For the Indian community, the story is a salutary reminder that its widely-chronicled success is spotted with a few odd contretemps.