You’ve probably never heard of Koss. They are an American company that makes headphones, usually of the low end variety. For the most part, they’re just a company trying to make their way in the American dream. They’ve have their successes and failures over the years, including a bankruptcy in the 1980s, but for the last few years they’ve managed to turn a tiny profit.

But sometimes cozy little American companies hire themselves an idiot. Case in point: Sujata Sachdeva. Ms. Sachdeva is the former VP of Finance at Koss. She started there many many years ago and worked her way up to the respectable position within the company. On Christmas Eve of 2009 she was fired because Koss had learned she was embezzling money.

I always find it sad when someone steals money from their employer. I’m under the belief that it should be near impossible to do if the company does proper auditing and cash-flow tracking. But it does happen.

What doesn’t happen, ever, is someone embezzling 1/3 of a company’s value. Koss has a market capitalization of $63 million (remember it’s a small company). Sachdeva has been accused of embezzling as much as $20 million from the company over 4 years. They are certain of a few million, the rest of which is still pending. That’s a third of the company’s value! I cannot stress this enough.

Normally I’d give a Weaky Award to someone for being dumb enough to steal from a company thinking they wouldn’t get caught. But not this time, no. This goes to Koss for not noticing. In order for someone to embezzle 1/3 of Google they’d have to take $57 billion (that’s BILLION). I think someone would notice that!

Another way to look at this is she is accused of embezzling more in 4 years than the company made in profits. How do they not notice this? Who is running the show at Koss?

Would you notice if over 4 years someone stole all your money? Probably. Koss is planning to restate their earnings for the last 4 years, an embarrassing thing for any firm to do. Honestly, I wish we had the legal system in place in this country to just shut down firms that are clearly incapable of running a business.

Ranting aside, Sachdeva admits to embezzlement claiming to be an oniomaniac (shopaholic for those of you that hadn’t looked up the work yet). It was later discovered that much of what she purchased was never used (clothes) which corroborates her story. Even someone at the legal edge of “crazy” wouldn’t buy $2 million worth of clothes.

Sachdeva clearly has a case to argue in court for being crazy. But honestly the shame goes down on the management of Koss for not noticing this sooner. The company has 73 full time employees and was incapable of noticing millions of dollars being embezzled. Seriously, anyone could have figured this out in an afternoon. Read more about Sachdeva and her antics here, here, and here.

Photo: Pal Berge

By The Weakonomist

The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice.

categories: business, weaky