Embezzlement may top $20 million according to Koss

Last Monday Sachdeva was charged criminally in the U.S. District Court with embezzling more than $4.5 million by making illegal interstate wire transfers. The wire transfers were from a Koss business bank account to Sachdeva's personal American Express account. The transfers allegedly were used to support a multimillion-dollar compulsive shopping habit. On Tuesday, Sachdeva attributed the crimes to shopping addiction (clinically known as oniomania). According to court records obtained by the Madison Headlines Examiner, a mental health examination has been ordered by the court.

 

The criminal complaint filed in Federal District Court says American Express security notified Koss CEO Michael Koss that Sachdeva's personal American Express account balances were being paid down by many large bank wire transfers originating from the Koss bank account. In the three-month period September 2 through November 25, 2009 wire transfers exceeding $4.5 million were made.

 

Upon entering Sachdeva's workplace office, CEO Michael Koss found piles of women's clothing with price tags still attached. The FBI agent investigating the case noticed that several items of clothing found in Sachdeva's office had price tags in excess of $2,000. Additional evidence was gathered by the FBI at Sachdeva's residence last Monday and Tuesday. Moving vans were used to haul away the evidence.

 

According to the criminal complaint, Sachdeva cooperated with FBI agents by inviting them into her home and answering questions. She acknowledged that she authorized the bank wire transfers for purchases of clothing, jewelry and other person items. In other news reports, neighbors said Sachdeva lived a  lavish life style including parties at her upscale Mequon home. Others observed deliveries of purchased goods to her home three-to-four times daily. The criminal complaint enumerates a dozen different purchases made by Sachdeva that range from $12,500 at a local Channel Boutique to over $1.35 million at a women's clothing store in Mequon, Wisconsin.

 

Most businesses can be defrauded by employees due to a lack of security controls. But many small businesses are loath to consider employee fraud, often defending the integrity of their workers. Sachdeva, a highly compensated executive and otherwise law-abiding citizen, was an executive member of several civic and educational organizations. She does not fit the profile of a person a business owner or manager might suspect of fraud. Privacy, fraud and information security controls are important for all businesses and organizations regardless of size and the apparent integrity of employees. All employees are people, and occasionally good people make mistakes or develop addictions and other mental health illnesses. While a small business is not likely to suffer $20 million in employee fraud, even a few thousand dollars of annual losses due to fraud can be significant.

 

Oniomania, also called compulsive shopping disorder or "shopaholism," is a debilitating mental disease. It can be heightened during the holiday season due to the "holiday blues" as well as seasonal affective disorder depression (SADD). Addictions are often linked to depression and anxiety. According to studies, as many as 10% of shoppers may suffer from shopping addiction.  There are several oniomania warning signs that families and friends should look out for.