Koss has accused Park Bank of failing to inquire further about suspicious activity on the part of Sujata Sachdeva, a former Koss employee who embezzled $34 million from the business from 1997 to 2009 while she was executive vice president of finance.
Koss holds that Park Bank was negligent in issuing more than 500 cashier’s checks from company accounts to Sachdeva that added up to $17 million and not detecting the embezzlement.
Sachdeva is currently serving an 11-year term in federal prison for the embezzlement.
A judge ruled Monday not to dismiss the case, but it did grant Bankmanagers, a holding company for Park Bank, dismissal from the case.
A Park Bank representative expressed disappointment at the judge’s decision not to dismiss the case, but said the company will continue to aggressively defend itself.
"This lawsuit is just another effort by Koss to shift the blame for its own, well-documented multi-million dollar mistake,” said Elizabeth Borst, vice president of marketing for Park Bank. “After giving one employee virtually unlimited, unsupervised authority while failing to have even basic internal controls, Koss is desperately trying to find a way to blame anyone but itself for the $34 million embezzlement scheme that somehow escaped Koss's own attention for more than a decade.”
Koss Corp. representatives did not return requests for comment.
A pre-trial conference has been scheduled for July 30.