PHOENIX (CN) – Koss Corp. claims that American Express negligently aided and abetted a vice president who wired $16 million from company accounts to AmEx to pay personal credit card charges and buy designer clothing and furs.
Koss claims that Sue Sachdeva did that though she was earning nearly $200,000 a year, and AmEx “concluded that the transactions did not constitute suspicious activity, that no further analysis was necessary, that no further inquiry or investigation should be undertaken, and that Koss should not be alerted to a potential embezzlement by one of its officers.”
Koss, which makes headphones and audio products, claims in Maricopa County Court that Sachdeva’s transfer of $120,000 from its corporate accounts to pay her “high end retail clothing charges” in October 2008 should have prompted an investigation, since American Express knew Sachdeva made only about $200,000 per year.
Koss claims American Express continued to accept Sachdeva’s payments because she was one of its best customers and it profited from her purchases.
In August 2009, Koss says an analyst found that Sachdeva had spent about $3.5 million on designer clothing and accessories between October 2008 and August 2009.
After surfing Forbes.com for her salary, the analyst “concluded that Sachdeva was living far above her means.” Koss says that when AmEx’s investigation escalated, a member of its financial crimes unit “stated that AMEX should immediately contact Koss and the appropriate authorities, including the Federal Bureau of Investigation, because Sachdeva’s conduct was a clear case of embezzlement.”
But Koss says AmEx did not tell it about the embezzlement until December 2009. Koss says it fired Sachdeva immediately, and she has been charged in Milwaukee with six counts of wire fraud.
Koss claims that American Express failed to “effectively develop and maintain a program designed to detect and report suspicious activity that might be indicative of financial crimes, including embezzlement.” It says American Express failed to “develop and maintain an effective program in order to properly review and analyze financial transactions involving the payment from a third-party … whether by check, cashier’s check or wire transfer.”
Koss seeks punitive damages. Its lead counsel is Richard W. Shapiro of Phoenix.