A US-based headphone manufacturing company has settled its lawsuit against American Express for profiting from the embezzlement of USD 34 million of its funds by the firm's Indian-American former top executive Sujata 'Sue' Sachdeva.
Koss Corporation where Sujata worked as a vice president finance said that the settlement calls for Koss to receive a gross payment of USD 3 million, but net proceeds will include expenses relating to attorneys' fees and costs, the company said in a statement yesterday.
"The matter has been resolved to the mutual satisfaction of the parties," said Michael Koss, CEO of Koss Corp.
Koss had accused American Express of profiting from the embezzlement activities by Sachdeva, who spent the stolen funds lavishly on luxury goods using her American Express account.
The accusation and lawsuit came despite the fact that the embezzlement came to light because American Express alerted Koss of Sachdeva's potentially fraudulent activity.
Koss alleged that the credit card firm waited months to report that Sachdeva paid an estimated USD 20 million of her bills with Koss funds.
The lawsuit contended that American Express executives delayed exposing Sachdeva's activities after discovering the embezzlement in an effort to avoid losses and to profit from Sachdeva's business.
American Express had called the claims preposterous and moved to dismiss the lawsuit, which was filed in 2010.
Trial dates in the matter were scheduled for later this month, according to online court records from Superior Court of Maricopa County, Arizona.
Under the settlement, the parties provided mutual releases that resolved all claims involved in the litigation between Koss and American Express Co, according to its press release.
Sujata, now 53, was sentenced to 11 years in prison in November 2010 for embezzling USD 34 million company funds.
Sujata had pleaded guilty to using company funds to pay her personal bills and admitted running up expensive bills at Milwaukee-area companies.
