Wisconsin Supreme Court says bank not liable in Koss embezzlement

MADISON, Wis. (AP) — A divided Wisconsin Supreme Court says Park Bank isn’t liable in a Koss Corp. executive’s scheme to embezzle $34 million from the Milwaukee-based headphones manufacturer.

The Supreme Court decided 5-2 on Tuesday to uphold a ruling from the state appeals court.

Sujata Sachdeva was sentenced to 11 years in federal prison in 2010 for using company money to buy clothes, jewelry and other lavish items. Sachdeva obtained a large part of the embezzled money through Koss accounts at Park Bank.

Koss sued Park Bank in 2010, alleging bank officials acted in bad faith because they hadn’t detected or investigated the embezzlement.

The Supreme Court agreed on Tuesday with a previous appeals-court ruling that had found that failing to prevent or detect misconduct doesn’t mean the bank had acted in bad faith.

Justices Dan Kelly and Rebecca Bradley dissented.