Wmcmanus

Actually, the progression so far has been to charge her for $4.5 million of losses (it seems this was for 2009 alone), then make an 8K non-reliance filing for all financial statements dating back to June 30, 2006 (at an estimated total loss of $20 million), and now the non-reliance goes back to 2005 (and the losses are now estimated at $31 million). What this pattern suggests to me is that they're not done yet! The numbers will get bigger the further back they go until they figure out when she started all of this. She's been with Koss since 1992, but may not have been in charge until the late 90's or early 00's (I'm just guessing). In any case, we don't know at this point if the estimated losses will grow but I doubt that they will shrink. If her activities go back far enough, it may well turn out to be a case of a company that simply didn't know how successful they really were. The Koss family may have simply followed the financial results from quarter to quarter and year to year and assumed all was well so long as there was a slow and steady growth. In other words, they would have been lulled into a false impression as to what their cost structure was. I doubt that she could have hidden revenues from them and I don't see anything in the news reports suggesting that this was the case (i.e., having cash receipts diverted directly to her accounts). Had she diverted revenues such that they were never reported in the Koss books, it would have been easy to spot differences between production volume (which they would know from other records not maintained by her) and reported sales volume. Thus, my guess is that the primary illusion that she created was that there were more costs involved in running the business than there really were, and thus profit margins appeared to be slimmer than they really were. Again, it goes back to Michael Koss making the mistake of assuming both the CEO and CFO roles. As a "true" CFO, he should have been reviewing all company bank statements for unusual transactions. They were big numbers (payments of $600k and more) and would have been easy to spot, had he only looked... ever. Or had they hired Grant Thornton to do a review of the internal controls over financial reporting... ever.

About 11 years ago as best I recall, I had to buy a pair of crutches and use them for several weeks because of a severely sprained ankle. Fast forward to tonight when I was on Skype chatting with my former fiancee's daughter who is getting married this summer and has been pestering me of late to "sponsor" one thing or another in connection to her wedding (someone is sponsoring her bridal shower, someone else her flowers at the wedding, someone else the photographer, etc.) and suddenly I've been more like her real dad than the man himself. I told her that I'd sponsor the green beans, but she claims they're not included on the menu. I'll probably get stuck with the entire food bill, but no matter, I love her dearly and she knows it. Ah, but that's a side issue. So as we were chatting, I told her about the trouble I've been having with my knee, and into the room her mother walks. The conversation then went like this, "You know, I've been looking all over the house for those crutches. Did you lend them to somebody way back when and never get them back?" To which she replied, "Have you looked in the attic? I think I put them up there along with a bunch of other junk that you had laying around that you never used!" Now you can imagine my surprise, even after having figured out long ago what a fool she was/is, that she would put a single man's crutches up in his attic! When do you suppose he might need them again? Maybe the next time he can't walk, let alone climb those steep and narrow pull-down attic stairs?!?! So I got off the phone with her and called my neighbor for his assistance. No way I'd be able to get up there in the shape my knee is in. He knocks on the door and I direct him to the attic stairs. Up he goes. A minute later he yells down, "What are all of these CDs doing up here?" to which I respond, "What CDs?" His answer was, "Oh, about 200 or so, maybe more. All kinds of stuff." To which I say, "WTF?!?! You've got to be kidding me! Bring it all down." So I'm standing under the attic stairs and this guy is now handing me two large portfolio boxes (the kind used in offices to store old files) with lids on them. No markings whatsoever as to their contents. There are easily 300 CDs, not 200. I'm still sifting through them. Mostly jazz, blues and classical and all of it is out of my collection. (For years, I've operated under the assumption that her son had borrowed/stolen them.) I haven't seen this stuff for at least 8 years. Apparently, she boxed up whatever piles of my stuff (in my house where she never officially lived) that was in her way while I was off-Island and she never bothered to tell me about it. I've also now found the long lost remote control to my Audio Aero Prima CD player, an electric tooth brush that I used to quite enjoy, 4 or 5 bottles of cologne, and several pairs of fresh looking boxer shorts (but I'll wash them anyway). I can't wait to get up there again myself to see what other treasures lie in store for me. The thing is, I'm up there at least once per year for one reason or another, but purposefully she hid all of this stuff from me behind one of the air handlers for the a/c system. My neighbor said, "Oh, you would definitely have to be looking for it!" The two big portfolio boxes were, of course, right next to the crutches.

When is anorexia meeting in Jacksonville again?

Never trust a woman! About Carl's thought that she might be the "fall guy" in a bigger cover up. I'd highly doubt that. She may have had other people involved with her (on her accounting team), but for there to be something larger occurring here, it would have to be insurance fraud involving Michael Koss (and perhaps other family members). They'll be able to check that possibility out with reasonable accuracy as it would involve first a) creating false revenues and then creating false losses to offset those false revenues (in the hopes of getting an unrealistic insurance indemnity). Problem with that is there would need to be legitimate evidence that the supposed revenue took place to begin with, which would mean that there would have to be evidence of cash receipts and deposits to bank accounts. The trick to look out for there is the creation of an appearance of deposits by making a number of transfers from one bank account to another (some of which could be held outside of the company such that when those funds are redeposited it looks like fresh revenues). Per the article attached by Dreadhead, it seems to still be at the "internal investigation" stage. So if the Koss family is somehow involved in a grand insurance fraud scheme of some sort (again, highly unlikely), of course their internal investigation wouldn't turn up anything of the sort. It would then be incumbent upon the insurance company to hire their own team of forensic auditors to search the Koss records for this type of evidence before paying the claim. My guess is about the only insurance they'll have to cover any such losses would be standard business interruption insurance (won't help too much) and possibly something that might cover fraud by key employees. But that's quite rare as well. More likely, they'll have director's liability insurance, but since the Koss family owns 73% of the stock, they're the ones suffering the most. The independent directors, however, should come out of this pretty clean (other than their shareholdings suffering). Long post, but unless we see something about a large insurance settlement in the works, there would be no reason to suspect that the Koss family was involved. Chances are they've been pretty comfortable for a long, long time and that goes as far as any explanation as to why her actions were not detected. If you don't really need the money, you don't get so concerned when profits start to slip a bit. Plus, she was at least wise enough to trickle the money out bit by bit (big bits to be sure, but never enough to create quarterly losses).

Either way, they'll have to wholesale most of it (after the liquidators did the best job they could to move as much as possible through retail public sales). It's sad, because NONE of it will ever be sold for more than 50 cents on the retail dollar. Then eventually, they'll end up selling everything that is left to one of the large liquidation houses for 10 to 15 cents of the dollar. They, in turn, will reposition the merchandise and make significant money on it since they're in business to move such goods. The court appointed liquidators don't have that kind of expertise so they can only sell as much as the local market supports (at reasonable prices). Everything that is left gets dumped for a song.

I've driven by their main facility in the Milwaukee area, and from the Interstate it looks like a fairly large facility. I'd imagine that they would have a hard time managing all of that overhead if their strategy was simply to scale back. So I was thinking along these same lines. They'll now be a prime takeover target, IMO. I'd imagine that it will be a difficult decision for the Koss family members. Since they own 73% of the stock, it'll be their decision to make entirely. I'm not an expert in bankruptcy law, but this is something that would normally be taken into account in the company's listed debts (which they then seek relief from). Depending on the extent of the estimated warranty liability, the complexity of the work that is likely to be involved to provide such services, and the hardship it would impose upon existing product owners if those expected future claims were not met, the bankruptcy judge would need to make rulings on, a) whether to allow contingent claims such as these at all (most likely, yes, since most of the amounts involved could be reasonably estimated based on past experience with similar warranty claims), where those warranty claims will fall in the list of priorities (i.e., which "class" they will fall into). If they're treated as unsecured creditors, which is (sadly) the most likely case, then chances are their claims would never be met because whatever funds are available for distribution to creditors would go to those in higher classes (secured creditors, like banks and such). Although Koss is a rather mature company, so perhaps they don't have a lot of long term debt on their balance sheet.

Both ideas sound good to me. The only problem I'll have is getting the time. This is just a week before final exams for the Winter quarter so my students will be hounding me with questions and such.

My system is all MBL at this point, other than the analog front end which is a VPI-HRX with a Lyra Titan cart and RSA XR-10B phono preamp. I bought the MBL stuff in 3 stages as I could afford it. First the 101E speakers, then a pair of 9008A monoblocks and 6010D preamp, and then finally the digital front end (1622 SACD transport and 1611F dac) which I think outperforms that VPI is some respects. Uhhh... let me get back to you in a couple of months on that note.

Don't let morbid curiosity get the best of you! It's a train wreck you don't need to see! Ok, so 5 (subpart 2), 11, and 55 (the levee thing) were my favorites, although it's not like I read all 98 of them.

Indeed, I sit corrected. I've updated my knowledge in this matter by reference to the Urban dictionary, which offers some rather entertaining entries from John Q. Public's very best.

Leftover Santa candy.

I thought only women had taint.

It would look good with sweat socks.

Serious or sarcastic comment?

The thread title actually should have read "...when selling goods and receiving funds via PayPal" because having the sender of funds select "gift" rather than "goods" is what saves the recipient the 2.9% fee; it's also what is now causing certain transactions to be red flagged. Seems to me that the best way to avoid getting caught up in this situation (short of playing by the rules and absorbing the 2.9% fees), is to: 1) avoid putting anything in the comment box, such as a shipping address or reference to the item sold, that would make it look like a "goods" transaction, 2) have the buyer send a nice round number, such as $100, rather than $103.58 or $96.75 (which don't look like typical gift amounts) and then agree to square up on the difference by some other means. 3) try to minimize the number of gift transactions that are being sent to you by any one person or at any one point in time.

This was news to me. Why not to accept "gifts" on paypal when selling items on paypal - Head-Fi: Covering Headphones, Earphones and Portable Audio Note that all it took to have the transaction flagged was the inclusion of an address in the comments section. I'm not surprised that they're cracking down on this, given that they don't collect fees on gifts.

Hey, now there's an idea! I'd invest in group snatch! I've been dreaming of the opportunity for about 30 years now.

I like that, especially the .25 part.

I'm not sure what the answer to that is. The stuff will be seized as evidence initially in support of the criminal actions against her, which will obviously be quite easy to prove but will still take time. I'd imagine there will be a civil suit filed by Koss against her as well which should eventually allow them to recoup most of the assets found in her possession at the time of her arrest, since she obviously won't have $20 million in cash to pay a judgement. I'd imagine she'll go to jail and will also declare personal bankruptcy to protect whatever she can (house and such).

I know the Monkey man was just joking when he said this, but $20 million was just under half of the company's market capitalization at the time the stock was halted shortly after the news broke. KOSS stock quote - Koss Corporation stock price - NASDAQ.com No telling what the market will have to say when trading resumes, especially given how thinly traded a small cap company like Koss normally is. Presumably trading will resume after the SEC's fact finding mission is over and public disclosures are made as to exactly what we're dealing with here. That may take quite some time, given that they issued a non reliance 8k (for financials dating back to June 30, 2006) right away, and they may well uncover evidence that the fraud predates that time period. Fun times for forensic auditors in Milwaukee these days. Summary of KOSS CORP - Yahoo! Finance The following news article is dated but includes details that I hadn't seen last time I did a search. Koss now says embezzlement could exceed earnings during same period For example, the Koss family holds 73% of the stock in the company. Ouch! I'd also missed the fact that Michael Koss is President, CEO and CFO. Not a good idea to combine the CEO and CFO roles, even (as in this case), if it's only for "official" reporting purposes. In reality, she was for all intents and purposes acting as the CFO, so it probably wouldn't have made a difference if she was the person who was signing off as the CFO. But at least the formality of designating her as CFO would have put her through the paces of one more round of questionnaires and interviews with the auditors each year. But sheez!, Grant Thornton wasn't even assessing the company's effectiveness of internal controls over financial reporting! In a way, I can understand this, especially for small publicly traded companies that have been increasingly bombarded by the cost, time, and hassle of dealing with more and more regulation and reporting requirements. Then you get in good with your auditors and lawyers and convince them to cut any corners they possibly can to keep your costs down... Also, I just love that last paragraph of the article! It pretty much confirms my suspicions that she was preparing to set up her own boutique at some point in time. Imagine a start up boutique with $2 million of inventory from day one? I'd imagine she could have done quite well in her little retirement job!

Oh ya, that too. I about crapped when I saw it on Amazon for $10.49, but I guess it's kind of old news these days (I mean, the performance itself). Funny though. I've got it on CD and DVD and at one time probably had it on vinyl as well. It's never looked or sounded so good (per the reviews, although I don't have my copy yet), and it's never been nearly so cheap.

Exactly! How did you know?

Most of the Gov't Mule back catalog.

Yes, specific specifications are a good thing but they must be kept top secret.

This year I resolve to quit writing 1974 on my checks. If I can get through the first couple of weeks of January, I should be alright.