US District Judge Lynn Adelman has dismissed
Grant Thornton US as a defendant from the civil class-action
brought forward by shareholders of US headphone manufacturer Koss
Corporations (Koss).

Adelman said the plaintiffs failed to make a
case that Grant Thornton’s failure to detect the fraud as Koss’
auditors constituted wilful, knowing or reckless behaviour,
according to US reports.

The dismissal comes two moths after the
Circuit Court of Cook County rejected Grant Thornton’s appeal to
throw them out of the lawsuit

Koss filed the suit against its former auditor
Grant Thornton, accusing it of gross negligence for not uncovering
$34m embezzled by former Koss finance vice president Sujata
Sachdeva, who is currently serving an 11 year sentence for the
crime, brought to light by American Express in 2009.

A Grant Thornton spokesperson told the
International Accounting Bulletina few months ago
the fraud committed by Sachdeva and others in the finance function
at Koss had hurt a lot of innocent people, including some of its
own staff.
“Fraud always starts with a breakdown in a company’s internal
control system – breakdowns that may not be detected even by a
financial statement audit done in accordance with professional
standards. This is why [Grant Thornton] have advocated for so long
that all public companies should be required to have an independent
audit of their internal control systems under Sarbanes-Oxley
Section 404(b) – a requirement that was publicly argued
against by Koss’ management,” the spokesperson added.