Koss fraud. Wow, not good.

[Hopstretch]

Is investment group snatch necessarily good.

Out of respect for my good lady wife, I shall remain mute on this particular issue.

[deepak]

Is investment group snatch necessarily good?

I would not want to be a ESP950 owner without the warranty.

Maybe more people will experiment with the drivers in better housings now that there is no warranty? It really sucks if a pair develops the squeal though

[ktm]

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 just suddenly had a 30+ year flashback of being a Marine

in the far East. And four very painful penicillin shots.

It always bothers me how they can let white collar

crooks right back out of jail. Matoff spent his time

before trial sneaking off millions of dollars of assets

to friends and family.

[The Monkey]

Out of respect for my good lady wife, I shall remain mute on this particular issue.

I want a finder's fee dammit!

[Chekhonte]

this thread just got full of all sorts of win.

I think good ol' saint nick needs a group snatch nic.

[Duggeh]

So.

I find the actions of this woman to be utterly reprehensible on every relevent level. It is a long term sequence of utterly unconscionable actions. I hope she hangs and every drop that oozes from her go back into the reliquidation of the company she has fucked over. I also hope that (and this is hoping that Koss survives) the company does the best it can from this fuck up and tightens up its internal management to make this kind of filth impossible on any scale in future.

If Koss falls it will be sad for the employees and sad for the hobby. Not a giant company, but within our habitat, certainly a player and a half. I very much hope this wont happen.

But, for all of the joking about the concept, the notion of the financial support I find worthy. It is a large scale manifestation of the nominally smaller scale of the idea of cameraderie which pervades those involved in the community which is this hobby.

On blergh, get your ESP950s now, before its too late.

Edited January 5, 2010 by Duggeh

[deepak]

So.

I find the actions of this woman to be utterly reprehensible on every relevent level. It is a long term sequence of utterly unconscionable actions. I hope she hangs and every drop that oozes from her go back into the reliquidation of the company she has fucked over. I also hope that (and this is hoping that Koss survives) the company does the best it can from this fuck up and tightens up its internal management to make this kind of filth impossible on any scale in future.

If Koss falls it will be sad for the employees and sad for the hobby. Not a giant company, but within our habitat, certainly a player and a half. I very much hope this wont happen.

But, for all of the joking about the concept, the notion of the financial support I find worthy. It is a large scale manifestation of the nominally smaller scale of the idea of cameraderie which pervades those involved in the community which is this hobby.

On blergh, get your ESP950s now, before its too late.

Given the faults the ESP950 are known to develop I have stopped thinking about getting a pair. I was going to see what they sounded like on the Blue Hawaii, but not any more.

[n_maher]

Given the faults the ESP950 are known to develop I have stopped thinking about getting a pair. I was going to see what they sounded like on the Blue Hawaii, but not any more.

I'm sorry to say that even prior to this incident I was leaning this way and will almost definitely not be picking up another pair now. Suck pill.

[mypasswordis]

ESP10 ftw. I still need to redo the Stax jack on mine. And then put the pro bias board in the SRD-7. And buy SR-5 pads for them. And replace the ceramic caps with silver micas.

[Kabeer]

Given the faults the ESP950 are known to develop I have stopped thinking about getting a pair. I was going to see what they sounded like on the Blue Hawaii, but not any more.

I'm sorry to say that even prior to this incident I was leaning this way and will almost definitely not be picking up another pair now. Suck pill.

Is the primary reason you are scared it will develop squeal?

Apart from that I dont really see a big reason to stop the purchase if the headphone is good enough. Most other companies offer useless warranties, so when you buy used you just have to accept what happens to it in the future anyway.

[Dusty Chalk]

Not just warranty, but if there's no factory, you can't actually send it back to the factory for repair, if it gets to that point. Someone would need to stockpile spare parts, too, for those that need replacing.

[n_maher]

Not just warranty, but if there's no factory, you can't actually send it back to the factory for repair, if it gets to that point. Someone would need to stockpile spare parts, too, for those that need replacing.

Yup, no Koss doesn't equal just no warranty, it equals the potential for no service, period.

[guzziguy]

Even worse, it might mean no replacement parts, so that there would be no possibility of repair.

[Kabeer]

Hopefully Koss can keep afloat...

[spritzer]

Even worse, it might mean no replacement parts, so that there would be no possibility of repair.

With electrostatics there is always the possibility of repair.

[Tyll Hertsens]

Man, you wonder what the strategy will be to deliver a come-back.

Thin out, for sure.

Discontinue the low money makers.

R&D is expensive.

Focus on the products with good sell through.

Focus on developing stronger partnerships with .. say ... Radio Shack.

I sorta don't see them with a gas pedal to step on, the headphone market is furiously competitive and busting with new product from every direction. Be pretty tough selling "The Plug" when so many better products are appearing out there.

I dunno. I'm guessing they'll either have to thin down to a shadow of their former self, or try to sell the brand to someone who's got the money and will to refresh it.

They do have very good brand recognition, someone is bound to see that as an opportunity. Logitec? Sumpin' like that.

edit - Does bankruptcy let them off the hook from previous warranty commitments?

Edited January 7, 2010 by Tyll Hertsens

[Beefy]

Be pretty tough selling "The Plug" when so many better products are appearing out there.

Yet at the same time, the KSC75 have surely got to be the best bang for the buck headphones available......

But they would still have to sell a cubic assload of those to make up these sort of losses

[Dusty Chalk]

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).

The part that sucks is, in order to get the best value on reselling all her stuff is, they have to move quickly on it, but it's going to be tied up as evidence.

[Wmcmanus]

They do have very good brand recognition, someone is bound to see that as an opportunity. Logitec? Sumpin' like that.

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.

edit - Does bankruptcy let them off the hook from previous warranty commitments?

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.

[Wmcmanus]

The part that sucks is, in order to get the best value on reselling all her stuff is, they have to move quickly on it, but it's going to be tied up as evidence.

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.

[Dreadhead]

Dunno if this was posted already but it is up to 31 million:

Koss fires auditor as losses hit $31 million - JSOnline

Koss Corp. Fires Auditor as Alleged Fraud Loss Widens to $31 Million - DailyFinance

Essentially entirely controlled by the Koss family with 70% of the stock.

[n_maher]

I say again, how do you not notice this?

[Dusty Chalk]

I say it's pretty easy. If your accountant is the one stealing money from your account, he does up a little spreadsheet where the numbers all add up.

Oh, and: they did. Finally.

[CarlSeibert]

Here's a cynical thought.

$4-ish million dollars seems an outlandish amount of money to wash through credit cards. $20 million seems more than outlandish.

I wonder if this person might be a fall guy of some sort, either through a straight frame-up (which is almost never done) or by the owners (or somebody else) seeing what's going on, or even seeing the potential and just making sure the controls were lax enough. Then the meltdown might cover up some sort of shortfall, either another embezzlement or business losses or whatnot.

Or, the giant dollar figures could be pure BS for the benefit of the press.

We've certainly seen schemes like that.

Wayne - Could frame-up scenario work well enough to appeal to a rational person, or would the auditors be so sure to catch it that only another nut job would attempt it?(Exempting the trial-by-newspaper alternative, of course. That's mean and it may be counterproductive, but that doesn't make it irrational. God knows it's done enough.)

Does anybody know if the suspect has been charged? Update: I just Googled. She's not yet been indicted. She's waived a timely hearing. In Federal criminal court, the grand jury is a rubber stamp, so indictment is just a formality. Also, in Fed court, just about everybody pleads out, (read into that what you will about the chances of getting a fair trial there) so a deal may be in the works. Koss is now claiming that the losses could be $31 million. Fantastic.

[Tyll Hertsens]

I say again, how do you not notice this?