Stay away from companies that stock their management ranks with family and friends of other top executives, Steve Tobak writes. Take the example of stereo headset maker Koss: Its vice president of finance was accused of embezzling $5 million a year, an amount equal to the company's annual profit. The list of top managers and shareholders is full of people named Koss, suggesting there were few checks and balances in the executive suites, Tobak writes.

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