Update on Starkey’s Palace Coup: Reports and Analysis

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Wednesday September 9th was an eventful day at Starkey when Bill Austin’s stepson Brandon Sawalich engineered a palace coup with at least six firings, including President Jerry Ruzicka, CFO Scott Nelson, Senior VP of Operations Keith Guggenberger, and Senior VP of Human Resources Larry Miller; and also Adam Miller & his mother. As we understand it, there were additional departures in their troubled Medical division. Also, as we exclusively reported yesterday, their “Employee State of the Union” event was canceled.

It is unclear as to who ejected Ruzicka from the premises: One local report says it was by security, however an eyewitness report says it was by Police. In addition, a second local report indicates the company scrubbed the names of the four executives from its website Wednesday.
▬▬► Confidential tips welcome via e-mail at Dan@Snip.Net, via message us on Facebook, or via our friend Kathleen Willey’s Safesite Tip Line for A Scandal A Day.

Update 2 (2 October): In addition to the firings of President Jerry Ruzicka, Senior VP of Operations Keith Guggenberger, CFO Scott Nelson, and Senior VP of Human Resources Larry Miller, according to the lawsuit filed on October 2nd, firings included executive assistants Julie Miller and Kim Mohlis; on September  13 Austin fired Jeff Longtain, the president of Starkey’s Oregon subsidiary Northland Hearing Centers. Two days later, he fired Susan Good, the senior director of Starkey Medical Partner Network.

Update: Our good friend Brian Taylor confirms this was a palace coup:

The true nature of the abrupt terminations are still unknown and according to statements by the company it is part of an “ongoing investigation”. However, two sources close to the company, and willing to speak off the record, cited a long-standing rivalry between Ruzicka and Brandon Sawalich, Sr. VP of Sales, Marketing & Customer Relations, who also happens to be Starkey founder Bill Austin’s stepson.

According to the sources, small cliques of executives who are loyal to each camp have formed around Ruzicka and Sawalich. They speculate that perhaps Sawalich may have forced Ruzicka (who has been rumored to retire within the year) and the three other executives from their positions with, presumably, the tacit approval of Mr. Austin.

Ironically, more than 20 years ago, it was rumored that Ruzicka assumed his position in the company in a similar manner when Mike Jones (who later ran Phonak US) and other top executives were abruptly ousted from their positions.

Nice work, Brian!

Here is what else we know from local news reports:

CBS Minnesota reports:

Company founder and CEO Bill Austin released a brief statement: “We can’t comment due to an ongoing investigation. There are no issues that affect our company and it’s business as usual.”
Austin is the sole owner of Starkey but devotes his attention to the charitable foundation arm, which funds its mission with the annual gala.
He’s said in the past that he doesn’t attend budget or sales meetings and doesn’t get involved in the company’s money matters.
“I haven’t written a check since August 1970,” Austin said before last year’s gala. “I don’t know who writes my checks. I have no idea and I don’t care.”
He clearly cared Wednesday morning.
Company employees were reluctant to speak on camera but voiced frustration over what’s behind the mass firings.
The FBI, Eden Prairie Police and the Hennepin County Sheriff’s Office all said they are not involved in any criminal investigation at the company.
Everyone is asking what’s behind the firings. There are a lot of rumors circulating, including mismanagement or even financial wrongdoings.
But at this point it seems to be an internal matter of a privately held company and Austin isn’t spilling the beans.

Fox 9 reportsMarshall Tanick, an attorney with Hellmuth & Johnson, said he doesn’t represent the other 3 top executives that were apparently fired, but he might;” and Minnesota Public Radio adds Tanik also said they are “looking into the matter and we hope it can be resolved fairly and amicably.”

Two Empires, Two Sons, Two Shake-ups

Two Empires, Two Sons, Two Shake-ups

Analysis:

First and foremost, although the Starkey empire is fifth in size of the Big Six hearing aid manufacturers with with over 3,600 great employees and an estimated $825 million in sales, it is privately owned by Bill Austin, and he & his family can do pretty much whatever they please, with virtually no accountability. One decades-long Starkey customer messaged us with these tidbits, which point to a palace coup:

Starkey is not thinking about how their customers view them. A chocolate cake and small party a few months early would have been wiser [Ruzicka’s contract was up at the end of the year ~DLS].
Brandon has hated Jerry since his Momma married Bill. I was a Starkey customer when Bill left his wife for Tani and her 18 year old son Brandon was given an inside sales director position that several long-term Starkey employees had been hoping for. Several of them quit over it.

Besides no local, state or federal law enforcement being involved, another clue this was a palace coup came from Ruzicka’s lawyer, namely that he may be representing the other three former executives: If criminal conduct was involved, each of the four would have separate attorneys due to the built-in conflict-of-interest. On the other hand, there may indeed be criminal conduct involved, but being a medical company subject to FDA regulations it was quietly swept under the rug so as to not attract attention from either the FDA itself, or from the VA, which is a large customer of theirs.

Also, we remind our readers that we are dealing here with Bill Austin, who sometimes has difficulty with the truth, even to the point of deceiving loyal employees who then unwittingly deceive their constituency. We also remind our readers that Austin has deep ties to the sleazy Bill, Hillary and Chelsea Clinton Foundation both with his his charitable hearing foundation as well as his company.

▬▬► Confidential tips welcome via e-mail at Dan@Snip.Net, via message us on Facebook, or via our friend Kathleen Willey’s Safesite Tip Line for A Scandal A Day.

← [Deprecated: Event Over] BREAKING: Turmoil at Starkey: Pres. Jerry Ruzicka FIRED; more firings & departures →

About the author

Dan Schwartz

Electrical Engineer, via Georgia Tech

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