In early June as the full picture was emerging of the sleaze of the Bill, Hillary and Chelsea Clinton Foundation money laundering and influence peddling operation, we connected the dots back to Bill Austin and his Starkey Expo and Starkey Foundation Gala. At the time, we took a libertarian, laissez-faire view that Starkey was a privately owned company, and if Bill Austin wanted to get into bed with Bill & Hillary Clinton, so what: It’s his money, his company, and his Trump-sized ego. However, The Hearing Blog has learned through first a whistleblower report and then confirmed through law enforcement sources that the FBI & IRS is conducting a criminal investigation for money laundering at both Starkey and the Starkey Foundation; and that the story we broke two weeks ago of the six executive firings, including President Jerry Ruzicka, was an attempt to cover up the criminal probe.
Because of Austin’s personal ties to team Clinton, and Starkey company & foundation membership in the sleazy Clinton Global Initiative as we documented in June, the implications are staggering: Is the Clinton Foundation itself under a secret FBI criminal investigation, and one of the subsidiary discoveries money laundering by the Austins? Currently, the FBI has custody of the CLINTONEMAIL.COM e-mail server as part of a criminal investigation into Hillary (the FBI only performs criminal, not civil investigations) and has just recovered her work and personal e-mails, but it is worth noting the former Secretary of State and her team shared the same domain and server as the Clinton Global Foundation: What did the FBI uncover? Are the Clinton and Starkey probes independent, or more ominously, are they tied together?
Quick clarification on the banner: The late Andrew Breitbart encouraged “citizen journalism;” and that particular “I Want You To Be Andrew Breitbart!” banner is used by a number of websites. ~DLS
- New: BREAKING: Ruzicka, Guggenberger File Revealing Wrongful Termination Lawsuits Against Starkey Hearing.
- New: Fired executive sues Starkey Laboratories. Minneapolis StarTribune, 10:14 pm EDT October 2, 2015
- New: Analysis of the FBI Money Laundering Probe Into Starkey Hearing Technologies. The Hearing Blog, September 29, 2015
- New: Analysis of the FBI Money Laundering Probe Into The Starkey Hearing Foundation. The Hearing Blog, September 29, 2015
- New: Paid celebrities give hearing foundation a louder voice. MPR News, July 24, 2015 (added 9/29/15)
- Hillary’s FBI nightmare. Politico, 10:22 pm September 23, 2015
- FBI Said to Recover Personal E-Mails From Hillary Clinton Server. Bloomberg Politics, 7:15 pm September 22, 2015;
- Does This Charity Shakedown By Bill Clinton Look Disturbingly Familiar?. The Hearing Blog, June 2, 2015;
- Clinton Foundation on Charity Navigator’s ‘watch list’. The Washington Times, September 22, 2015;
- Hillary Clinton has made $12 million since leaving the State Department. The Daily Mail (London), July 21, 2014;
- The Latest Available Clinton Foundation Filings Appear Deceptive [32 page article by investigative journalist Charles K Ortel] September 23, 21015;
After breaking the news two weeks ago of Starkey firing President Jerry Ruzicka, Senior VP of Operations Keith Guggenberger, CFO Scott Nelson, and Senior VP of Human Resources Larry Miller in what appeared to be a “palace coup” engineered by Tani Austin’s son Brandon Sawalich (and confirmed by our good friend Brian Taylor here); and we reported as much on Thursday, and thought we had put it to bed, so their 3,600+ great employees could get back to work making good hearing aids.
However, we found it curious Bill Austin also said, “We can’t comment due to an ongoing investigation. There are no issues that affect our company and it’s business as usual.” Now, why would he say that?
[This person gave a bit too much identifying information so we redacted and lightly edited the original.]
I work in [position redacted] for Starkey. I have been with the company for many years [start year redacted]. I would like to keep my information anonymous.
When Bill Austin says there is an investigation, what he is saying is that Starkey and the Starkey Foundation are being investigated by both the FBI and IRS for money laundering, but Bill Austin is making it seem like the fired executives are being investigated which is not the case.
Bill Austin has been doing a lot of dealings with various prominent Foundations in Africa and these large money dealings (in the millions of dollars) have come under the scanner of the IRS and FBI. Bill Austin and his wife Tani Austin are the main subjects of the investigation.
A few months ago, we had to stay back over the weekend and delete thousands of emails from our Exchange servers. We were told this was being done to save costs so we wouldn’t need to buy more servers but it seemed like they were trying to cover up stuff. [Emphasis added: Ed.]
One thing immediately jumped off the page at us: If no backups were made, by deleting e-mails whoever ordered it at Starkey is already guilty of Anticipatory Obstruction of Justice, a Felony spelt out in §802 of the Sarbanes-Oxley Act of 2002 (18 USC §1519). Our suggestion to the tipster and others is contact your lawyer, and have him or her get you a grant of immunity from prosecution so you can safely talk to the Feds.
How we at The Hearing Blog see this playing out:
As one friend told us, if the Starkey and Clinton FBI probes are unrelated, this story will be on the front page of the Minneapolis Star-Tribune. However, if indeed these probes are connected, this will be on the front page everywhere.
Watch for “Parallel Construction:” In our post-Snowden world we must start with the assumption the NSA already has copies of every e-mail ever sent going back many years. Attempts at this started as early as the Clinton administration’s “Carnivore” program, and has been honed to a sharp blade in our post-9/11 world, so you can bet the FBI has mouse-clicked the NSA database and recovered every single e-mail from Teams Clinton and Austin; and what you are seeing play out in the courts and media is the dodgy practice of “parallel construction,” where the prosecutor already have the (unlawfully obtained) wiretap evidence, and then works backwards to build a case. From the Tenth Amendment Center, we have this explanation of parallel construction:
Edward Snowden revealed that the NSA intercepts huge amounts of electronic data warrantlessly without our permission. However, that is not the only way the surveillance state violates our rights. The NSA uses other underhanded schemes behind-the-scenes to exploit us. One of them is known as ‘parallel construction.’
Through this shady process, the NSA snoopers supply information to other government agencies. These agencies include other federal bureaucracies, and local and state government entities as well. The information is then rearranged to cover up the exact whereabouts of where it came from, thereby removing any evidence of malpractice for the courts. A more appropriate term to describe this process, coined by the EFF, is ‘information laundering.’
This insidious process operates primarily through a formerly secret DEA unit known as the Special Operations Division (SOD). As Exposed by Reuters last year, the SOD is involved in information sharing with state and local law enforcement. Almost none of this warrantlessly gathered data has anything to do with foreign intelligence or “terrorism.” It primarily involved run of the mill criminal investigations, mostly drug related. The SOD is exempt from any type of oversight from judges or prosecutors. This means the feds get free reign to use illegally-gathered information to fill our exploding prisons at an even faster rate.
After the SOD passes along this information, it then works with state and local law enforcement to “create” an investigation, working backward to obscure the origin of the information. For instance, the SOD will instruct the local police to obtain a warrant to collect information they already have via information sharing. It creates the illusion that the investigation and prosecution proceeded in a constitutionally permissible way
Former NSA technical chief turned whistleblower William Binney described the process of parallel construction as “the most threatening situation to our constitutional republic since the Civil War.”
Despite the ownership, Starkey itself is still a good company with over 3600 employees, about $825 million in annual sales, a good patent portfolio, and good products. Of the “Big Six” hearing aid manufacturers, only Starkey & Widex are privately owned; while Sonova, Wm Demant, GN Store Nord (and also Cochlear Pty) are publicly owned. What we see is the FDA brokering a deal with one of the other listed players (Sivantos is still digesting Siemens), much as the FDA did with Advanced Bionics in late 2009 when Sonova bought it from Al Mann. Widex may be a player as well, as they also are looking to get into the US retail market, and the hundreds of Audibel and NuEar franchises would be ripe for the picking. Italy’s Amplifon is the franchisor for Miracle-Ear; and although they are currently not building hearing aids, they too may be bidding to pick up one of the “Big Six” at fire sale prices.
LAST MINUTE UPDATE: Just as we were ready to hit “Publish” we received this tip from a Swiss analyst who covers hearing aids & other medical devices: We’re going to quote it and leave it up to the reader to decide:
What I hear from Europe is that Widex with ‘new’ management from McKinsey wants to play a role in M&A, thus some rumours that Starkey might combine with Widex and that the stepson wanted to do that but not the ‘others’ or even the other way round…
I know that Bill does not care about the money and that he said several times he always receives offers but that he always neglect…
On the other hand with 73 years the time could come when he admits that there should be a plan for successorship, so a well defined merger could be a solution.
But why then fire top shots like Jerry just few months before retirements?
This somewhat makes sense, as Widex and Starkey use non-overlapping technologies, both in wireless technology (10.6 mHz HF vs 900 mHz & 2.45 gHz UHF), and more significantly in chip archetecture: While Widex uses an application-specific integrated circuit (ASIC) architecture to minimize power drain, lead times even using the latest software take as long as 18 months to tape-out (though Oticon pumped out the Agil 2 in 10 months), and costs at least $35 million. On the other hand, Starkey uses field programmable gate array (FPGA) architecture, which while costing about another mA or so in battery drain, allows for rapid development, and flash firmware upgradeability: When a new audiologic feature comes out, just rewrite the embedded code and load it on to the “blank canvas.” In fact, there is even a software house — Two-Pi in Vienna — which writes libraries for ON Semi chips such as the Ezario and Bela Signa.
The combination of Widex and Starkey intellectual property, and Widex’ itching to get into the big US retail market through the Audibel and NuEar franchise systems makes sense… And it looks like the windmill guys in Lynge may be able to grab it on the cheap if the FDA brokers a fire sale when the Austin clan is headed to the hoosegow.
3:00 pm UPDATE: We have an unconfirmed report Samsung has also been in talks with Starkey, as they have already announced they are entering the hearing aid/PSAP business with a Bluetooth 4 link to the upcoming Galaxy 7 mobile. To see a detailed chart of who owns what in the industry, see Hearing Aid Brands Explained by our friends at Hearing Tracker.
However, we see this Widex angle as a red herring for the real story of the executive firings attempting to cover up the alleged money laundering: Yes, it may be peripheral, but chez Austin has much bigger problems…
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