Analysis of the FBI Money Laundering Probe Into the Starkey Hearing Foundation

Some confusion surrounds the story we broke last Friday on the criminal money laundering probe into both Starkey Hearing Technologies and the Starkey Hearing Foundation, and with the help of a late July investigation by Minnesota Public Radio, this article will attempt to explain what it means for the Starkey Hearing Foundation.

Related coverage: Analysis of the FBI Money Laundering Probe Into Starkey Hearing Technologies
President Bill Clinton and Steven Sawalich, senior executive director of the Starkey Hearing Foundation, fit a patient with hearing aids at a mission in Rwanda in August 2013.Photo: Starkey Hearing Foundation

President Bill Clinton and Steven Sawalich, senior executive director of the Starkey Hearing Foundation, fit a patient with hearing aids at a mission in Rwanda in August 2013.
Photo: Starkey Hearing Foundation

To clarify one point, although our law enforcement source confirmed the FBI’s probe into the Starkey corporate and foundation entities (“yeah, it’s a Big One“) they did not confirm either the IRS’ and/or the FDA’s involvement — They may indeed be involved, but we cannot confirm those two aspects.

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

The Starkey Hearing Foundation is another story entirely, especially since it has deep ties to the Clinton Foundation, which itself is on Charity Navigator’s “watch list.” According to this extensive investigative report by Minnesota Public Radio in late July of how the Starkey Foundation pays celebrities:

…Clinton’s Global Initiative, for example, received $1.6 million from the Starkey foundation between 2010 and 2013.

…To some, the efforts of the Starkey foundation amount to brilliant marketing, both helping people in need and getting Starkey hearing aids into emerging global markets. Others worry that the foundation obscures the relationship between it and the celebrities and between the foundation and its corporate partner, the privately owned for-profit Starkey Hearing Technologies.

In 2013, the most recent year for which data is available publicly, the foundation reported revenue of $33 million. Two-thirds of that was in the form of hearing aids provided by the company, the fifth-biggest hearing aid manufacturer in the world. The foundation donated those hearing aids to poor people around the world, often at highly visible “missions” featuring teams of celebrities like Clinton.

Most of the rest of the foundation’s revenue was raised at the annual gala, which brings in more than $8 million a year. That money pays for the international missions and also goes into the coffers of foundations favored by the celebrities.

Documents the Starkey foundation filed with the Internal Revenue Service between 2011 and 2013 show it gave $1.9 million to the George W. Bush Presidential Library, the George W. Bush Foundation and The Global Health Corps, founded by Bush’s two daughters.

The foundation also gave significant sums to charities tied to entertainers who performed at the gala and appeared on hearing aid missions.

Elton John, for example, performed at the gala in 2004 and 2009 and went on a foundation hearing aid mission to the Philippines in 2012. The foundation gave the Elton John AIDS Foundation $1.5 million between 2007 and 2012.

Other charities linked to Garth Brooks, Tony Bennett, Michael Bolton, Miley Cyrus and Jordin Sparks also received money from Starkey. They either performed or appeared at past gala events.

Charities linked to professional sports stars Willie Mays, Muhammad Ali, Magic Johnson, Larry Fitzgerald and Adrian Peterson also have received money from the foundation…

The article continues:

Former President Bill Clinton speaks at the Starkey Foundation's 2013 "So the World May Hear" Awards Gala, on Sunday, July 28, 2013 in St. Paul, Minnesota. (Photo by Diane Bondareff/Invision for Starkey Hearing Foundation/AP Images)

Former President Bill Clinton speaks at the Starkey Foundation’s 2013 “So the World May Hear” Awards Gala, on Sunday, July 28, 2013 in St. Paul, Minnesota.
Photo by Diane Bondareff/Invision for Starkey Hearing Foundation/AP Images

[Foundation president Richard] Brown said charities linked to George W. Bush and the Clinton Global Initiative (CGI) will continue to get funding because of commitments made in the past. He said the fee to be a member of CGI, which has helped deliver hearing services internationally, is $500,000 a year…

There is nothing illegal about the foundation’s approach to courting celebrities, but there is disagreement among nonprofit watchdogs about the practice.

Doug White, director of the master of science in fundraising management at Columbia University in New York, said the foundation should be more transparent about what it spends to put on the gala. After scanning Starkey’s charity forms and looking at the gala attendees, White said that, in particular, it should let people know how much celebrities charge to be a part of the mission.

“There’s a lot of buzz when it comes to being a celebrity,” White said. “Having Elton John come and speak and maybe sing a song or two. Having Bill Clinton, come, Oh my God, isn’t this wonderful? It’s so great, but you know at the end of the day everyone goes home and the question is, ‘Is the mission being furthered?’ I don’t see a lot of evidence of that.”

…The company values the hearing aids it provides the foundation at $250 each – a figure consistent with what German regulators reported it costs to make the device when they released a study of major hearing aid manufacturers in 2006. Several analysts say the company is eligible for taking a tax break on every device it donates to the foundation.

Let’s pause here and look at that $250 per aid figure Starkey Hearing takes on every donated device: We think the IRS would like to know how that figure was derived, as the tender price to Britain’s National Health Service (NHS) is about £63 per aid, which is about US$100.

Major Starkey Hearing Foundation contributions, 2006-2013

  • Clinton Global Initiative: $5.6 million (membership $4 million + $1.6 million in donations)
  • Elton John AIDS Foundation: $1.5 million
  • George W. Bush Foundation and George W. Bush Presidential Library: $1,250,000
  • Teammates 4 Kids (co-founder: Garth Brooks): $785,000
  • Global Health Corps (Barbara Bush and Jenna Bush Hager): $692,465
  • Women’s Sports Foundation (Billie Jean King): $525,000
  • Youth Services America/Get UR Good On (Miley Cyrus): $420,000
  • Michael Bolton Charities: $350,000
  • Virgin Unite USA (Richard Branson): $210,000
  • Exploring the Arts (Tony Bennett): $141,000
  • Goldie Hawn Institute: $132,500
Bill Clinton fits an ear mold during a visit to Nairobi May 2, 2015. Note that Clinton is not wearing his Starkey ITC' hearing aidsJohn Muchucha for AFP/Getty Images via Minnesota Public RadioSource: Paid celebrities give hearing foundation a louder voice

Bill Clinton (with Bill Austin looking on) fits an ear mold during a visit to Nairobi May 2, 2015. Note that Clinton is not wearing his Starkey ITC hearing aids
John Muchucha for AFP/Getty Images via Minnesota Public Radio
Source: Paid celebrities give hearing foundation a louder voice

The donations made by Starkey Hearing Foundation just to these entities alone is over $11.6 million. Since we’re also discussing the sleazy Clinton connection, note the $5.6 million figure paid to CGI does not include the two appearances of Bill at the biennial Starkey Expo trade show in Las Vegas. For more on this, see Does This Charity Shakedown By Bill Clinton Look Disturbingly Familiar? from June.

As we wrote last Friday, because of Austin’s extensive personal & business ties to team Clinton as we documented in June, the implications of the Starkey probe could be staggering: Is the Clinton Foundation itself under a secret FBI criminal investigation, and one of the subsidiary discoveries money laundering by the Austins? Or, is the converse true, that the Starkey probe triggered a probe into team Clinton? 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 just last week 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?

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

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About the author

Dan Schwartz

Electrical Engineer, via Georgia Tech

9 Comments

  1. Dr. Chesire
    October 1, 2015 at 4:43 pm

    How could any AuD or dispenser continue to support Starkey. Their non profit was supposed to be help children, while they were funneling money into their pockets and the Clinton Demagogues. My God… If you buy another Starkey product may you be just as guilty. A non profit that was supposed to help children!!! Disgusting!


    • Cheryl Brooks
      October 6, 2015 at 7:49 pm

      The Starkey Foundation helps many children who have hearing loss throughout the world. He has given money to many charities. Bill has not been charged with any criminal activity. Starkey hearing aids are great products.
      Bill has given to Republicans and Democrats. There is no reason not to purchase the Rolls Royce of American hearing aids


      • Dan Schwartz
        October 7, 2015 at 12:04 pm

        Cheryl, you crack me up. Yes, Starkey makes very good hearing aids, and they have 3600 wonderful employees — And I made that clear in the article. However, the “foundation” is a different story. Here is part of a tip we just received, one of many:

        The Austins don’t use quality hearing aids for mission work. They only use the very
        old, big, bulky outdated, used, recycled hearings aids they gets back after being
        used. They are not in it for greater good – only for appearance.

        Worst company ever. Highly toxic, abusive, and Austins create this tyrant type
        environment. Both Bill and Tani yell, bully, and treat employees horrifically.

        I am not at all surprised by firings. You don’t EVER GO AGAINST the Tani Austin
        kids – Brandon and Steven.

        They have been doctoring the books in regards to foundation for years. They fired an
        accountant within 3 months when she wouldn’t agree to falsifying the records. They
        use money from Starkey Corporation for foundation and are completely dirty, illegal,
        and have been doing it for years. I hope the Austins and all associated get exposed
        finally. The world thinks they are do-gooders – it is all a sham. Run by tyrant,
        scare tactic power. You don’t EVER go against Bill or Tani or anyone close to them.


  2. Doug
    June 23, 2016 at 7:22 pm

    I didn’t fail to see that the cost to manufacture one of these hearing aids is about $250.00 US and I (before reading this article) shelled out (I should say my insurance shelled out) $6400.00 US for a pair of them.


    • Dan Schwartz
      June 26, 2016 at 2:18 pm

      Closer to the NHS tender of $100 per aid than the $250 price you cite.


      • Doug
        June 26, 2016 at 3:37 pm

        Unbelievable! $200.00 a pair to manufacture, $6400.00 a pair selling price. They are making money hand over fist.


  3. C. Alistair
    July 8, 2016 at 2:48 am

    I am a former hourly Starkey employee. I left there about 4 years ago and for many years prior and up to the time I left, we had to complete time sheets to account for how our time was spent. There were predefined project “buckets” and if any of our time was not spent on R&D (tax deductible) projects, we had to explain why we were not able to fill our buckets with R&D. It became much easier to just fudge the time sheet and have all of our time go under R&D.

    One of the last projects that I worked on was the AMP. Originally they were going to be sold as a cheap Walmart type hearing amplifier. The R&D work on it was extremely minimal. The actual cost of one was under $15.00. Once Starkey realized that the AMP was more durable than originally thought, they suddenly became a lot more expensive for the consumers. Starkey may make quality products, but the consumers are getting screwed.


    • Dan Schwartz
      July 8, 2016 at 10:55 am

      I wouldn’t call the AMP very durable: I fit my former girlfriend with a pair of AMP’s, and one died at 6 month, the other at 13 months, and the replacement at 14 months. I replaced them with ReSound Verso 988’s with the thin tube conversion plus a Phone Clip+ and she’s been happy ever since.


      • C. Alistair
        July 13, 2016 at 12:33 am

        They must have originally expected the durability to be really bad. What a shame.


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