Single charge against Longtain was outlined in a felony “information” court report, which is sometimes used in plea bargains with coöperating witnesses.
UPDATE (3/11/2017): US Attorney Andrew Luger was fired by President Trump (more). Also, we missed additional charges filed against Jerry Ruzicka and Scott Nelson several weeks ago (more)
From the Minneapolis Star-Tribune:
Another shoe dropped this week in the $15 million Starkey Laboratories embezzlement case, as the US attorney filed a tax evasion charge against another former executive.
The government late Wednesday charged Jeffrey Lee Longtain with one count of filing a false tax return, making him the sixth person charged in the case. The charge was outlined in a felony information court filing that described a series of complicated schemes that allegedly resulted in Longtain receiving Starkey money improperly and then underreporting that income to the IRS from 2010 through 2015.
The criminal charge authorities ultimately leveled against Longtain had to do with a single false tax return Longtain filed for calendar-year 2014, which stated adjusted gross income of $502,576 when it was really $652,826, the court document said.
Attorneys for Longtain could not be reached for comment.
The fact that the government filed the charge under an “information” court report, instead of a criminal indictment, could signal that Longtain is cooperating with authorities and may eventually plead guilty.
“Clearly the nature of the filing is that it’s very likely that there is a plea agreement that is likely to result,” said Ed Magarian, a Minneapolis partner with the law firm Dorsey & Whitney who specializes in white collar criminal defense. He is not involved in the Starkey case. “And usually part of a plea agreement is cooperation with the government.”
From 2006 until his firing in 2015, Longtain was the chief operating officer and president of a Starkey affiliate called Northland Hearing Centers, based in Oregon. In Wednesday’s filing, the government accused Longtain of receiving but not reporting to the IRS $105,600 between 2010 and 2015 in the form of personal golf membership fees paid by Starkey suppliers Audiometrix LLC and Socio LLC.
“Longtain understood it was a conflict of interest for him to receive the payments, given his position at Northland,” wrote U.S. Attorney Andrew Luger.
The criminal filing also accused Longtain of arranging to receive $115,000 from Starkey to cover tax liabilities associated with what the government said was an early and fraudulent termination of Northland restricted stock worth $15 million.
The 2013 stock transaction ultimately resulted in Longtain and two other executives splitting $8.2 million in cash and arranging to pay the IRS another $7 million for tax liabilities. (more)
Worth noting is US Attorney Andrew Luger is an Obama Administration holdover; however we do not anticipate any significant changes with a Trump administration appointee, as the cases are handled by career civil service attorneys, not political appointees. Although occasionally US attorneys are retained by a successive administration — US Atty Preet Bharara for SDNY is staying on board to handle the Clinton Foundation charity fraud case FIRED 3/11/2017 — we expect Luger to follow normal customs.
UPDATES (3/11/2017): Indeed, Luger was fired by President Trump and Attorney General Sessions. Scott Johnson has an interesting Powerline article as to why he had to go.
Also, on January 26th, four additional charges were filed against fired President Jerry Ruzicka and fired CFO Scott Nelson in a superceding indictment of significantly underreporting their income on tax returns filed in 2010 and/or 2014, in addition to the 30 counts of fraud and embezzlement charges filed in September.
According to the new charges filed, authorities have charged Ruzicka with underreporting his income on tax returns filed in 2010 and 2014; while Nelson is accused of reporting $567,979 on his 2014 return, much less than his real income. He is also accused of submitting a “false and fraudulent” corporate tax return on Starkey’s behalf for the 2013 tax year.
According to court documents, Nelson claimed that Starkey Laboratories was entitled to receive a $12.9 million deduction. But the government charges that the deduction was based on fraudulent payments of restricted stock from Northland Hearing that were given to Ruzicka, Nelson and another unindicted executive. (more).
Additional coverage of Longtain indictment on CBS Local here~