Trial Starts in $20 million Starkey Labs Embezzlement Case Against Four Former Execs

Trial Starts in $20 million Starkey Labs Embezzlement Case Against Four Former Execs

The trial starts against Jerry Ruzicka, Larry Miller, W Jeffrey Taylor, and Lawrence T Hagen in the $20 million Starkey Hearing Technologies embezzlement case in Federal Court: The complicated case is expected to take at least six weeks and may involve racy counterclaims.

From the Minneapolis Star Tribune:

Prosecutors gave their opening statement Wednesday morning in the criminal fraud trial that accuses two fired Starkey executives and two of their business associates of embezzling $20 million from the hearing aid manufacturer.

Jerry Ruzicka

“Jerry Ruzicka abused his power and autonomy and the autonomy that he had to steal from Starkey [and also the firm Sonion] and all of their employees,” said Assistant US Attorney Benjamin Langner.

The defense team for Ruzicka, Starkey’s former president, former human resources chief Larry Miller and associates W Jeffrey Taylor and Lawrence T Hagen were to present their opening statement late in the morning.

Jurors were selected Tuesday in the case that alleges fraud, conspiracy and theft. Because the trial in front of Chief Judge John R Tunheim in US District Court in Minneapolis will be complicated, it is expected to take at least six weeks.

Witness testimony was expected to begin Wednesday afternoon.

Scott Nelson

Two other fired Starkey executives — Chief Financial Officer Scott Nelson and Jeffrey Longtain, head of Starkey’s Northland Hearing subsidiary — have pleaded guilty to charges. Nelson faces up to five years in prison for conspiracy while Longtain faces up to three years on tax-evasion charges.

The US attorney’s office has accused Ruzicka, with Nelson’s help, of secretly transferring and selling $15 million worth of restricted stock options in Northland Hearing that actually belonged to Austin.

Ruzicka’s attorneys have said their client’s actions were either done with Austin’s permission or within his authority as president of the company.

The government’s complicated case involves allegations of theft, stock fraud and the establishment of sham companies designed to swindle money from Starkey.

Starkey Owner Bill Austin

But the case also involves surprising counter-allegations by the defendants. They accuse Starkey’s owner Bill Austin and its new president Brandon Sawalich, who is Austin’s stepson, of sexually harassing several female employees and then issuing hush money payouts, bonuses and jobs.

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[Judge] Tunheim also agreed to allow evidence regarding Austin’s divorce settlement and regarding the defendants’ allegations that Starkey donated “defective hearing aids to impoverished individuals in other countries.”

Court documents state that Austin’s long-ago divorce from former wife, Cynthia Lee Dawson-Austin, is relevant as “impeachment evidence” against Austin.

Chief Judge John R Tunheim

The judge ruled that the “evidence at issue relates to an employment dispute, not a divorce case” because Dawson-Austin had brought claims against her former husband for fraud, breach of fiduciary duty, breach of implied contract, and breach of implied covenant of good faith and fair dealing.

Defendants have produced evidence suggesting that Austin may have lied under oath during that action and that at least one business refused to interact with Austin because he failed to disclose the action. The Court concludes that this evidence is, at a minimum, admissible for impeachment purposes.” (more)

Balance in the Minneapolis Star Tribune

← Days 2 And 3 of Starkey Executives' Embezzlement Trial: Computer Searches, FBI Testimony, Brady Violation Former Starkey Executive Scott Nelson Pleads Guilty to 1 Federal Count of Conspiracy-UPDATED →

About the author

Dan Schwartz

Electrical Engineer, via Georgia Tech

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