In Minneapolis, jury selection is scheduled to begin today for two former executives of Starkey Hearing Technologies on charges of fraud and embezzlement.
As HHTM readers will recall Starkey’s longtime former president Jerry Ruzicka, chief financial officer Scott Nelson and vice president of human resources Larry Miller were all fired in September 2015 by Starkey’s founder and CEO Bill Austin.
Shortly after their firing, Ruzicka and Miller filed wrongful termination lawsuits. Those suits were put on hold after the U.S. attorney’s office of Minnesota, indicted the pair along with Nelson and two other former business associates on Sept. 21, 2016.
Federal prosecutors allege that, among other charges, Ruzicka “orchestrated a scheme” to steal more than $20 million from Starkey between 2006 and 2015.
Ruzicka has been accused of paying himself, Nelson and the COO of a Starkey subsidiary, Jeffrey Longtain, $15 million in restricted stock from that subsidiary without Austin’s approval. Separately Ruzicka and two business associates, Lawrence Hagen (a former Starkey employee) and Jeffrey Taylor (the president of a hearing aid component manufacturer, Sonion) have been accused of setting up fake companies to receive consulting fees from Starkey totaling at least $600,000.
Former CFO pleads Guilty to Conspiracy; Others Deny Charges
Ruzicka, Miller, Hagen and Taylor, via their attorneys, have denied all charges filed against them. Nelson, the former CFO, pleaded guilty on Dec. 19 to one charge of conspiracy, but the other four are set to go to trial in the U.S. district court of Minnesota, beginning with jury selection this week. Longtain is not a defendant in the upcoming case, but he was charged with tax evasion in March 2017 and pleaded guilty in April.
Ruzicka has disputed these charges and has leveled others at CEO Austin. Ruzicka’s attorney alleges in court filings that Austin told Ruzicka that he was allowed to issue shares to himself, Nelson and another employee (Longtain), that Austin had given Ruzicka permission to sign his name on documents, and that Austin knew about the other three companies Ruzicka operated.
According to Forbes, Austin bought Starkey Labs for $13,000 in 1970. Today its annual revenues are estimated to be approximately $650 million, with 10% of the worldwide market share for hearing aids. It is widely believed Austin stepped back from running Starkey in 2006 to focus on overseeing the Starkey Hearing Foundation, leaving Ruzicka in charge of the day-to-day operations of the manufacturing business.
For the latest updates on the Starkey trial, click here.