Indicted Starkey Execs Claim Owner Knew Of Their $30M In Payments, Perks

MINNEAPOLIS (WCCO) — Attorneys for the men charged in the massive Starkey Labs embezzlement case say owner Bill Austin was fully aware of their payments and perks.

That statement followed the initial appearances of four of the defendants who are all pleading not guilty to fraud and conspiracy charges.

Federal prosecutors are out to prove that the former Starkey executives and business partners took more than $30 million from the company without Austin’s knowledge.

The government unsealed 29 separate search warrants used to piece together its embezzlement case.

Prosecutors allege a complex embezzlement scheme dating back to 2006, in which top Starkey executives were paid an estimated $30 million in exorbitant bonuses, perks and restricted stock — much of it hidden from Austin.

(credit: CBS)

(credit: CBS)

Search warrant affidavits reveal some in Starkey’s legal department witnessed CEO Jerry Ruzicka forging Austin’s signature multiple times.

“This indictment is based on a claim by Bill Austin that he didn’t know what was going on,” said John Conard, Ruzicka’s attorney. “That’s untrue.”

The company paid three of the charged executives over $8 million in 2013 for restricted stock options in a Starkey subsidiary.

One of the unsealed search warrants reveals how Ruzicka misappropriated money to Starkey supplier Jeff Taylor, and how Taylor used the pen name “Geronimo Rose” to hide his involvement.

“They engaged in a mutually-beneficial transaction that was known to Bill Austin, encouraged by Bill Austin and approved by Bill Austin,” said Bill Mauzy, Taylor’s attorney.

Kevin Short, Larry Hagen’s attorney, says it is a complicated case that will take time going to trial.

“This is more complicated than the average white-collar case and I’d be surprised if this case is tried before the Fourth of July,” Short said.

Mauzy says very clearly that the culture of Starkey and the credibility of Austin will be the central issues in the trial.

There were 29 search warrants in the case, which included Starkey and several hearing-component suppliers and subsidiaries with whom the four defendants were involved.

The defendants’ homes were also searched, as were email servers and financial accounts.

Bill Austin’s spokesman, Jon Austin, released the following statement:

“The notion that Mr. Austin knew and approved of the criminal conspiracy and related cover-up described in the U.S. government’s indictment – alleging that more than $20 million was stolen from him — is absurd on its face.  We’d invite any interested party to read the detailed indictment that resulted from a year-long investigation by the Department of Justice, the FBI, the IRS the U.S. Postal Service and a grand jury, and then decide for themselves whether the story offered by the defense attorneys makes any sense.”

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* Meet Bill Austin – Founder Of Starkey Hearing Foundation

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