Former Starkey Hearing executives plead not guilty in fraud case

(KMSP) - It was a dramatic day in federal court, as four top executives of Starkey Hearing pleaded not guilty.

It also offered a preview of their legal defense: turning the tables on Starkey founder Bill Austin.

After pleading not guilty, the former president of Starkey Hearing, Jerry Ruzicka, and the former vice president of human resources, Larry Miller, left the federal court house without saying a word.
 
Outside, the defense attorneys had plenty to say, pinning the blame on Starkey's founder, Bill Austin.

"This indictment based on claim Bill Austin that he didn't know what was happening.  That's untrue,” said John Conrad, Ruzicka’s attorney.

"We look forward to vigorously cross examining Bill Austin about Starkey and that will be the central issues of this track,” said Bill Mauzy, Jeffrey Taylor's attorney.

But the federal indictment tells a much different story of a $20 million fraud. It describes how the three Starkey executives, along with two business associates, conspired to set up shell companies, named Archer Consulting, Archer Associates, and Claris Investments, and paid themselves bogus consulting fees and commissions.  

Federal agents served a total of 29 search warrants in the case, even seizing Ruzicka's $100,000 Jaguar, which they say he stole from the company. 

Nelson allegedly stole $200,000 to set up a condo love nest for an affair he was having with a fellow employee. 

But the defendants claim company founder Bill Austin was aware of all the transactions, but turned on his executives when they refused to make his step-son, Brandon Sawalich, the head of Starkey's U.S. operations.  The executive team argued the son-in-law was woefully unqualified.