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Five Accused In Starkey Fraud Case Claim Company's CEO Knew Of Defendants' Dealings

September 23, 2016 06:19 PM

Attorneys for the five men accused in a fraud case centered on Starkey Laboratories say the owner of the company knew full well what was happening.

Those comments came after the group made its first court appearance on Friday.

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Jerome Ruzicka, W. Jeffrey Taylor, Lawrence Miller, and Lawrence Hagen all entered not guilty pleas at their initial appearance in a federal courtroom in Minneapolis. A fifth defendant, Scott Nelson, was not present, but his attorney told 5 EYEWITNESS NEWS that Nelson was ill, and would likely make his first court appearance next week.

The five former executives are charged with conspiring to steal more than $20 million from the Eden Prairie-based business and its principal owner, Bill Austin. They are all facing multiple federal charges, including mail fraud and wire fraud, in what prosecutors call a "massive and long-running" fraud scheme.

The four defendants who entered not guilty pleads on Friday were released on $25,000 unsecured bond. Conditions imposed on their release include surrendering their passports, getting prior approval for international travel, and avoiding all contact with Austin and his family.

After their court appearances, attorneys for three of the four defendants who appeared began laying out their defense.

"He's never done anything wrong in his life until now, and he didn't do anything wrong here," said Kevin Short, Hagen's attorney.

The attorneys also directly attacked Austin, blaming the entire case on him.

"This indictment is based on the claim by Bill Austin that he didn't know what was happening. That's untrue," said John Conard, Ruzicka's attorney.

They told reporters that the money investigators claim was stolen was, in reality, part of business dealings everyone knew about.

"Jerry Ruzicka, on behalf of Starkey, and Jeff Taylor, on behalf of Sonion (one of Starkey's suppliers), engaged in a mutually beneficial transaction that was known by Bill Austin, was encouraged by Bill Austin, and approved by Bill Austin," said Bill Mauzy, Taylor's attorney.

Defense attorneys also vowed to grill Austin on the witness stand during an eventual trial.

"The culture of Starkey and the credibility of Bill Austin will be the central issues in this trial," Mauzy said.

Also at Friday's hearing, a judge unsealed 29 search warrants related to the case, many of them dating back to last year. The most recent involves the search of an email account, under the pseudonym "Geronimo Rose," that investigators said was connected to Taylor, and was used to hide certain activity. The warrant also revealed that investigators believe the group actually embezzled at least $30 million.

5 EYEWITNESS NEWS reached out to Starkey on Friday. A company spokesman provided 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."

The five defendants are next due in court on Nov. 16.

Credits

Stephen Tellier

Copyright 2016 - KSTP-TV, LLC A Hubbard Broadcasting Company

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