Former Starkey Executive Pleads Guilty to 1 Count of Conspiracy

December 19, 2017 06:32 PM

A former Starkey Laboratories Inc. executive pleaded guilty to one count of conspiracy Tuesday morning in U.S. District Court in Minneapolis.

Scott Nelson was among those accused of conspiring to embezzle from Starkey and Sonion from 2006 to September of 2015. Starkey is a hearing aid manufacturer, and Sonion is a major supplier of hearing aid components. Charges were first filed in September of 2016, and a new indictment in January of this year charged both Nelson and former Starkey president Jerry Ruzicka of tax fraud as well.

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RELATED: New Indictment Reduces Number of Charges For Some Accused of Stealing From Starkey

In all, Nelson had faced three counts of mail fraud, two counts of wire fraud, one count of transactions involving fund proceeds, one count of making and subscribing a false tax return and one count of willfully aiding and assisting the preparation and presentation of a false income tax return.

But as part of an agreement, he pleaded guilty to just the conspiracy count at a 10 a.m. hearing Tuesday in federal court in downtown Minneapolis. Nelson could now face up to five years in prison.

As part of the plea deal he cut with the U.S. Attorney's Office, he's also agreed to testify against his alleged co-conspirators.

"It's difficult for the government to prove its case without an insider who's willing to flip," former U.S. Attorney Rachel Paulose said Tuesday, adding that she believes Nelson's alleged co-conspirators could still strike plea deals themselves before their planned Jan. 16 trial. "Conspiracy depends on every co-conspirator maintaining the same story. If even one of them folds or changes the story, it does have repercussions for the other defendants."

A superseding indictment issued earlier this month reduced some of the charges facing Ruzicka, former Sonion president Jeff Taylor and former Starkey employee Larry Hagen.

RELATED: Former Starkey Executive Charged in Federal Court Sues Company Over Legal Fees

Prosecutors alleged the defendants used a variety of methods to steal from the companies, including controlling a complicated web of sham companies and dummy entities, awarding themselves restricted stock in Starkey's retail affiliate and embezzling from the company.

In a statement, a spokesperson for the company said it continues to monitor the case against Nelson and others.

RELATED: New Charges Against 2 Former Starkey Executives

"We are aware of the filing and continue to follow the developments in the government's case with interest," the statement reads. "We're confident that this represents another step forward in resolving this matter."

An attorney for Nelson declined to comment on the matter.

RELATED: 5 Executives Indicted, Accused of $20 Million Fraud Against Starkey Laboratories

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