Government wraps up case, 2 defendants rest in Starkey fraud trial

In a surprising move, two defendants in the $20 million Starkey Laboratories fraud trial rested their case Monday in U.S. District Court in Minneapolis without calling a single witness.

Former Starkey President Jerry Ruzicka and former human resources chief Larry Miller told the judge of their decision Monday after the prosecution concluded its monthlong case against the two former Starkey executives and two former Starkey business associates.

Ruzicka's attorney, John Conard, said Monday that he had already cross-examined the government's witnesses and rebutted claims against his client. "We have said everything that needed to be said in that courtroom," Conard told the Star Tribune.

Conard filed a motion Monday asking the court to acquit Ruzicka because "the evidence is insufficient to sustain a conviction."

Conard added that the government "had failed to prove a single conspiracy" and had not proved that Ruzicka engaged in any concealment or misrepresentation. Citing case law, Conard argued that the evidence was "such that a reasonably minded jury must have a reasonable doubt."

Prosecutors are expected to challenge the motion, noting the employment contracts, altered payroll records, faked signatures and hundreds of internal e-mails they have already presented to the court.

Paul Engh, who represents Miller, acknowledged that it was "unusual" for two key defense clients to rest their cases without calling witnesses. But Engh said that "we are pleased with the status of the evidence" that the defense has shown during weeks of cross examinations of prosecution witnesses. Engh emphasized that the decision to rest Miller's case doesn't signal a plea agreement.

Since the trial began Jan. 16, the prosecution has presented more than 30 bins of documents as evidence and called dozens of witnesses, including IRS and FBI agents, Starkey owner Bill Austin and several current and former Starkey employees.

The government has accused Ruzicka, Miller and former business associates Larry Hagen and W. Jeffrey Taylor of stealing $20 million worth of stock, fraudulent bonuses and commissions from Starkey and Austin, its principal owner. All four defendants have pleaded not guilty.

Taylor, who was president of the hearing aid parts supplier Sonion U.S. before being fired in 2015, is expected to continue with his defense. Hagen is likely to do the same.

Court adjourned early Monday and is scheduled to resume Tuesday, perhaps with the jury receiving special instructions on how to proceed, Judge John Tunheim said.

The case has involved more than just the four defendants now on trial. Two others, Starkey's former finance chief Scott Nelson and former Northland division President Jeff Longtain, have pleaded guilty and testified on behalf of the government.

Defense attorneys have denied all allegations and have sought to prove that Austin knew about, approved of and financially benefited from all financial transactions.

During weeks of cross examinations, Conard presented state commerce filings, corporate board of director filings, W-2 forms and audit reports to support the contention that Austin could have kept track of the financial dealings of the company, which is America's largest maker of hearing aids.

Eden Prairie-based Starkey has roughly $800 million in annual revenue and more than 4,000 employees. Austin owns about 93 percent of the company. Employees own about 7 percent.

Dee DePass • 612-673-7725