Starkey Laboratories owner Bill Austin — on the stand for a second day in a fraud trial against the company's former president and three others — said he had never seen nor read key documents outlining how a subsidiary was set up and structured.
Jerry Ruzicka, the former president, is on trial along with former human resources chief Larry Miller and business associates W. Jeffrey Taylor and Larry T. Hagen on charges they embezzled $20 million from Eden Prairie-based Starkey.
The men have pleaded not guilty, and their attorneys have said Austin either knew or should have known about the transactions under dispute in the trial.
Austin testified he had never seen critical consolidated financial statements addressed to Starkey's board of directors of which he is the sole member. Several of those auditor documents outlined how assets were transferred from the company's Northland U.S. LLC subsidiary to a new entity called Northland Hearing Centers Inc.
Starkey paid $5.3 million for 49 percent ownership of Northland Hearing Centers with Ruzicka, former Chief Financial Officer Scott Nelson and former subsidiary President Jeffrey Longtain obtaining the other 51 percent of the shares.
Austin called the entire idea of the Northland Hearing arrangement pure "nonsense" because "I don't hold minority interests in things. I hold things [outright]."
He said he had not seen appraisal reports for Starkey's employee stock ownership program in 2006 and 2007 or a McGladrey & Pullen document from 2009 that discussed Starkey's minority ownership stake in Northland Hearing. Austin also said he did not see a 2014 audit report that laid out how the others' restricted stock in Northland had been sold to Starkey for more than $15 million.
"I have never read or seen these documents," Austin told the court Monday, during his second day on the witness stand.