MINNEAPOLIS -- Five men charged with stealing $20 million from Starkey Labs in Eden Prairie say they're innocent.
Jerry Ruzicka, Lawrence Miller, Lawrence Hagen and William Taylor pleaded not guilty Friday in US District Court on multiple counts of federal fraud. A fifth defendant, Scott Nelson, will make his first court appearance at a later date.
Attorneys for the group say Starkey CEO Bill Austin lied to investigators about financial arrangements and transactions, falsely accusing the five men of embezzlement. They say Austin approved and encouraged all of Starkey's business deals, and that he pushed prosecutors to indict the men so he could promote his son in law to the role of Starkey's President.
"It is disconcerting to be charged with a crime when you know you didn't do anything wrong," said defense attorney Kevin Short.
Austin alleges his former employees---including three executives---took unearned commissions, fees and bonuses and used shell companies to steal. Prosecutors agree, saying the men also used a hearing aid parts company called Sonion to embezzle.
But the accused men say Austin knew every detail of Starkey's partnership with Sonion, and that the deal was great for both corporations, worth more than $10 million.
"(William) Taylor engaged in a mutually beneficial transaction that was known by Bill Austin, was encouraged by Bill Austin, and was approved by Bill Austin," said defense attorney Bill Mauzy.
Defense attorneys call Austin "sanctimonious" and vow to expose his lies in court.
"We look forward to several days of vigorous cross examination of Bill Austin," said defense attorney John Conard. "The culture of Starkey and the credibility of Bill Austin will be the central issues in this trial."
Prosecutors say they have lots of evidence. Search warrants unsealed Friday show computer files of payroll reports had been deleted, and that Austin recorded meetings with at least one of the indicted executives then gave the tape to investigators. They also show an email account under the fake name “Geronimo Rose” created to help hide payments.
The trial is tentatively set for Dec. 19.