A fired Starkey Hearing executive pleaded guilty to tax evasion in federal court in Minneapolis on Thursday and agreed to forfeit about $2.3 million in fraudulently obtained funds.
The signed plea agreement comes seven weeks after the government first charged Oregon resident Jeffrey Longtain with failing to report $105,600 in income received from two affiliates doing business with Starkey, an Eden Prairie-based hearing aid manufacturer.
Longtain, who worked for Starkey from 2006 through 2015, was Starkey's chief operating officer and president of its Northland Hearing Center subsidiary until being fired in the fall of 2015.
Longtain admitted to U.S. District Judge John Tunheim that he intentionally underreported his income on tax returns filed from 2010 to 2015.
He also admitted receiving two separate pools of money through the alleged fraudulent actions of former Starkey President Jerry Ruzicka and former CFO Scott Nelson.
Ruzicka and Nelson are accused in a separate criminal indictment of fraudulently transferring about $15 million worth of restricted stock in Northland Hearing Centers and later paying themselves and Longtain $8.2 million combined from the fraudulent proceeds in 2013. They allegedly also arranged to pay the IRS an additional $7 million to cover tax liabilities associated with the stock proceeds. Ruzicka and Nelson deny the charges.
Longtain said in court Thursday that he later figured out that the Northland stock transfer and proceeds had been orchestrated in secret and without the permission of Starkey's principal owner Bill Austin.
When asked by prosecutor Lola Velazquez-Aguilu if he intervened or tried to alert Austin to the possible fraud, he said he did not.