Judge grants two convicted in Starkey fraud case a second prison delay

The convicted former president of Starkey Laboratories and his convicted associate received yet another extension on the date they must report for their prison sentences.

Former Starkey President Jerry Ruzicka and former Sonion president W. Jeff Taylor — both convicted of fraud a year ago for their role embezzling funds from Starkey and supplier Sonion — were originally supposed to surrender to prison March 11. They received an extension until April 22.

Now they have received a second extension to June 3, six months after they were sentenced, according to a court order filed Friday by U.S. District Chief Judge John Tunheim. It was not immediately clear why the extensions were requested or granted. Some of the documents to the court case are now sealed.

Ruzicka's attorney, John Conard, said Monday the court is dealing with the issues that are sealed. He would not elaborate on the issues.

"And while the court does its work, a delay was necessary," he said. "Judge Tunheim is taking time to thoughtfully deal with some issues. We await decisions."

Ruzicka was convicted by a jury in March 2018 and sentenced in December to seven years in prison for his role defrauding Starkey Laboratories and its supplier Sonion of $18.9 million.

Co-defendant Taylor was sentenced to 18 months in prison for his role stealing about $338,000 from Sonion and Starkey, the Eden Prairie-based hearing aid manufacturer.

Once those documents are signed and filed, the parties will likely file an appeal, Conard said.

Ruzicka was convicted by a jury for his role transferring $15.5 million worth of restricted stock in Starkey subsidiary Northland Hearing to himself and two other Starkey executives.

Ruzicka was also convicted of filing a false tax return, stealing his company car and for working with Taylor to set up sham companies and steering hundreds of thousands of dollars in fake commissions and fees from Starkey to himself and Taylor.

It is not clear which prison facility Ruzicka and Taylor will be assigned. The Federal Bureau of Prisons is the entity that makes that decision.

During a sentencing hearing in December, attorneys for both Ruzicka and Taylor requested their clients be allowed to serve their prison time in the Federal Prison Camp in Duluth or as close to Minnesota as possible.

Former Starkey CFO Scott A. Nelson, 60, began serving his 24-month prison sentence in February at the Federal Prison Camp in Duluth. Nelson is due to be released in November 2020. Nelson pleaded guilty in late 2017 to one count of conspiracy in the Starkey fraud case. He testified against Ruzicka, admitted that he falsified company financial reports, and admitted to filing at least one false tax return.