StarkeyLogoAccording to Hearing Review sources and a Saturday, December 19 Minneapolis Star-Tribune article, Starkey Hearing Technologies says that it is not the subject of any Federal Bureau of Investigation (FBI) case, and the company is continuing to be run and gain market share by a team of experienced managers. Starkey employees said the company briefed staff members on Friday, revealing “as much as was legally possible about an ongoing Federal investigation” that allegedly centers on one or more of the executives who were fired in September.

On Friday, Starkey executives told their employees that the company is the possible victim of a crime, although they could not provide specifics about any charges or the nature of the investigation. What is known is that the FBI and Internal Revenue Service (IRS) conducted interviews with and searched the homes of former Starkey President Jerry Ruzicka and CFO Scott Nelson on November 4, taking computers and other items, including one of Ruzicka’s vehicles.

There have been no indictments, and the FBI says it cannot comment on the ongoing investigation, including who is the investigation’s target or what crime might have been committed. Lawyers speaking for Ruzicka, Nelson, and the other fired executives have maintained that their clients did nothing wrong. Former Senior VP of Operations Keith Guggenberger has filed a $10.9 million wrongful termination lawsuit against the company.

A Starkey employee emailed The Hearing Review, describing Friday’s staff briefing, writing: “Early in the fall it became apparent that maybe something was askew, so the company hired a very respected outside company to audit the financials. They reported suspicions and advised contacting the authorities. Starkey did. On November 17, Starkey received a letter from the US Department of Justice saying that Starkey was a possible victim of a crime, and an investigation had been started…”

In the Star-Tribune article, Starkey attorney Scott Neilson stated, “As the alleged victim of criminal activity, Starkey continues to cooperate with federal law enforcement…The [Department of Justice] has requested that Starkey avoid providing any details about the conduct of certain former executives or the nature of the investigation, because to do so could impede the investigation or interfere with the enforcement of federal criminal law. Starkey is respecting that request.” The article also quotes Michael Useem of the Wharton School who describes how “cleaning house” of executives can be part of corporate strategy in these situations, citing as an example Tyco International’s termination of 290 of its 300 top executives.

Another employee at the company shared an email showing that Starkey Executive VP of Sales Brandon Sawalich alerted staff members on Friday to Saturday’s upcoming Star-Tribune news article. The email reiterated that the company is not being investigated and that, as a possible crime victim, Starkey will continue to cooperate with authorities. Sawalich also noted that, in the 3 months since the September firings, the company added more than 80 employees and is on track for the best fourth quarter in the company’s history.

Also see: Blog: Turmoil at Starkey Leads to Market Analysts’ Talk About Acquisition