Fired president demands Starkey pay his legal fees for his embezzlement case

Dec. 08--The indicted former president of Starkey Laboratories has sued his old employer, demanding that it pay his attorney fees related to his criminal embezzlement case.

Jerry Ruzicka said in court documents filed last Friday that the company's bylaws specifically state that Eden Prairie-based Starkey "shall indemnify" a company official or director for attorney fees, fines, judgments or other expenses incurred because of legal proceedings related to his current or past job at Starkey. The bylaws, the suit said, apply to civil, criminal or investigative proceedings.

A Starkey spokesman said in an e-mail to the Star Tribune that the company found the new lawsuit "unwarranted."

"Mr. Ruzicka has been charged with stealing millions of dollars from our company and is now asking us to pay for his criminal defense," spokesman Jon Austin said. "The irony is not lost on us, and we're confident that the court will conclude -- as our special counsel did -- that forcing the victim to pay the criminal's legal bills is unjust and unwarranted."

Ruzicka worked at Starkey for 38 years before being fired in September 2015. Ruzicka, a Plymouth resident, two other former executives and two former business associates were indicted on criminal charges a year later.

The five men are accused of embezzling $20 million from Starkey through a series of alleged schemes that included secretly issuing themselves stock, bonuses, insurance policies and fraudulent commissions or kickbacks. The five defendants all have denied wrongdoing. The criminal trial is scheduled to begin Jan. 16.

In the lawsuit he filed last week, Ruzicka again denied that he ever used any company money or stock without proper authorization. He said Starkey's insurance company, a Chubb subsidiary called Federal Insurance, had previously recognized that the criminal charges he faced were directly tied to his work as a Starkey officer. The complaint said Chubb had advanced him legal fees in the past in accordance with Starkey's bylaws.

However, Ruzicka said Starkey recently settled several wrongful termination lawsuits related to Starkey's claim that it was a victim of fraud. Those financial settlements "exhausted" Starkey's insurance coverage and effectively blocked Ruzicka from receiving additional help with his criminal legal fees.

Ruzicka's new lawsuit was filed within days of the U.S. attorney's office submitting a superseding indictment to the court that reiterated its past allegations of embezzlement and tax fraud and clarified which financial accounts would have to be forfeited should Ruzicka and the other defendants be found guilty.

Ruzicka's lawsuit over the legal fees marks the second time he has sued Starkey since his firing. Ruzicka filed a whistleblower lawsuit in January 2016. That case is pending in Hennepin County District Court following the outcome of the criminal case. So is the wrongful termination lawsuit of one of Ruzicka's co-defendants, fired human relations chief Larry Miller.

The company has settled wrongful termination lawsuits filed by Julie Miller -- Ruzicka's administrative assistant and Larry Miller's wife -- and Keith Guggenberger, who was fired as chief operations vice president.

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