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United States v. Ruzicka

United States District Court, D. Minnesota

January 19, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
JEROME C. RUZICKA, SCOTT A. NELSON, W. JEFFREY TAYLOR, LAWRENCE W. MILLER, and LAWRENCE T. HAGEN, Defendants.

          Gregory G. Brooker, Interim United States Attorney, and Benjamin F. Langner, Lola Velazquez-Aguilu, and Surya Saxena, Assistant United States Attorneys, UNITED STATES ATTORNEY'S OFFICE, for plaintiff.

          John C. Conard, JOHN C. CONARD PLLC, for defendant Jerome C. Ruzicka.

          Casey T. Rundquist and William J. Mauzy, MAUZY LAW PA, for defendant W. Jeffrey Taylor.

          Paul C. Engh, for defendant Lawrence W. Miller.

          Kevin J. Short, for defendant Lawrence T. Hagen.

          MEMORANDUM OPINION AND ORDER

          JOHN R. TUNHEIM, United States District Court Chief Judge

         Defendants Jerome Ruzicka, W. Jeffrey Taylor, Lawrence Miller, and Lawrence Hagen have been charged in connection with the alleged embezzlement of funds from Starkey Laboratories. Defendants have moved to exclude testimony from Scott A. Nelson on the grounds that the Government failed to timely disclose exculpatory statements made by Nelson during his interview on January 10-11, 2018. Because the Court concludes that the Government's week-long delay does not violate the rule of Brady v. Maryland, 373 U.S. 83, 87 (1962), the Court will deny Defendants' motion.

         BACKGROUND

         The Indictment alleges that, in 2006, Ruzicka, Nelson, and Jeffrey Longtain created Northland Hearing Centers, Inc., (“Northland Hearing”) and caused the company to issue 100, 000 shares of restricted stock - including 51, 000 shares to themselves. (3d Superseding Indictment ¶¶ 36-37, Jan. 8, 2018, Docket No. 298.) They allegedly did so without the knowledge of William Austin, Starkey's majority shareholder. (Id. ¶ 37.) In 2013, Ruzicka, Nelson, and Longtain allegedly caused Northland Hearing to pay $15, 000, 000 in exchange for the termination of their unvested restricted stock - again without Austin's knowledge. (Id. ¶¶ 38-43.)

         On December 19, 2017, Nelson reached a plea agreement with the Government and changed his plea to guilty. (Plea Agreement, Dec. 19, 2017, Docket No. 266; Minute Entry, Dec. 19, 2017, Docket No. 264). As part of the agreement, Nelson agreed to cooperate with law enforcement in the investigation and prosecution of the other Defendants. (Plea Agreement at 11-12; Hr'g Tr. at 25:16-20, Jan. 3, 2018, Docket No. 287.) On January 10-11, 2018, Nelson was interviewed by a postal inspector, FBI special agent, and two Assistant U.S. Attorneys. After that interview, the postal inspector prepared a Memorandum of Interview summarizing in detail new information provided by Nelson. In it, she wrote that:

Nelson stated that after the newspaper published an article referencing the Northland transaction, he spoke to either Phil Ahern or Damon Anderson of Ernst and Young. That person advised Nelson that they recalled that Ahern and/or Anderson[ ]discussed the creation of Northland Hearing Centers, Inc. and the restricted stock arrangement with Austin followed their audit.

(Court Ex. 1 at 1, Jan. 19, 2018.) Nelson had not previously disclosed this information.

         Trial of the Defendants began with jury selection on January 16, and the parties gave opening statements the next day. Counsel for the Government argued that the restricted stock grant was done “without Bill Austin's knowledge, ” while Ruzicka's counsel argued that Austin “absolutely knew” that Ruzicka had received 51, 000 shares of restricted stock in Northland Hearing. The Government finally disclosed Nelson's exculpatory statements on the evening of January 18, a week after his interview concluded and three days into trial. ...


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