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United States v. Ruzicka

United States District Court, D. Minnesota

February 7, 2018

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

          John C. Conard, JOHN C. CONARD PLLC, Alexander C. Kopplin, WARD KOPPLIN, PLLC, and Daniel R. Burgess, BURGESS LAW, LLC, for defendant Jerome C. Ruzicka.

          MEMORANDUM OPINION AND ORDER

          JOHN R. TUNHEIM, CHIEF JUDGE UNITED STATES DISTRICT COURT.

         Defendants Jerome Ruzicka, W. Jeffrey Taylor, Lawrence Miller, and Lawrence Hagen are standing trial in connection with the alleged embezzlement of funds from Starkey Laboratories. Ruzicka was the President of Starkey. In 2006, Ruzicka and Defendant Scott Nelson created Northland Hearing Centers, Inc., and transferred retail hearing aid stores to it from Northland LLC, a company owned by Starkey's CEO and majority shareholder, Bill Austin. They allegedly did so without Austin's knowledge or approval. As part of the transaction, Ruzicka and Nelson issued 100, 000 shares of stock in Northland Hearing, granting 49 percent to Starkey and 51 percent to themselves and a third executive. In 2013, Ruzicka and Nelson allegedly caused Northland Hearing to purchase their stock, again allegedly without Austin's knowledge.[1] Ruzicka has now issued a subpoena to Starkey requiring disclosure of certain documents that were prepared annually for the two trustees of Northland Hearing's Employee Stock Ownership Plan - Ruzicka and Austin - and moved the Court to order Starkey to comply. Because the documents are relevant and admissible and Ruzicka has identified them with adequate specificity, the Court will order Starkey to disclose them.

         BACKGROUND

         On November 27, 2017, Ruzicka served a series of subpoenas duces tecum on Starkey, which Starkey moved to quash. (Sealed First Decl. of David B. Olsen ¶ 2, Ex. A at 2, Dec. 1, 2017, Docket No. 213; Sealed Mot. to Quash, Dec. 1, 2017, Docket No. 211.) As relevant here, Ruzicka requested “[t]he business valuations report of Starkey and Northland performed annually by Chartwell for the years 2004-present.” (See Sealed Order at 4, Dec. 13, 2017, Docket No. 229.) At the hearing on the motion, Magistrate Judge Franklin Noel stated that Ruzicka's argument “clearly suggested” that “he has in mind specific documents that he can identify that might meet these standards but has failed to do so in the subpoenas as they are drafted.” (Dec. 7 Hr'g Tr. at 49:3-14, Jan. 3, 2018, Docket No. 289.) Thus, the Magistrate Judge granted Starkey's motion to quash with regard to the request for the Chartwell reports. (Sealed Order at 11.)

         On February 4, 2018, Ruzicka served another subpoena duces tecum on Starkey seeking the same valuation reports, but providing additional details about them. (Decl. of John C. Conard ¶ 2, Ex. 1 at 2-3, Feb. 5, 2018, Docket No. 339.) Specifically, Ruzicka's subpoena seeks to compel production of the following documents:

1. 2005 Chartwell certification.
2. 2006 Chartwell valuation report and certification.
3. 2007 Chartwell valuation report and certification.
4. 2008 Chartwell certification.
5. 2009 Chartwell valuation report and certification.
6. 2010 Chartwell certification.
7. 2011 Chartwell valuation report and certification.
8. 2012 Chartwell valuation report and ...

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