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Former Starkey Exec Admits Guilt in Tax Evasion Scheme

Starkey’s former chief operating officer was indicted in early March.

Former Starkey Exec Admits Guilt in Tax Evasion Scheme
Jeffrey Lee Longtain, a former executive at Starkey Hearing Technologies, pled guilty on Thursday to a tax evasion scheme that he claimed involved other members of the company’s C-suite.
 
In a plea deal, Longtain of West Linn, Oregon agreed to forfeit roughly $2.3 million for failing to report money he received between 2010 and 2015 from Eden Prairie-based Starkey, a hearing aid distributor, and Northland Hearing Centers, a subsidiary responsible for acquiring and managing hearing aid facilities for Starkey.
 
The 58-year-old was the chief operating officer of Starkey and president of Northland during his nine-year tenure. His employment at both companies was terminated in 2015.
 
About $1.6 million of Longtain’s $2.3 million forfeiture will come from Northland stock he owns, with the rest being an out-of-pocket expense.
 
The Starkey executive admitted to receiving the stock through a stock transfer operation that Starkey owner Bill Austin had not been aware of. In the first year of Longtain’s employment, he claimed to have collaborated with former Starkey president Jerry Ruzicka and former chief financial officer Scott Nelson on the scheme, which involved the transfer of assets from Northland LLC, a company created by Austin in 2002, to a new entity called Northland Hearing Centers.
 
According to court filings, they forged Austin’s signature to complete the asset transfer, then terminated $15 million worth in restricted stock and collectively netted $8.2 million. To take care of tax liabilities, Nelson allegedly sent $7 million to the IRS in 2013 to cover himself, Ruzicka and Longtain.
 
The $7 million wasn’t quite enough, however, so Nelson allegedly gave another $115,000 in Starkey money to Longtain, Longtain admitted in a federal court in Minneapolis on Thursday that that amount was actually bloated. He only needed another $85,000 to cover his tax obligations and instead pocketed the rest.
 
Additionally, Longtain received about $183,000 from two companies that worked with Starkey: Audiometrix LLC and Socio LLC. About $77,000 of that was paid directly to Longtain, while the remaining $106,000 went toward covering his membership and fees at the Oregon Golf Club.
 
Longtain’s sentencing will take place during the afternoon of December 14. Despite facing up to three years in prison and as much as $100,000 in fines, he is expected to be given a lenient sentence given his participation in lawsuits facing five other Starkey executives.
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