United States v. Ruzicka

• Citation: 333 F.Supp.3d 853
• Decision Date: 07 September 2018
• Docket Number: Criminal No. 16-246 (JRT/SER)
• Parties: UNITED STATES of America, Plaintiff, v. Jerome C. RUZICKA and W. Jeffrey Taylor, Defendants.
• Court: U.S. District Court — District of Minnesota

333 F.Supp.3d 853

UNITED STATES of America, Plaintiff,

v.Jerome C. RUZICKA and W. Jeffrey Taylor, Defendants.

Criminal No. 16-246 (JRT/SER)

United States District Court, D. Minnesota.

Signed September 7, 2018

Erica H. MacDonald, United States Attorney, and Benjamin F. Langner, Lola Velazquez-Aguilu, and Surya Saxena, Assistant United States Attorneys, UNITED STATES ATTORNEY'S OFFICE, 300 South Fourth Street, Suite 600, Minneapolis, MN 55415, for plaintiff.

John C. Conard, JOHN C. CONARD PLLC, 310 Fourth Avenue South, Suite 5010, Minneapolis, MN 55415, for defendant Jerome C. Ruzicka.

Casey T. Rundquist and William J. Mauzy, MAUZY LAW PA, 800 Hennepin Avenue, Suite 800, Minneapolis, MN 55403, for defendant W. Jeffrey Taylor.

MEMORANDUM OPINION AND ORDER DENYING POST-TRIAL MOTIONS

JOHN R. TUNHEIM, Chief Judge

TABLE OF CONTENTS

BACKGROUND ...862

I. Pre-trial Motions ...863

II. Napue Order ...863

III. Motions for Acquittal ...864

IV. Verdicts ...864

V. Post-Trial Motions ...864

DISCUSSION ...864

I. Standards of Review ...864

II. Motion for a New Trial – Constructive Amendment ...865

III. Motion for a New Trial – Napue Violations ...867

A. January 2018 Interview...868

B. July 2016 Interview...869

C. Austin's Signature...869

D. Starkey's Tax Returns...870

IV. Motion for a New Trial – Miscarriage of Justice ...871

A. Austin's Credibility...871

B. Archer Consulting...872

V. Motion for a New Trial – Prosecutorial Misconduct ...874

A. Austin's Credibility...875

B. Susan Mussell...876

C. Trustee Verification Forms...877

D. Nelson's Conversations with Austin...878

E. Ownership of Northland Hearing...879

F. Korpela's Testimony on SoundPoint...880

G. Ruzicka's Ownership of Hearing Fusion...883

VI. Motion for a New Trial – Misjoinder ...883

A. Timeliness...883

B. Exculpatory Testimony...884

C. Unrelated Acts...885

VII. Motion for a New Trial – Brady Materials ...886

VIII. Motions for Acquittal ...887

A. Northland Hearing (Counts 2, 3, and 10)...887

B. Archer Consulting (Count 4)...888

C. Archer Acoustics (Counts 7 and 19)...888

D. Tax Fraud (Count 25)...889

IX. Franks Motion ...889

ORDER ...891

Defendants Jerome C. Ruzicka and W. Jeffrey Taylor have brought numerous post-trial motions seeking relief from various criminal convictions. Both were alleged to have engaged in a conspiracy to defraud hearing-aid companies Starkey Laboratories, Inc. ("Starkey"), and Sonion A.S. A jury returned a guilty verdict for Ruzicka on four counts of mail fraud, three counts of wire fraud, and one count of making and subscribing a false tax return. A jury returned a guilty verdict for Taylor on one count of mail fraud and two counts of wire fraud. The Court will consider each of their motions in turn and, for the reasons explained herein, will deny all of them.

BACKGROUND

For purposes of brevity, the Court will abstain from reciting the factual allegations contained in the Indictment. (3d Superseding Indictment ("Indictment"), Jan. 8, 2018, Docket No. 298.) The Court previously summarized the factual allegations in its order on the parties' motions in limine. United States v. Ruzicka (MILs Order ), No. 16-246, 2018 WL 385422, at *1-2 (D. Minn. Jan. 11, 2018) (Docket No. 308).

Defendants Jerome C. Ruzicka, Lawrence W. Miller, W. Jeffrey Taylor, and Lawrence T. Hagen were indicted on some or all of 25 separate counts:

Count 1: Conspiracy to Commit Mail Fraud and Wire Fraud. (Indictment ¶¶ 17-56.)

Counts 2-3: Mail Fraud stemming from the 2013 Northland Hearing restricted stock transaction. ( Id. ¶ 58.)

Count 4: Mail Fraud stemming from Archer Consulting. (Id. )

Count 5: Mail Fraud stemming from transfer of the title to a Jaguar vehicle from Starkey to Ruzicka. (Id. )

Count 6: Wire Fraud stemming from a transfer from Auric's bank account to Claris Investments' bank account. (Id. ¶ 60.)

Count 7: Wire Fraud stemming from a transfer from ExSilent to Archer Acoustics. (Id. )

Counts 8, 13-14: Wire Fraud stemming from a payment from Starkey to Archer Consulting. (Id. )

Count 10: Wire Fraud stemming from the 2013 Northland Hearing restricted stock transaction. (Id. )

Counts 9, 11-12: Wire Fraud stemming from employment bonus payments from Starkey to Miller. (Id. )

Counts 15, 17: Wire Fraud stemming from payments from Archer Consulting to Ruzicka. (Id. )

Counts 16, 18: Wire Fraud stemming from payments from Archer Consulting to Taylor. (Id. )

Count 19: Wire Fraud stemming from a transfer from Sonion to Archer Acoustics. (Id. )

Counts 20, 23: Transactions Involving Fraud Proceeds stemming from checks from Archer Consulting to a 401k account benefitting Ruzicka and Taylor. (Id. ¶ 62.)

Count 21: Transactions Involving Fraud Proceeds stemming from a check from Archer Consulting to Taylor. (Id. )

Count 22: Transactions Involving Fraud Proceeds stemming from a check from Archer Consulting to Ruzicka. (Id. )

Count 24: Making and Subscribing a False Return stemming from Ruzicka's 2010 Individual Income Tax Return, related to proceeds from the sale of SoundPoint. (Id. ¶ 64.)

Count 25: Making and Subscribing a False Return stemming from Ruzicka's 2014 Individual Income Tax Return, related to a purported loan from Starkey. (Id. ¶ 66.)

The Court will briefly summarize its previous orders and other procedural history as relevant to the current order.

I. PRE-TRIAL MOTIONS

Before trial, Ruzicka brought a motion to sever on the grounds that Rule 14 required severance of the co-defendants because Ruzicka would be unable to compel their testimony and that Rule 8 required severance of improperly joined schemes, and a motion to dismiss on the ground that the conspiracy charge was duplicitous. (Ruzicka's Mot. to Sever, Mar. 31, 2017, Docket No. 131; Ruzicka's Mot. to Dismiss, Mar. 31, 2017, Docket No. 130.) Taylor moved to join both motions. (Taylor's Request to Join, Apr. 17, 2017, Docket No. 152.) The Magistrate Judge did not address Taylor's motion to join, but denied the motion to sever because Ruzicka had not established that joinder would result in irreconcilable defenses or inadmissible evidence and recommended denying the motion to dismiss because the Indictment charged a single conspiracy. (R. & R. at 3-4, May 22, 2017, Docket No. 168; Order at 8, May 19, 2017, Docket No. 162.) The Court adopted the recommendation. (Order, June 14, 2017, Docket No. 175.)

Also before trial, the United States moved to permit the introduction of evidence about SoundPoint Audiology and Hearing Services LLC ("SoundPoint"), Audiometrix LLC, and Hearing Fusion. (Gov.'s Mem. & Mots. in Limine ("Gov. MILs") at 20-21, Dec. 14, 2017, Docket No. 244.) The Court concluded that evidence related to SoundPoint was admissible because it was inextricably intertwined with the 2010 tax-fraud count against Ruzicka. MILs Order , 2018 WL 385422, at *3-4. The Court also concluded that evidence related to Audiometrix and Hearing Fusion was admissible because it was sufficiently connected to the conspiracy count. Id.

II. NAPUE ORDER

On February 27, 2018, the Court concluded that the United States knew or should have known about two instances of false testimony by witness William Austin, the majority shareholder and CEO of Starkey: (1) Austin never told FBI agents that he shreds documents and (2) Ruzicka drafted his own amended employment contract the same day that it was signed. United States v. Ruzicka(Napue Order) , No. 16-246, 2018 WL 1064215, at *2-7 (D. Minn. Feb. 27, 2018) (Docket No. 377). The Court concluded that the United States' failure to correct these false statements would result in a constitutional violation. See Napue v. Illinois , 360 U.S. 264, 269, 79 S.Ct. 1173, 3 L.Ed.2d 1217 (1959). To avoid the violation, the United States called back two FBI agents for further testimony. In light of that additional testimony, the Court found that Austin had provided false testimony and struck his false statements. (Mem. Op. & Order at 2, Mar. 5, 2018, Docket No. 391.) On March 5, the Court issued a written order finding that the United States had remedied the Napue violation. ( Id. )

The Court subsequently instructed the jury:

At the end of trial, the Court struck two portions of William Austin's testimony because the Court concluded that these statements were false:

1. William Austin's testimony that he never shredded any descending gross income reports.

2. William Austin's testimony that he believed Defendant Ruzicka had drafted the amendment to his employment contract and that he had drafted that amendment the same day it was signed.

The Court has struck this testimony and, therefore, you may not consider it in your deliberations. However, you may consider the fact that the Court has struck portions of Austin's testimony in assessing his credibility.

(Jury Instrs. No. 41, Mar. 9, 2018, Docket No. 396.)

III. MOTIONS FOR ACQUITTAL

Before the close of trial, Ruzicka and Taylor moved for acquittal and a mistrial on various grounds, including misjoinder, and raised or renewed a number of oral motions. (Trial Tr. Vol. XXIV at 5996:9-23, July 13, 2018, Docket No. 516; Taylor's Mot. for Acquittal, Feb. 26, 2018, Docket No. 368; Taylor's Mot. for Decl. of Mistrial, Feb. 26, 2018, Docket No. 369; Ruzicka's Mot. for Acquittal, Feb. 26, 2018, Docket No. 370.) The Court denied these motions. (Minute Entry, Feb. 28, 2018, Docket No. 383; Minute Entry, Feb. 27, 2018, Docket No. 378.)

IV. VERDICTS

The jury returned not-guilty verdicts for Miller and Hagen on all counts. (Miller Verdict, Mar. 8, 2018, Docket No. 419; Hagen Verdict, Mar. 8, 2018, Docket No. 420.) The jury returned a guilty verdict for Ruzicka with respect to Counts 2-5, 7, 10, 19, and 25. (Ruzicka Verdict at 1-4, Mar. 8, 2018, Docket No. 417.) The jury returned a guilty verdict for Taylor with respect to Counts 4, 7, and 19. (Taylor Verdict at 1-3, Mar. 8, 2018, Docket No. 418.)

V. POST-TRIAL MOTIONS

Ruzicka and Taylor filed the post-trial motions that are now before the Court. At the hearing on these motions, the Court granted Taylor's motion to join three of Ruzicka's motions. (Minute Entry ("Hearing Minutes"), July 26, 2018,...