Fraud Scheme Against Starkey Laboratories Spawns ERISA Suit (1)

A $20 million fraud scheme against Starkey Laboratories Inc. has spawned four convictions and now a lawsuit by participants in the company’s employee stock ownership plan.

The proposed class action, filed June 3, seeks to hold the Minnesota hearing aid company and former executives liable under the Employee Retirement Income Security Act for failing to protect the plan from losses tied to the fraud scheme. The plan, which covers more than 2,000 people, lost almost $37 million between 2008 and 2017, according to the complaint.

The lawsuit stems from a years-long scheme by certain Starkey executives to embezzle and misappropriate ...