Bixby Energy Systems CEO Robert Walker soothed investors for years with a steady stream of newsletters and e-mails whose relentlessly upbeat message about the now-defunct company included comparing it to famed software maker Microsoft.
At Walker’s trial on charges of defrauding Bixby investors, the prosecution on Wednesday projected years’ worth of such rosy communications on a big screen for the jury in U.S. District Court in St. Paul.
“It appears that this is going to be a one-in-a-million stock like Microsoft,” Walker once said in an e-mail to a Duluth investor who testified about the $40,000 she and her husband invested in Bixby shares.
“I trusted Bob Walker,” said Alice Buria, a real estate agent.
Another investor testified that Walker once told him Bixby could “be a bigger corporation than Wal-Mart.”
Walker, 71, faces charges of fraud, conspiracy, tax evasion and witness tampering in a trial expected to last five to seven weeks. Prosecutors contend he defrauded 1,800 investors of $57 million to enrich himself, his family and accomplices, including a convicted fraudster who has pleaded guilty in the case.
Donald and Chuck Egeberg, brothers who co-own a golf course in River Falls, Wis., testified that they invested in Bixby and got little but positive news from Walker or in the company’s newsletter, the Bixby Blaze. Walker repeatedly told investors that Bixby was about to go public — increasing the value of their shares — but instead prosecutors say investors lost everything.
Charles Egeberg, who put $28,000 into Bixby stock, said he found out in 2005 that Walker’s chief fundraiser, Dennis Desender had a felony record. Desender had been convicted in 1998 of bank fraud and embezzlement. Egeberg said he confronted Walker, who seemed to know about the criminal history, but insisted Desender “doesn’t touch any of the money.”
Desender, under a plea bargain with the government, is expected to testify against Walker later in the trial.
Walker cofounded Bixby in 2001 and served as CEO until 2011, when he was ousted. The company started as a maker of stoves that burned corn, and when that market crashed in 2006, it began to promote a technology to convert coal to natural gas.
Walker’s defense attorneys contend that he was an innovator deceived by others in the company. In response to defense questions, witnesses agreed that Walker was a “big-picture guy.”
The defense is portraying Bixby as a struggling start-up, not a vehicle to defraud money from investors.
Walker’s business past as founder and ex-CEO of Select Comfort Corp. and inventor of its Sleep Number bed also is a prominent topic at the trial.
Investors testified that Walker’s claims of success with that company helped convince them to invest with his energy company. Prosecutors contend Walker almost ran Select Comfort into the ground and was ousted in the early 1990s by new investors.
Donald Egeberg, who invested $20,000 in Bixby, said he began to doubt Walker’s optimistic statements about the company’s coal-gasification technology in 2009, and fired off an e-mail to the CEO only to get an answer that seemed “more of the same.”
About two years later, Walker promised an infusion from a big mystery investor. Egeberg again doubted him. “It sounded like too tall of a tale for me,” he testified. The investor didn’t invest, and prosecutors contend it was a ruse by Walker to regain control of the company’s board.
Walker was ousted in 2011 by other board members who soon held a stockholder meeting without him. Said Egeberg: “For the first time it was really a statement of facts. There was no selling.”