Mystery investor, and doubts, at Bixby

Article by: DAVID SHAFFER , Star Tribune
Updated: May 6, 2011 - 9:28 PM

A former congressman makes new charges against the CEO of an energy firm that claims to have promising clean-coal technology.

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The battle for control of a Minnesota energy company took a bizarre twist Friday with allegations that its top executive is engineering a boardroom coup with the help of a mystery investor who may not exist.

Two directors of Bixby Energy Systems wrote a letter to shareholders describing alleged machinations by CEO Bob Walker to maintain control of the Ramsey company.

The same two directors -- one of them is former U.S. Rep. Gil Gutknecht -- sued Bixby, Walker and others last month, alleging that the company was grossly mismanaged, insolvent and under federal investigation.

In the letter to investors in the privately held company, Gutknecht and Illinois businessman James Bergeron said Walker has tried to remove them from the five-member board by creating a new class of stock with extra voting rights.

The letter also disclosed -- and called into question -- a recent assertion by Walker that an investor from the Philippines is ready to pump $100 million into the venture. The letter says Walker claims to have a backup investor -- also with $100 million on hand -- to come to the company's aid.

"We have all heard the promises that prosperity is just around the corner. But, somehow Bixby always fails to deliver," the letter from Gutknecht and Bergeron said. "Shareholders have been kept in the dark and fed one half-truth after another. That approach has been an effective way of terminating any dissent."

Bixby was founded in 2001 as a maker of heating stoves that burn corn pellets. Walker, its CEO, earlier founded Select Comfort, the maker of the Sleep Number bed, but left the company more than a decade ago.

Since 2008, his new company has promoted a technology that offers the hope of converting coal into clean-burning gas.

Neither Walker nor his attorney could be reached to comment.

The Gutknecht-Bergeron lawsuit seeks to have Walker thrown out and replaced by a receiver. Their lawsuit says the company has promising technology and customers in Asia, but has accumulated $141 million in losses through reckless conduct by Walker and others.

The suit said that $60 million has been raised from investors with the help of a Walker associate, Dennis DeSender, who has convictions for bank fraud and theft by swindle, and who recently pleaded guilty to tax evasion.

Now, a new mystery angel investor has entered the picture. The letter to stockholders said Walker has told investors that Lemonado C. Lim, CEO of Manna Assets Management Ltd. of the Philippines, is ready to invest, starting with $10 million by Saturday.

But Gutknecht and Bergeron said they can find no trace of Lim or any sign that he or anyone working for him conducted "due diligence" on Bixby. "Wouldn't you expect that a person controlling a fund that can make a $100 million investment would have a website, a Google entry or some footprint that could be found?" the letter said.

A company with a similar name exists and has a website, but it is not in the Philippines.

Gutknecht and Bergeron said that Bixby's 2,200 shareholders have a right to vote on the board members, but that no shareholder meeting has been held for at least four years. Their letter said they hope to call such a meeting soon. In the meantime, they also are headed to court Monday seeking appointment of a receiver.

David Shaffer • 612-673-7090