Page 2 of 2 Previous
The prosecution team of assistant U.S. attorneys David MacLaughlin, Benjamin Langner and Manda Sertich also plans to hammer on the image of Walker as a successful businessman. According to their pretrial brief, two former Select Comfort executives will testify that Walker by 1991 had “bankrupted the company” and was “an incompetent businessman” who had nothing to do with transforming Select Comfort into a publicly traded company. Select Comfort went public in December 1998.
Many investors who purchased Bixby stock got a sales pitch from Desender, who was Bixby’s main fundraiser. Desender has 1997 convictions for swindling and bank fraud, and prosecutors allege that Walker knew of his felony record. Desender, who pleaded guilty to securities fraud and tax evasion in the Bixby case, is now a government witness against Walker.
Prosecutors allege that Walker repeatedly buried signs that Bixby was a fraud, including a 2006 forensic audit ordered by the board of directors’ audit committee. Auditors discovered illegal payments to Walker’s family, securities law violations and other wrongdoing, according to the government brief. But Walker allegedly responded by ousting the audit committee and firing the auditors.
‘A very expensive education’
In 2011, Walker was ousted from Bixby after being sued by two of its board members alleging the company was insolvent. One of the board members who challenged Walker was former congressman Gil Gutknecht. An investor in the company, Gutknecht worked for months after Walker’s ouster trying to keep Bixby afloat. That included unsuccessful efforts to install Bixby gasification units in China for a company co-founded by one of the congressman’s former Washington staffers.
Gutknecht, who is on the government’s witness list, declined in an interview to say how much he lost. “It was a very expensive education for me,” he said.
Walker has been behind bars since August when investigators alleged he tried to contact a government witness through an intermediary. A judge revoked Walker’s conditional release.
A grand jury later added a witness tampering charge to Walker’s 13 counts of mail and wire fraud, a single count of conspiracy to commit fraud and three counts of tax evasion for the years 2004-2006.
If convicted, Walker could face a lengthy prison term, perhaps for the rest of his life. The most serious charges, mail and wire fraud, each carry maximum prison terms of 20 years.
David Shaffer • 612-673-7090