Bixby founder hit with more charges
- Article by: DAN BROWNING
- Star Tribune
- June 19, 2012 - 8:55 PM
Federal authorities gave Bixby Energy Systems founder Bob Walker a chance. Now they're giving him the business.
Walker was indicted in December on a single conspiracy charge alleging that he cheated some 1,800 investors out of $43 million in a decade-long quest to fund his Ramsey-based alternative energy company. He faced a maximum of five years in prison.
Federal prosecutors warned Walker that they would pile on additional charges if he didn't cut a deal and plead guilty. But the 69-year-old entrepreneur, best known as developer of the Sleep Comfort bed system, turned them down.
On Tuesday, prosecutors made good on their threat. A federal grand jury handed up an indictment charging Walker with 18 counts of mail fraud, wire fraud and securities fraud and two counts of conspiracy.
Peter Wold, Walker's attorney, said he will respond next week with a plea of not guilty.
"Bob had the opportunity to plead guilty and end it, but he's not guilty and couldn't say he was to avoid the charges," Wold said. "He wasn't going to stand in front of a judge and say under oath that he intentionally defrauded these people. It's just not true. We will prove that he acted in good faith and his objective was to create what he thought was revolutionary, clean energy for the world."
The gist of the charges hasn't changed. Walker stands accused of lying to investors to obtain their money and using some of the proceeds to fund a lavish lifestyle.
If convicted, he could spend decades behind bars. The fraud charges carry maximum terms of 20 years each, and the conspiracy charges, up to five years each.
Walker ran Bixby Energy from 2001 until he was ousted by the board in May 2011. The company started out making stoves that burned corn pellets. In 2008, it switched to marketing an invention that converts coal into clean-burning natural gas. Walker and several associates raised money in an effort to produce commercial units for sale in China, but the technology was fraught with problems and the company ran out of cash.
Prosecutors have turned two former Bixby insiders against Walker. According to the indictment, Dennis Desender, 65, of Minneapolis, was Bixby's former chief financial officer and an independent consultant who helped find investors. Gary Collyard, 62, of Delano, used his company, the Collyard Group, as a broker-dealer or "finder" of investors. Each has pleaded guilty of charges related to the scheme and hopes to reduce his sentence by cooperating with the government.
The indictment says investors were told that their money would not be used to pay salaries or commissions for Bixby's officers and directors; that Bixby had proven technology that could turn coal to gas; and that the company would soon go public and make a fortune for early investors.
None of that was true, the indictment says. Walker allegedly directed $3 million in commissions to Desender and got $600,000 in kickbacks in a commission-sharing arrangement that was concealed from investors and other members of Bixby's board of directors. The technology had substantial defects. Walker allegedly knew the company could not go public because it couldn't obtain audited financial statements.
Walker lulled investors into believing that their money was safe by using a portion of the incoming investor funds to make loan payments and interest payments, the indictment says. When some investors asked for their money back, it says, Walker either ignored their requests, made excuses for why the money couldn't be returned, or found new investors to replace them.
As a result of the actions of Walker and his associates, the indictment says, investors have lost all or substantially all of the money they invested in Bixby.
Bixby Energy itself was charged with conspiracy. The company agreed to cooperate in the investigation of Walker and others in exchange for a deferred-prosecution agreement and possible dismissal of the charge.
Dan Browning • 612-673-4493
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