The founder of the company that makes the Sleep Number bed, Bob Walker, has been arrested and accused by the FBI of witness tampering in connection with an investment fraud case involving his most recent business, a clean-coal venture called Bixby Energy Systems.
Walker continued raising money for the venture in the past year despite the fraud case pending against him, according to a criminal complaint filed Monday in federal court in St. Paul by Assistant U.S. Attorney David MacLaughlin.
The complaint also accuses Walker of tampering with a government witness by sending false information by e-mail. Both acts violated conditions of his release pending a trial scheduled for January, the complaint said.
Walker’s lawyer, Peter Wold of Minneapolis, said he will contest every allegation in the complaint and fight “with full force.”
“Bob didn’t do anything without checking with me,” Wold said. “It’s a great example of abuse of power by the government and intimidation.”
Walker remains in custody, according to Wold, and a hearing is scheduled for Friday afternoon before U.S. Magistrate Judge Tony Leung in St. Paul.
Wold said authorities made the arrest while he was out of town. “We’re appalled by it,” he said.
Wold said the government also has asked for copies of his own e-mails to witnesses.
Walker, 70, of Anoka, is best known as the founder of Plymouth-based Select Comfort Corp. and inventor of its signature Sleep Number bed. He started that company in the late 1980s but sold his control in 1991, then started Bixby in 2001.
The complaint says that Walker used at least three “unwitting” shareholders to continue directing the company and its board of directors even though he was forced out in early 2011 and had been charged with defrauding about 1,800 shareholders who invested more than $40 million.
An affidavit attached to the complaint refers to the three shareholders only by initials. Two are described as longtime friends of Walker.
Walker’s activities apparently involved a lot of e-mail, according to the 16-page affidavit by FBI special agent Jared Kary.
In some of the dispatches, Walker acknowledged that his lawyer advised him to stay out of Bixby’s business and that his friends would have to be Bixby’s public face.
In other e-mails, Walker allegedly discusses soliciting at least $2,000 from his brother-in-law for Bixby activities. He also allegedly discussed how a prospective investor named Bharat Katari had been poised to invest about $100 million in the company, how the company’s bills should be paid and how it should close a deal on a piece of company property near Mora.
The FBI accuses Walker of using the three unwitting Bixby shareholders to pass information via e-mails to a principal of Global Partners United, a company in Beijing that had a contract to market Bixby’s technology in Asia. The affidavit describes the company as a victim of Walker’s fraud scheme.
The Global Partners United principal is identified only as JW, and is described as the primary government witness in the Global Partners United portion of the fraud cause against Walker.
Via one of the unwitting Bixby shareholders, Walker allegedly arranged for an e-mail to be sent to the witness. The e-mail claimed there had been a “comprehensive investigation” showing that Bixby’s downfall and losses weren’t Walker’s fault, but the result of a conspiracy by others without his knowledge.