Robert Walker, the former CEO of embattled Bixby Energy Systems, went on the offensive Tuesday, taking the witness stand to fight federal criminal charges against him for his role in a failed coal gasification project that cost investors $57 million.
“Did you ever intend to defraud any investor in Bixby?” defense attorney Peter Wold asked Walker as soon as the 71-year-old inventor was sworn in to testify.
“Never,” Walker firmly but softly shot back.
Dressed in a blue sport coat, tan slacks, an oxford shirt and yellow tie, the Ramsey businessman went on to describe his successes in developing the new type of mattress for Select Comfort that became known as the Sleep Number bed, later financial riches when Select Comfort became a publicly traded company and nagging debt when a series of loans for a “dream home” began to sour.
Walker, who took the witness stand after lunch Tuesday, is expected to testify most of Wednesday as well and is likely to face a thorough cross-examination by Assistant U.S. Attorney David MacLaughlin, who is helping to prosecute the case.
Walker is charged with fraud, conspiracy, tax evasion and witness tampering for his role in promoting technology to turn coal in natural gas. But the technology never worked at a commercial level, and nearly 2,000 investors lost money while Walker and his family got rich, according to government charges.
Walker’s defense began this week after six weeks of testimony against him in which it was alleged that Walker enriched himself with kickbacks from Bixby fundraiser Dennis Desender, a convicted felon who collected fees for finding investors for the fledgling company. Bixby began by selling corn-fueled stoves before its move to the coal-to-gas technology.
Desender, who acted as Bixby’s chief financial officer, raised more than $50 million from investors in the privately held company.
But Walker and a former companion of Desender said Desender provided loans to Walker to help him through some rough financial times, not kickbacks that gave Walker and his family millions in income from a company that never turned a profit.
Walker, who said he was “nudged” out of Select Comfort when new investors wanted a professional management team to run the company in the 1990s, made $17 million on paper from Select Comfort stock he held when the company became publicly traded.
But a series of bad investments and declining value in his Select Comfort stock led to bank problems for Walker, he testified.
Walker said he eventually was introduced to Desender, who worked with Walker’s banks and restructured his debt, which included a $1.1 million construction loan on his 12,000-square-foot home and $600,000 in taxes for the sale of some of his stock.
“I was very impressed with him. He seemed like a very nice guy,” Walker testified.
Earlier in the trial, Desender testified against Walker with hopes of reducing his eight-year prison sentence for securities and tax crimes from his role in the Bixby case.
But Walker said he and Desender became close friends and that they signed a loan agreement in 2003 in which Desender agreed to provide half of his securities commissions to Walker as a loan.
“I was appreciative of the fact,” Walker testified.
When Bixby board members later questioned the financial relationship between Walker and Desender, Walker said he was “absolutely shocked” by suggestions of kickbacks.
In earlier testimony Tuesday, a former “confidant” and companion of Desender testified that the financial payments made by Desender to Walker were loans.
Christopher Henz, who had an eight-year relationship with Desender, told the jury that Desender routinely made loans to Walker for his Ramsey home.
“I’m going to help him out to save his home,” Henz quoted Desender as saying in late 2003 or early 2004.
Henz said Desender told him that Walker would repay Desender once Bixby went public and made millions.
“Desender took care of everybody’s needs. My needs, Bob’s needs,” Henz said.