More trouble ahead for Bixby Energy founder?

A former consultant to Bixby Energy, the troubled Ramsey, Minn., developer of a coal-to-natural-gas technology, has implicated a former officer of the company in what federal authorities describe as a $60 million securities fraud scheme.

Dennis Desender, 64, pleaded guilty Wednesday to one count of securities fraud and implicated "Individual A," identified in court papers as an officer of Bixby, in a scheme that allegedly duped investors in a venture to sell coal-gasification technology to China.

Desender pleaded guilty earlier to one count of tax evasion. That agreement did not require his cooperation in the Bixby investigation, but the new plea bargain does.

Bixby's onetime CEO Bob Walker resigned in May in the face of federal criminal and civil investigations and lawsuits alleging gross mismanagement. Walker, who earlier founded Select Comfort, maker of the Sleep Number Bed, had steered Bixby away from its original business of making pellet stoves into coal-gasification technology.

Assistant U.S. Attorney Chris Wilton declined to identify Individual A but said the wording of Desender's plea agreement made it fairly transparent.

The plea agreement says that Desender and a former officer misled investors by telling them the coal-gasification technology was ready for market when they knew it had "substantial defects and did not function." The agreement also said the former officer used investors' money to put family members on the payroll -- an allegation leveled against Walker in civil litigation.

Wilton said the individual had been an officer of the company at the time of the alleged securities fraud but is no longer.

Walker, reached at home, said he had no idea that Desender's new plea was in the works. He said federal authorities have not met with him to discuss any possible criminal charges against him. If Desender's allegations do implicate him, Walker said, "I absolutely would deny them."

Meantime, Walker, 68, of Ramsey, said he's spending his time "trying to find employment and trying to find a way to get investment back to Bixby so that it can finish its projects." He said he remains a Bixby shareholder.

Ryan Pacyga, Walker's attorney, said Desender would say or do anything to save himself from a lengthy prison term.

"Bob is eager to plead his story if anybody comes knocking. He hasn't been indicted. He is innocent of these claims that Desender [apparently] is making, and he's eager to tell his story if push comes to shove," Pacyga said.

Desender acknowledged in court that he and Individual A had told investors they had working commercial units ready to ship when none existed and that Bixby would soon take the company public when, in fact, that couldn't occur because Bixby couldn't obtain audited financial statements.

Desender admitted to personally causing about $4.3 million in investor losses. That amount pertains only to the period January 2010 to May 2011 encompassed by the charge to which he pleaded guilty. His mandatory restitution, which was part of the agreement, is expected to be substantially larger, according to Joe Dixon, chief of the fraud division of the U.S. attorney's office in Minneapolis.

The plea agreement estimates that federal sentencing guidelines would recommend a sentence of 70 to 87 months in prison. But if Desender's cooperation is considered "substantial" by prosecutors, they have the option of recommending a reduction. Ultimately, the sentence will be up to U.S. District Judge Susan Richard Nelson.

The case is being investigated by the IRS, U.S. Postal Inspection Service and the FBI.

Two lawsuits that eventually were settled with Walker's departure from Bixby alleged that the company had accumulated $141 million in losses and that Walker had put his relatives on the payroll, spent recklessly and left suppliers unpaid.

Former U.S. Rep. Gil Gutknecht, an investor who filed one of the suits, became chairman of the board in May and has been trying to salvage the company. Bixby is currently installing its first coal-gasification units in China, though the company has warned investors that it's having cash flow difficulties.

"We, at Bixby, are committed to being a good corporate citizen. We have, and we will continue to cooperate fully with the authorities," Gutknecht said. "The company is doing its best to correct the mistakes of the past. ... We're optimistic that our technology will soon prove itself to have real value in the marketplace."