Walker says Bixby investors were his top priority

Out of loyalty to his investors, Robert Walker testified Wednesday, he couldn't walk away from his first failure at Bixby Energy Systems.

A tearful Walker said he had to find an alternative energy technology to develop after a nearly successful line of corn-fueled stoves became uneconomical in 2007 when the price of corn skyrocketed.

"You were 65, you could have walked away," defense attorney Peter Wold asked of his client who was on the witness stand in U.S. District Court in St. Paul for the second day.

"No, I couldn't," said a choked-up Walker. "People who invested in me believed in me and I couldn't let them down."

"What did you do?" Wold asked.

"I started looking for a new technology," Walker responded.

Walker, now 71, faces criminal charges related to the marketing and promotion of that technology — a coal gasification business — that also went bust. And by late afternoon Wednesday, it was clear that federal prosecutors were not buying Walker's it's-all-about-the-investors version of events.

"You weren't Bixby, you were its CEO who served at the pleasure of the board who served at the pleasure of the shareholders," MacLaughlin said.

Walker is on trial for charges of fraud, conspiracy, tax evasion and witness tampering for his role at Bixby from 2001 until 2011 in promoting technology to turn coal into natural gas and other fuels. Nearly 2,000 investors lost $57 million when the process and the company failed.

But Walker insisted on the witness stand that the technology was solid and would have worked had the company not had financial problems and engineering spats over control of the process for making the mostly clean fuel.

When Bixby landed a contract for its technology with a company in China, Walker said, "I felt we were on our way."

But the deal ultimately collapsed when Bixby had trouble meeting orders for delivery to China and the technology failed in its first commercial use.

But MacLaughlin insisted that the Bixby story was flawed from almost the very beginning when Walker told potential investors that his previous business successes included development of the Sleep Number adjustable mattress and a subsequent $700 million public offering for the Select Comfort mattress company even though Walker had left the company several years before the Select stock offering.

"Investors put money in Bixby on their belief that you were a successful businessman who could take Bixby public," said MacLaughlin.

"That doesn't change the fact that Select Comfort went on to be a very successful company," Walker replied.

The government alleges that Walker had an arrangement with convicted embezzler Dennis Desender to receive half of Desender's commissions that he received as finders fee for landing investors. Prosecutors contended those fees were kickbacks to Walker, but Walker contends they were loans.

Desender, who acted as Bixby's chief financial officer, raised more than $50 million from investors in the privately held company.

The trial, now in its seventh week, continues Thursday before U.S. District Judge Susan Richard Nelson and likely will spill into next week.