Bixby’s Former Acting CFO Gets 8-Yr. Prison Sentence
Dennis Desender, the former acting chief financial officer for Bixby Energy Systems, Inc., was sentenced Monday to eight years and one month in prison for single counts of securities fraud and tax evasion.
U.S. District Judge Susan Richard Nelson handed down the sentence in St. Paul.
According the U.S. Attorney’s Office in Minnesota, Desender lied to investors to get them to commit large sums of money to Ramsey-based Bixby, an alternative-energy start-up.
According to the Star Tribune, Dennis told Nelson at the sentencing: “I accept responsibility. I know that I’ve affected a number of people with regards to investing in Bixby, and I’ll do my best to make them whole.”
Desender pleaded guilty to tax evasion in February 2011 and then to securities fraud last September.
In a plea agreement reached last fall, he said that from January 2010 to May 2011, while acting as a consultant for Bixby, he was responsible for raising funds for the company’s projects, including a “coal gasification” technology designed to convert coal into natural gas.
He admitted that he and others used manipulative and deceptive practices in an effort to sell securities. Desender said that he solicited unqualified investors to buy Bixby securities and routinely provided false information to both investors and potential investors.
He also told investors that Bixby’s coal-gasification project was ready for market when in fact it wasn’t.
Some investor funds were used by Bixby, but a significant portion went toward salaries and commissions paid to Desender and others at the company, the U.S. Attorney’s Office said.
Prosecutors say that Desender was responsible for about $4.3 million in losses to investors and an $825,866 tax loss to the Internal Revenue Service, which resulted from his failure to file federal tax returns or report his income over a three-year period.
According to a Star Tribune report, Nelson received letters from 160 victims of the Bixby fraud. One person who reportedly spoke out against Desender was Chris Henz, who described himself as Desender’s “significant other” for more than a decade. He told Nelson that Desender would “never change” and described the extravagant trips and lifestyle that Desender enjoyed while the fraud was taking place.
Desender is one of several Bixby leaders who have come under fire for allegedly mismanaging the company. Founder and former CEO Bob Walker was arrested in December and indicted on one federal count of conspiracy to commit securities fraud. Then in a superseding indictment filed in U.S. District Court last month, 19 additional charges related to mail fraud, wire fraud, and securities fraud were added. He’s now awaiting trial.
Additionally, in February, Gary Collyard—a broker who raised funds for Bixby—pleaded guilty to one count of conspiracy to commit securities fraud and one count of conspiracy to commit bank fraud, according to the U.S. Attorney’s Office.
In addition to some of its leaders facing various accusations, now-broke Bixby itself faced charges as well. In December, roughly a week before Walker was originally charged, Bixby admitted that it defrauded investors of between $2.5 million and $7 million. The company struck a deal with the U.S. Attorney’s Office, through which it accepted responsibility for the actions of its former workers and agreed to assist the government in its investigation in exchange for not being prosecuted.