Ex-Bixby CEO Faces 19 New Fraud Charges
Bob Walker—the founder and former leader of Ramsey-based alternative-energy start-up Bixby Energy Systems, Inc.—faces a series of new federal charges for allegedly defrauding investors.
In December, Walker was arrested and indicted on one count of conspiracy to commit securities fraud. In a superseding indictment filed Tuesday in U.S. District Court in St. Paul, 19 additional charges were added: The former Bixby leader now also faces nine counts of mail fraud, five counts of wire fraud, four counts of securities fraud, and one count of conspiracy to commit mail fraud.
Walker—who is perhaps best known as the founder of Minneapolis-based Select Comfort and invented its Sleep Number bed—served as president, CEO, and chairman of Bixby from 2001 through 2011. The company focuses on the development of alternative energy projects, including a “coal gasification” venture designed to convert coal into clean-burning natural gas.
During Walker’s time at Bixby’s helm, he helped raise more than $43 million from at least 1,800 investors by offering company securities based on false or misleading information, according to the indictment.
Walker allegedly told investors that company officers and directors wouldn’t be compensated for selling company securities but then directed at least $3 million to an officer for doing just that. In turn, Walker allegedly received kickbacks of more than $600,000.
He also lied about the capability of Bixby’s coal gasification and liquefaction technology and machine, calling them “proven” and “ready for market,” when the machine had defects and the technology never worked, according to the indictment.
In addition, Walker allegedly told investors that the company would conduct an initial public offering in the near future but knew that couldn’t be accomplished, in part because the company was unable to obtain audited financial statements.
Peter Wold, an attorney representing Walker, told Twin Cities Business on Tuesday that Walker intends to plead not guilty to all charges at a hearing next Thursday, and he’s “not interested in admitting to anything he didn’t do.”
Walker faced up to five years in prison for the conspiracy to commit securities fraud charge that was filed in December. Now, in addition to those five years, Walker faces up to 20 years in prison for each of the 19 new charges.
A number of other charges have been filed against alleged co-conspirators in the fraud. Dennis Desender, a consultant and the former acting chief financial officer for Bixby, pleaded guilty in September to securities fraud.
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—all in exchange for not being prosecuted.
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.