Ex-Bixby CEO, Sleep Number Inventor Arrested Again
Bob Walker, best known for inventing the Sleep Number Bed, has been arrested and accused by the FBI of tampering with a witness involved in his current investment fraud case, which involves another business he led.
In July 2012, Walker pleaded not guilty to 20 federal charges, which stem from allegations that he and others defrauded investors in Bixby Energy Systems, Inc., a Ramsey-based startup that he founded after leaving Plymouth-based Select Comfort.
Walker was charged with nine counts of mail fraud, five counts of wire fraud, five counts of securities fraud, and one count of conspiracy to commit mail fraud in late 2011 and 2012.
According to a criminal complaint filed Monday in federal court in St. Paul, Walker is now accused of tampering with a government witness in his case by sending false information by e-mail and raising money for Bixby despite his pending criminal case, the Star Tribune reported.
Peter Wold, Walker’s attorney, told the Minneapolis newspaper that Walker would contest every allegation in the complaint, saying, “It’s a great example of abuse of power by the government and intimidation.”
Wold told Twin Cities Business something similar in 2012 when Walker originally pleaded not guilty to all charges, stating that Walker was “not interested in admitting to anything he didn’t do.”
Walker started Select Comfort in 1987 but sold his majority shares in 1991 to start his own alternative energy business, Bixby. Bixby focused on “coal gasification,” which was designed to convert coal into clean-burning natural gas.
Prosecutors allege that, as president and CEO of Bixby, Walker helped raise more than $43 million from at least 1,800 investors by offering company securities based on false or misleading information; for example, he is accused of lying about compensation of company officers and also about the capability of Bixby’s coal gasification technology.
Walker also misled investors by saying his company would conduct an initial public offering but knew it couldn’t, in part because the company was unable to obtain audited financial statements, according to the 2012 indictment.
In late 2011, Bixby admitted to defrauding investors of between $2.5 million and $7 million and struck a deal with the U.S. Attorney’s Office, through which the company accepted responsibility for the actions of its former workers and agreed to assist the government in its investigation—in exchange for not being prosecuted.
According to the Star Tribune, the new complaint says that Walker used three “unwitting” Bixby shareholders as puppets to maintain control of the company and its board of directors after he was forced out in 2011 following his fraud charges.
Using one of those shareholders, Walker allegedly e-mailed a witness in his case and claimed that Bixby’s downfall wasn’t his fault. Instead, he said it was caused by a conspiracy without his knowledge, the Minneapolis newspaper reported.
The complaint also alleges that Walker used the shareholders to conduct business via e-mail with a victim of his fraud, Global Partners United—a Bixby technology business partner in Beijing, according to the Star Tribune.
Walker remains in custody, Wold told the newspaper, and is scheduled to appear Friday afternoon before U.S. Magistrate Judge Tony Leung in St. Paul.