Bixby Energy founder accused of lying to investors
Thursday, December 22, 2011
MINNEAPOLIS (AP) — The founder of Bixby Energy Systems Inc. was indicted Wednesday on a charge of conspiracy to commit securities fraud, a week after the Minnesota-based alternative energy company admitted defrauding investors of up to $7 million.
Former Bixby CEO Robert Allen Walker, 69, was arrested and appeared Wednesday in federal court. He resigned in May and has denied any wrongdoing.
The indictment against Walker alleges that he raised more than $43 million from about 1,800 investors over a 10-year period by offering company securities based on false or misleading information.
Prosecutors allege that Walker purportedly told investors that Bixby officers and directors would not be compensated for selling company securities but then directed payments of at least $3 million to a company officer for doing just that. The officer then reportedly kicked back more than $600,000 to Walker — a “commission sharing” arrangement that was concealed from investors as well as the company’s board of directors, the government alleged.
Walker also is accused of misstating that the company’s coal-gasification machine was “ready for market.”
Walker and former acting chief financial officer Dennis Luverne Desender also face a Securities and Exchange Commission civil complaint filed Wednesday that accuses them of making false and misleading statements. The SEC also separately filed a civil complaint against a network of brokers who allegedly sold the company’s securities without being registered with the SEC to do so.
Walker’s attorneys said Wednesday that Walker never intended to defraud anyone and they plan a vigorous defense.
“We know there’s a lot of information on this case that has not come out yet that we believe will vindicate Bob Walker,” said one of his attorneys, Ryan Pacyga.
Last week, Bixby Energy of Ramsey admitted that it defrauded investors of between $2.5 million and $7 million in a scheme that involved former officers lying to investors and using much of the money for their own salaries and commissions.
In an agreement with prosecutors, Bixby accepted a charge of one count of securities fraud and took responsibility for the actions of its former officers. The agreement allows Bixby Energy to avoid prosecution, and if the company complies with terms of the deal, the government will seek to have the charge dismissed.
Tom Heffelfinger, attorney for Bixby Energy, said Wednesday that the company was not surprised by the latest developments. Heffelfinger said outside directors who took control of Bixby’s board reported their concerns to the government last spring, and the company has been fully cooperating in the federal investigations.
“We’re very, very focused on making sure that our shareholders are fully involved in the company,” said Heffelfinger, a former U.S. attorney in Minnesota.
Desender pleaded guilty last fall to one count of securities fraud in a separate but related case. He agreed to cooperate with the government and is awaiting sentencing. His attorney did not immediately return a phone call for comment Wednesday.