Founder of Bixby Energy Systems Indicted for Defrauding Investors
|U.S. Attorney’s Office December 21, 2011|
MINNEAPOLIS—Earlier today in federal court, the founder of Bixby Energy Systems, Inc., a Ramsey-based alternative energy company, was indicted for lying to investors in an effort to induce them to commit large sums of money to the business. Robert Allen Walker, age 69, of Ramsey, Minnesota, was specifically charged with one count of conspiracy to commit securities fraud. He was arrested earlier today and made his initial appearance in St. Paul this afternoon.
The indictment alleges that from 2001 to 2011, Walker was the president, chief executive officer, and chairman of the board at Bixby Energy. In that capacity, he allegedly raised more than $43 million from approximately 1,800 investors by offering company securities based on false or misleading information about 1) the payment of salaries and commissions to Bixby officers and directors; 2) the operational capability of Bixby’s core product, a coal gasification machine; and 3) the prospect of conducting an initial public stock offering. Walker also allegedly concealed from investors that new investor money was being used to make payments to existing investors and diverted to fund Walker’s lavish lifestyle.
To further his fraud, 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. From those payments, the officer then reportedly kicked back more than $600,000 to Walker. This “commission sharing” arrangement was not only concealed from investors but from the company’s board of directors. Walker also made repeated misstatements regarding the capability of the company’s coal gasification and liquefaction technology and machine, characterizing them as “proven” and “ready for market,” when, in fact, the technology had never worked and the machine had substantial defects.
Moreover, the indictment alleges that Walker told investors the company was going to conduct an initial public offering of its stock in the near future, when, in truth, he knew it could not be done because, among other things, the company could not obtain audited financial statements.
Last week, Bixby Energy Systems admitted defrauding investors of between $2.5 and $7 million, and took responsibility for the acts of its former officers and agents. In September of 2011, Dennis Luverne Desender, who was a consultant and the former acting chief financial officer for Bixby Energy, pleaded guilty to securities fraud, admitting he used manipulative and deceptive practices in an effort to sell company securities.
If convicted, Walker faces a potential maximum penalty of five years in prison. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the Internal Revenue Service-Criminal Investigation Division, the United States Postal Inspection Service, and the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Christian S. Wilton.
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.