BULLETIN: SEC Charges 2 Executives Of Purported Clean-Coal Firm In Alleged $43 Million Offering Fraud; 1 Of Them Has Conviction For Bank Fraud And Was Arrested Dec. 1 Amid Allegations He Was Flogging New Offer In Violation Of Plea Agreement

BULLETIN: The SEC has gone to federal court in Minnesota, alleging that two executives of a clean-coal tech firm repeatedly lied to investors and that one of the executives had a conviction for bank fraud — a fact not disclosed to investors when the company was trawling for cash and using unregistered brokers to do so.

Bixby Energy Systems Inc. raised at least $43 million from more than 1,800 investors between 2001 and 2010, the SEC charged.

Bixby executives Robert A. Walker and Dennis L. DeSender, according to the SEC, touted the firm’s purported coal-gasification machine as “proven and operating when in fact it had substantial technological defects, did not function properly, and was at risk of self-destruction.”

“Investors were falsely informed that Bixby’s coal gasification technology was proven, fully functional, and ready for market,” said Merri Jo Gillette, director of the SEC’s Chicago Regional Office.

Records show that DeSender, 64, of Minneapolis, was released from federal prison in 1998, about three years prior to Bixby’s offering. He went on to work for Bixby as its CFO and COO, and also as an independent consultant, according to the SEC.

In September 2011, DeSender pleaded guilty to a criminal charge of securities fraud that flowed from his role at Bixby, according to records. But he was arrested again on Dec. 1 “for soliciting investors for another issuer in violation of his plea agreement,” the SEC said.

Bixby itself was charged with securities fraud in September 2011, entering into a deferred- prosecution agreement with the government after the firm accepted accountability for fraud committed by “former officers and agents” and its board ousted an individual federal prosecutors described only as an “unidentified coconspirator.”

In its complaint today, the SEC said Walker — Bixby’s 69-year-old former president, CEO and board chairman — no longer held any titles at the firm and had “asserted his Fifth Amendment right against self-incrimination and refused to provide testimony in response to a Commission investigative subpoena.”

Walker resides in Anoka, Minn.

The SEC today also charged six individuals and three companies with hawking Bixby’s offering illegally.

“Investors who purchased Bixby shares through the unregistered brokers were deprived of the protections afforded under the federal securities laws requiring the registration of broker-dealers and securities offerings like these,” Gillette said.

The Star Tribune is reporting this afternoon that Walker has been arrested.

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4 Responses to “BULLETIN: SEC Charges 2 Executives Of Purported Clean-Coal Firm In Alleged $43 Million Offering Fraud; 1 Of Them Has Conviction For Bank Fraud And Was Arrested Dec. 1 Amid Allegations He Was Flogging New Offer In Violation Of Plea Agreement”

  1. Quick note: Feds have confirmed arrest of Walker.

    Copy of indictment:

    http://www.justice.gov/usao/mn/downloads/FINAL%20Walker%20Indictment%20%28presented%20to%20GJ%29.pdf

    Patrick

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  2. one thing i do not understand, although walker deserves prison these are civil charges. why was he arrested? is there a parallel criminal case i am unaware of?

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  3. mike: why was he arrested? is there a parallel criminal case i am unaware of?

    Hello mike,

    Yes.

    http://www.justice.gov/usao/mn/walkerindicted.html

    Patrick

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  4. thanks Patrick
    i guess i was confused since the guys who marketed the bixby stock (Collyard Musich etc.) are facing only civil charges. i think they all deserve criminal prosecution… of course further criminal charges may be pending!

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