Litigation Release No. 22207 / December 21, 2011
Securities and Exchange Commission v. Robert A. Walker, et al., Case No. 11-cv-03655 (JNE/SER) in the United States District Court for the District of Minnesota.
Securities and Exchange Commission v. Gary A. Collyard, et al. Case No. 11-cv-03656 (PJS/JSM) in the United States District Court for the District of Minnesota.
SEC CHARGES CLEAN COAL TECHNOLOGY COMPANY’S FORMER CEO, CFO AND UNREGISTERED BROKER NETWORK
On December 21, 2011, the Securities and Exchange Commission filed two civil injunctive actions in the United States District Court for the District of Minnesota. In the first complaint, the SEC alleges that Bixby Energy Systems, Inc.’s former Chief Executive Officer Robert A. Walker made false and misleading statements about the operational capability of Bixby’s core product – a machine that supposedly produced synthetic natural gas through a proprietary clean coal technology. The complaint also alleges that Walker and Dennis DeSender, who at one time served as Bixby’s Chief Financial Officer (“CFO”), made misstatements directly to shareholders and prospective shareholders in investor presentations and one-on-one meetings. The complaint alleges that these misstatements violated the antifraud provisions of the Securities Act of 1933 and Securities Exchange Act of 1934.
The SEC’s complaint against Walker and DeSender also alleges that investors were falsely told that company officers would not be compensated for their sale of Bixby securities. In fact, the SEC alleges that Bixby paid DeSender commissions related to his sale of Bixby securities while he served as Bixby’s CFO. The SEC further alleges that from 2004 to 2006, DeSender kicked back more than $600,000 to Walker in an undisclosed and fraudulent commission-sharing scheme.
The complaint against Walker and DeSender further alleges that DeSender and his corporation, DLD Financial Ltd., also acted as unregistered brokers and that Walker aided and abetted these violations. That complaint also charges Walker and DeSender with violations of the securities offering provisions of the Securities Act of 1933.
The second complaint filed by the SEC alleges that from at least 2001 to 2010, a large network of unregistered brokers, including DeSender, sold over $21.7 million in Bixby securities to at least 560 investors. The complaint alleges that Gary A. Collyard, Collyard Group LLC, Paul D. Crawford, Crawford Capital Corp., Ronald Musich, Joshua J. Singer, Christopher C. Weides, Michael B. Spadino and his corporation, Marketing Concepts Inc., acted as unregistered brokers in violation of Section 15(a) of the Securities Exchange Act of 1934. As compensation for their sale of Bixby securities, the unregistered brokers were paid a total of at least $4.9 million in transaction-based cash commissions. In addition, they also received warrants to purchase over 900,000 shares of Bixby common stock.
The staff’s investigation is continuing.