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[January 22, 2014]
In Walker trial, CPA says he found Bixby "cooking the books" [Star Tribune (Minneapolis) :: ]
(Star Tribune (Minneapolis, MN) Via Acquire Media NewsEdge) Jan. 22--An accountant who briefly worked at Bixby Energy Systems in 2006 testified Wednesday that he discovered the company was falsely telling investors that business was so strong that there was a backlog of orders.
Michael Brodeur, a certified public accountant who was hired to replace the Ramsey, Minn.-based company's chief financial officer in August 2006, told a jury in U.S. District Court in St. Paul that the order backlog was fictitious.
"It was conjured," said Brodeur, who was fired a few months later after taking steps to clean up the company. "It was what I call 'cooking the books'." Brodeur said he told this to former Bixby CEO Robert Walker, who is on trial accused of defrauding 1,800 investors of $57 million. But Walker didn't seem surprised, he said. "There was no shock," Brodeur testified.
Walker, 71, is on trial for fraud, conspiracy, tax evasion and witness tampering. He led the company from 2001 to 2011, a time when it went from producing corn-burning stoves to promoting clean-coal technology that prosecutors say never worked. The investors lost their money.
Brodeur said he urged a "forensic audit" of Bixby after learning that his predecessor as chief financial officer, Dennis Desender, had a felony record for fraud, as did another executive of the company. The audit began in 2006, but eventually was dropped and Brodeur was fired.
Brodeur said Walker also didn't seem surprised to have felons working at Bixby and had told him, "You have to walk through some real rough neighborhoods to get to the good neighborhoods." Brodeur said he interpreted that to mean the CEO was willing to work with unsavory characters and later "cleanse itself." At the time, Bixby was making plans to take the company public through a reverse merger, but it never happened.
Brodeur testified that Bixby already had raised $26 million in late 2006, but he found that $3.5 million had been paid in finders fees, mostly to Desender who stayed on as the company's chief fundraiser. That exceeded the maximum 10 percent fee allowed to be paid to finders under the stock offering.
"The results were shocking," Brodeur said of the discovery.
He also found a handwritten note in company records that indicated "Bob" was to get 50 percent of Desender's commissions. That seemed to indicate that Walker "was getting kickbacks," Brodeur testified.
The defense, which will question Brodeur this afternoon, contends Desender was loaning money to Walker. Desender is expected to testify later in the trial. He already has pleaded guilty to securities and tax charges in the Bixby case.
The trial is expect to last five to seven weeks.
David Shaffer -- 612-673-7090 -- @ShafferStrib ___ (c)2014 the Star Tribune (Minneapolis) Visit the Star Tribune (Minneapolis) at www.startribune.com Distributed by MCT Information Services
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