Appeals panel upholds fraud conviction of Bixby Energy CEO Bob Walker

Imprisoned Minnesota businessman Bob Walker has lost an appeal of his 2014 conviction for scamming investors in his energy company that pitched bogus clean-coal technology.

A panel of the 8th U.S. Circuit Court of Appeals on Friday rejected Walker's claim that he was a "naïve businessman" who was betrayed by the convicted criminals and others he hired to develop coal-to-gas technology for Bixby Energy Systems, a defunct that last operated in Ramsey, Minn.

The three appeals judges upheld the March 2014 jury verdict and 25-year prison sentence imposed by U.S. District Judge Susan Richard Nelson, who presided over the eight-week trial in the St. Paul federal courthouse. Read the appeals court ruling here.

Walker, 73, was convicted of four counts of mail fraud, eight counts of wire fraud, conspiracy to commit mail and wire fraud, witness tampering, and three counts of tax evasion.

Walker gained fame as the inventor of what became known as the Sleep Number Bed, but left bedmaker Select Comfort in the 1990s. He then founded Bixby Energy and served as chief executive from its formation in 2001 to 2011. The company, which folded in 2012, initially made corn-burning stoves, then tried coal-gasification machines. It developed unsuccessful prototypes of the gasification units, and fraudulently pitched them to investors and buyers in China as working models.

About 1,800 people invested in the company, losing a total of $57 million. Many were unsophisticated investors enticed by Dennis Desender, Bixby's chief financial officer and top fundraiser. In its ruling, the appeals panel said Walker knew of Desender's prior fraud convictions when he was hired.

Walker is being held a federal medical facility for prisoners in Lexington, Ky., according to the federal inmate locator website. Desender was released after testifying against Walker, but was re-committed in 2015 after violating terms of his release. He is in the Federal Prison Camp in Duluth, with release set for April 2017, the website said.