Bixby Energy Systems admits responsibility for
securities fraud committed by its officers and agents
FOR IMMEDIATE RELEASE
December 14, 2011
MINNEAPOLIS—A Ramsey-based alternative energy company has admitted defrauding
investors of between $2.5 and $7 million. Bixby Energy Systems, Inc. was charged via an
Information with one count of securities fraud and immediately accepted that charge as part of a
Deferred Prosecution Agreement. In entering the agreement, Bixby Energy took responsibility
for the acts of its former officers and agents. The agreement recognized Bixby Energy’s
compliance with the rule of law as well as its cooperation with the government. The
Information and agreement were filed with the court this afternoon.
The Deferred Prosecution Agreement was made possible because, in May of 2011, two
outside directors took control of Bixby’s board of directors, replacing an unidentified coconspirator
in this case, who had previously controlled the board. That co-conspirator and his
associates were then forced to leave the company. At that point, the company agreed to
cooperate fully with the government’s investigation. To that end, the company voluntarily
conducted a preliminary internal investigation, reporting all of its findings to the government.
Because of this fraud, Bixby Energy investors lost between $2.5 and $7 million.
U.S. Attorney B. Todd Jones said, “When a company does what is right; when it accepts
responsibility for the wrongdoing of its employees, officers, and agents; cooperates with the
government in its investigation; and takes steps to insure similar offenses will not occur in the
future, the government will work with the company toward a just outcome for all. That is what Bixby Energy did in this case, and in doing so, it demonstrated true corporate responsibility and
leadership and serves as a fine example for other companies.”
The documents filed with the court in this case state that between 2006 and May of 2011, an
unidentified co-conspirator at the company, along with Dennis Luverne Desender, who was a
consultant and the former acting chief financial officer for Bixby Energy, used manipulative
and deceptive practices in an effort to sell those securities.
Specifically, the unidentified co-conspirator and Desender lied to investors, some of whom
were not accredited, to induce them into committing large sums of money to the company for
business projects, including a coal gasification energy system. While some investment funds
were, in fact, spent on those projects, the unidentified co-conspirator and Desender used a
significant portion of them for substantial salaries and commissions paid to themselves and
others. Then, they offered both existing and potential investors false information to entice them
into providing future funding. For instance, they told them the company was going to go public,
when they knew that was untrue. They also assured them the company was in good financial
standing while fully aware that was not the case. Moreover, they knowingly concealed
information from investors, including the fact that the coal gasification project was not ready
for market, even though they told them otherwise.
The terms of the Deferred Prosecution Agreement dictate that the company will develop
and implement a compliance and ethics program designed to prevent and detect future
violations of securities laws. The agreement also requires that over the course of the next two
years, Bixby Energy will truthfully disclose to the government, including the U.S. Securities
and Exchange Commission, all information and material relative to this matter.
In a separate but related court action, Dennis Desender, age 64, pleaded guilty in September
of 2011 to one count of securities fraud for his role in this scheme. He is awaiting sentencing.
He faces a potential maximum 20-year term in prison.
The investigation into this matter continues. It is being conducted by the Internal Revenue
Service-Criminal Investigation Division, the U.S. Postal Inspection Service, and the Federal
Bureau of Investigation. These actions are being prosecuted by Assistant U.S. Attorney
Christian S. Wilton.
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