The Securities and Exchange Commission (SEC) has charged the former CEO and CFO of Bixby Energy Systems, a Minnesota-based clean coal technology company, for making allegedly false and misleading statements to investors, and it separately charged a network of brokers for selling Bixby’s securities without being registered to do so.

In complaints filed in U.S. District Court for the District of Minnesota, the SEC alleges that the company, which is working to make synthetic natural gas, raised at least $43 million from more than 1,800 investors between 2001 and 2010 through a series of purported private placement offerings of stocks, warrants and promissory notes.

The SEC alleges that former CEO Robert Allen Walker and former CFO Dennis DeSender “made repeated misstatements both verbally and in writing to investors about the company’s core product: a machine that supposedly produced synthetic natural gas [syngas] through a proprietary clean coal technology. They told investors that Bixby’s coal gasification machine was proven and operating when in fact it had substantial technological defects, did not function properly and was at risk of self-destruction.” Walker and DeSender never disclosed those problems to investors, according to the SEC.

The SEC alleges that DeSender was paid $3.6 million related to his sale of Bixby securities despite the company’s assurance to investors that Bixby officers would not be compensated for such sales. DeSender allegedly kicked back more than $600,000 to Walker “in an undisclosed and fraudulent commission-sharing scheme,” according to the SEC, which said Bixby also failed to disclose to investors that DeSender was previously convicted for bank fraud. And the former CEO and CFO told investors the company was going to conduct an initial public offering in the near term, “even though they knew that Bixby could not do so,” the SEC said.

Walker and DeSender are charged with violations of the securities offering provisions of the Securities Act of 1933.

Separately, the SEC alleges that DeSender and his DLD Financial Ltd. corporation acted as unregistered brokers. DeSender and nine brokers and firms are alleged to have sold more than $21.7 million in Bixby securities to at least 560 investors despite not having been registered with the SEC or associated with an entity registered with the SEC.

The SEC is seeking permanent injunctions against Walker, DeSender and DLD, disgorgement of their gains plus interest, civil penalties, and an order prohibiting Walker and DeSender from serving as officers or directors of any public company.

Walker and DeSender left Bixby in May. Walker pled not guilty to the SEC charges in federal court Wednesday. DeSender, who was convicted of bank fraud in 1998, pled guilty to one count of tax fraud in March 2011 and pled guilty in September to one count of securities fraud in connection with the offer and sale of Bixby securities. DeSender was charged Dec. 1 with soliciting investors in violation of his plea agreement, according to the SEC.

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