|Number's Up For Select Comfort Founder|
|By ALAN FARNHAM||Aug 28, 2013, 1:07 PM|
His number may be up: Bob Walker, creator of the Sleep Number Bed, sits today in a Minnesota jail, accused of witness tampering and fiduciary misconduct. The charges stem not from his tenure with the bed company that he founded, Select Comfort, but from another of Walker's ventures, Bixby Energy Systems.
According to a criminal complaint filed in U.S. district court for Minnesota, Walker violated the terms of a release agreement in a case where the government alleges that he, as CEO of Bixby, "treated Bixby as though it were his own personal asset," enriched himself and defrauded almost 1,800 shareholders of approximately $40 million. Bixby was never publicly traded.
Aaron Morrison, one of Walker's attorneys, explains that in Dec. 2011 a grand jury indicted Walker for securities fraud. Walker maintained his innocence. He appeared before a judge, who allowed him to remain free, pending trial, on a $25,000 bond. A condition of the release was that he not act in a fiduciary capacity to try to raise more funds for Bixby.
The government contends Walker violated that condition, and, further, that he engaged in witness tampering. That's why he was jailed last Monday. Last Friday the judge in the case held a hearing to determine if there was sufficient evidence to keep Walker in jail. He decided there was. So, there he will remain until his Jan. 13, 2014, trial date.
Another of Walker's lawyers, Peter Wold, tells ABC News the charges filed against his client have no merit, and that Walker, aged 70, ought to be at home--not in jail--reunited with his elderly wife, who is recovering from a hip replacement.
Asked about Walker's character and past business history, Wold says:
"Bob doesn't have a parking ticket. He's an enthusiastic visionary, a big thinker. He's not a Harvard MBA. He went to the state school of science in North Dakota." His reputation is that of "someone always looking for the next better way to make the wheel."
Twin Cities Business, in a 2007 profile of Walker, described him as a serial entrepreneur (a phrase Walker didn't like because, he said, it sounded too much like "serial killer").
Walker told the paper he liked to build businesses more than he did to run them.
"I'm a wheel builder, not a wheel spinner," he said. "I will design the race car, but I'm not as interested in racing it, because I think I can find people out there who are better racecar drivers."
Walker's search for a more comfortable mattress for his own use, according to the paper, led him to come up with the Sleep Number bed, whose air-supported mattress could be made harder or softer by dialing a controller. He and his wife, JoAnn, founded Select Comfort Corp. in 1987, building it into a national name. Today it's a publicly traded company.
According to Select Comfort's website, the beds are now sold through 400 company-owned stores and online through www.sleepnumber.com. Net sales for the second quarter were $207 million.
Wold says that Select Comfort eventually got "too big for Bob," and that Walker moved on to found alternative energy company Bixby Energy Systems in 2001.
According to Twin Cities, Walker had become frustrated by how much it was costing him to heat his home. He got interested in efficient, high-tech stoves that produced heat by burning corn pellets.
"For Bixby's first six years," says Wold, "they sold corn-burning stoves. They were state of the art. They were selling them all over the country. Then all of a sudden ethanol came in, and the price of corn went from $2 to $8 a bushel," spelling the end of the stove.
"About that time," Wold continues, "they got attracted to this process—extremely innovative—where coal is not burned but heated, so that it gives off nowhere near the emissions of burning coal, creating natural gas and carbon that later can be used for jet fuel."
What went wrong at Bixby? Says Wold obliquely: "A lot of greedy factors got involved along the way. Bob was not one of them." That greediness, he says, "led to a lot of back-stabbing," of which Walker was a casualty.
The government's complaint says that Walker, after having been enjoined from trying to raise any more money for Bixby, continued to do so. It says, too, that he continued to try to run the company's affairs in secret, through surrogates. Finally, it accuses him of having engaged in witness tampering (a federal offense) by trying to influence the testimony of a person in an official proceeding.
Asked if Walker has any ongoing relationship with Select Comfort, Wold says no; "He sleeps on it, that's all."