MINNEAPOLIS — The founder of Bixby Energy Systems Inc. was indicted Wednesday on a charge of conspiracy to commit securities fraud, a week after the Minnesota-based alternative energy company admitted defrauding investors of up to $7 million.
Former Bixby CEO Robert Allen Walker, 69, was arrested and appeared Wednesday in federal court. He pleaded not guilty. He resigned in May and has denied any wrongdoing.
The indictment against Walker alleges that he raised more than $43 million from about 1,800 investors over a 10-year period by offering company securities based on false or misleading information.
Prosecutors allege that Walker purportedly told investors that Bixby officers and directors would not be compensated for selling company securities but then directed payments of at least $3 million to a company officer for doing just that. The officer then reportedly kicked back more than $600,000 to Walker — a “commission sharing” arrangement that was concealed from investors as well as the company’s board of directors, the government alleged.
Walker also is accused of misstating that the company’s coal-gasification machine was “ready for market.”
BNY Mellon subsidiary settles NY probe for $1.3M
ALBANY, N.Y. — The Bank of New York Mellon Corp. will pay $1.3 million to three states to settle an investigation into manipulative trading of auction rate securities facilitated by employees at one of the company’s subsidiaries, the New York attorney general’s office announced Thursday.
Under the agreement, BNY Mellon agreed to cease any further violations of New York’s Martin Act, which prohibits deception in offering securities. The deal ends a joint investigation with the Texas State Securities Board and the Florida Office of Financial Regulation. The $1.3 million is for penalties, fees and costs to the three states.
“Today’s announcement sends a clear message that the manipulative trading of auction rate securities in New York will not be tolerated under any circumstances,” New York Attorney General Eric Schneiderman said. “My office will continue to protect the integrity of New York’s global financial markets at all costs.”
Ron Sommer, spokesman for BNY Mellon Capital Markets, successor to Mellon Financial Markets LLC that was investigated, said the company was pleased to resolve the matter, “which centered on the isolated conduct of three individuals who are no longer with the company.”
2 Ohio men plead guilty in huge mortgage fraud
CLEVELAND — Authorities say two Ohio men have pleaded guilty to mortgage fraud crimes covering $50 million in real estate transactions, $44 million in fraudulent loans and $31 million in profits.
Prosecutors say Uri Gofman, Anthony Capuozzo and businesses they operated pleaded guilty Wednesday in Cleveland in what investigators call one of the nation’s largest mortgage fraud cases.
Gofman is from Beachwood. He’s accused of defrauding lenders by using straw buyers to purchase homes, claiming nonexistent or inflated home improvements to gain refinancing and selling to unqualified buyers. Prosecutors say he’ll be sentenced to eight years and three months in prison.
Capuozzo is from Concord. He’s accused of misleading lenders into believing buyers were making down payments. Prosecutors say he was sentenced to one year in prison.
To keep payroll tax low, mortgage fees will rise
WASHINGTON — The new mortgage fee to fund the temporary extension of the payroll tax cut could damp the still-sluggish real estate market and complicate efforts to overhaul the nation’s wounded housing finance system.
Even though the tax cut approved Friday extends for only two months, a small fee on loan amounts will be levied for a decade on all mortgages sold to housing finance giants Fannie Mae and Freddie Mac, which control about 60 percent of the nation’s mortgage market.
That fee arrangement also makes it difficult for Congress to work on efforts to shut down Fannie and Freddie, which federal regulators seized three years ago with a taxpayer bailout now estimated to total about $150 billion.
Based on prevailing rates for a 30-year fixed-rate loan, a homeowner borrowing $200,000 would pay about $4,000 more if the loan were sold to Fannie or Freddie. That would raise the mortgage payment about $11 a month for the life of the loan.
The collapse of the housing market triggered the Great Recession and led to a wave of foreclosures as housing prices plummeted nationally. The market has been struggling to recover amid weak economic growth and high unemployment.
The fee may make a new loan unaffordable for some people, but the effect probably would be modest, said banking analyst Bert Ely of Alexandria, Va. The bigger effect will be on the government’s ability to overhaul the housing finance system, which most analysts said is needed.