Bixby figure admits tax crimes

  • Article by: DAN BROWNING , Star Tribune
  • Updated: February 21, 2012 - 11:01 PM

Delano businessman admits to not paying about $63,000 in state income tax.

Delano businessman Gary Collyard pleaded guilty Tuesday in Hennepin County District Court to five felony tax charges, but that may not be the end of his trouble.

Dressed in a perfectly tailored dark blue suit, Collyard admitted to charges that he willfully avoided the payment of about $63,000 in state income taxes between 2006 and 2008. As a condition of his plea agreement, he must assist with a formal audit of his business operations.

According to court records and former employees, Collyard has acted as a real estate broker without a license, has misrepresented himself as a lawyer and has sold securities without a license. They point to court judgments and multimillion-dollar settlements showing that Collyard has stiffed banks, business associates and former girlfriends.

Collyard, 62, was convicted in federal court in 1998 for filing fraudulent tax returns, statements or other documents, a misdemeanor. He was sentenced to two years of probation and 200 hours of community service.

State sentencing guidelines call for up to 18 months in prison on his new tax charges, but any prison term would be stayed while he's on probation. Prosecutor Tom Fabel said the county attorney wants one of those conditions to be that he serve a year in the workhouse.

That may be moot, however. Fabel told Judge Regina Chu that Collyard is working on a plea agreement on a "federal matter which holds the prospect of a considerably harsher sentence." Any state sentence would run concurrent to a federal prison term.

Collyard is under investigation by federal authorities for his role in the sale of stock in Bixby Energy Systems, a troubled Ramsey developer of coal-to-natural-gas technology. Collyard was paid $582,454 in "finder's fees" in 2006 and 2007 to help sell $5.8 million in Bixby Energy stock, according to records produced in an unrelated Hennepin County civil suit.

Collyard also had been partners with former Bixby CEO Bob Walker, Bixby consultant Dennis Desender and Ronald Musich, a former executive with Petters International, in a Wayzata company formed in 2007 called MX Telecom LLC.

The U.S. Securities and Exchange Commission accused Collyard, Desender and Musich and three other Minnesota men in a civil lawsuit of acting as unregistered "brokers" or "finders" related to the sale of Bixby securities. Federal authorities have described the stock sale as a $60 million securities fraud scheme that allegedly duped investors in a venture to sell coal-gasification technology to China.

Desender, 65, has already pleaded guilty to federal securities fraud and tax charges and is cooperating with the federal investigators. He awaits sentencing.

Walker, 69, who made his name as founder of the Select Comfort bed company, was indicted in December on securities fraud charges and awaits trial. He has denied any wrongdoing.

Fabel said that if federal authorities don't charge Collyard, the state could still bring fraud charges against him related to his alleged business activities.

Collyard's wife, Valeri Lennon, 51, still faces four tax charges in Hennepin County. Fabel said negotiations may result in an agreement for her to plead guilty to less serious charges. He said those negotiations were not affected by Collyard's agreement.

Dan Browning • 612-673-4493

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