Collyard admits fraud in Bixby scheme

Delano businessman Gary Collyard pleaded guilty Monday in St. Paul to federal fraud charges stemming from his sale of stock in Bixby Energy Systems, plus other business ventures involving real estate ventures.

Collyard, 62, told prosecutors that he conspired with Bixby CEO Bob Walker, 69, and former business consultant Dennis Luverne Desender, 65, in a plan to raise money for the struggling alternative-energy company. Some of the money was raised from unsophisticated investors, he admitted. The government alleges that about $43 million in investor funds has been lost.

Bixby, based in Ramsey, has been trying to market technology in China that can convert coal to natural gas, but it has been plagued with technical problems and a shortage of cash.

Desender has pleaded guilty to securities fraud related to Bixby, as well as tax charges, and awaits sentencing. Like Collyard, he is cooperating with federal authorities investigating Walker, some of Walker's family members and other top Bixby officials.

Walker, of Ramsey, is best known as the founder of the Select Comfort bed company. He was indicted in December on securities fraud charges and awaits trial. He has denied any wrongdoing. Peter Wold, his attorney, quietly observed Collyard's plea hearing.

Collyard said he was responsible for $3 million in investor losses related to Bixby since January 2005. He also acknowledged that his sale of Bixby stock wasn't his only fraud. His company, the Collyard Group, was involved in leasing, renting and developing real estate. Collyard admitted to bilking $1.3 million from a number of area banks since at least April 2005. He used much of the proceeds from his business loans for personal debts and living expenses.

Loans financed the high life

Collyard's plea agreement suggests three different possible prison terms, ranging from 51 months to 87 months, depending on how many prior convictions the judge counts under federal sentencing guidelines. Collyard agreed not to appeal his sentence unless it exceeds whatever guideline the judge determines is appropriate.

In 1998 Collyard was convicted for filing fraudulent federal tax returns, statements or other documents, a misdemeanor. Last week he pleaded guilty to five state tax charges in Hennepin County District Court. Under his plea agreement in that case, his sentence will run concurrently to the sentence he will get in the federal case.

Two of Collyard's former employees and a Bixby investor attended the plea hearing. State and federal authorities have credited them for providing substantial help to their investigation.

"From our perspective, he's been doing this for more than a decade, and five years [in prison] would seem reasonable," said John O'Donnell, the Bixby investor.

'A long time coming'

Collyard could get a shorter sentence by providing "substantial cooperation" to federal authorities investigating Bixby. Assistant U.S. Attorney Chris Wilton said Collyard might provide some insight into Walker's activities, as well as other officers and other "finders" who solicited investors for Bixby.

"Collyard is just one of a bunch of finders," Wilton said. "We are continuing our investigation. I'm not done yet."

U.S. District Judge Susan Richard Nelson barred Collyard from soliciting funds for any companies, public or private, and said he cannot hold a job with any fiduciary responsibilities while he's out on bond pending sentencing.