Michael Gilliland
Michael Gilliland

Wild Oats Markets co-founder and Sunflower Farmers Market CEO Michael Gilliland resigned Saturday after being arrested this week by Phoenix police on suspicion of soliciting sex with a minor.

Gilliland was arrested Thursday at a hotel in Phoenix. Police there said he solicited sex online with someone who identified herself as an underage girl and had gone to the hotel to meet her. 

He bonded out of jail Friday. 

Gilliland faces one count of felony child prostitution. Gilliland could not be reached for comment Saturday on his cell phone.

In a press release, Sunflower said company President and Chief Operating Officer Chris Sherrell has been named acting chief executive.

The release said Gilliland has "informed the company he believes he is not guilty of the charges brought against him, and he expects to be exonerated."

"Sunflower appreciates the respect that Mr. Gilliland has shown for the company by his action, so that his personal affairs will not affect the company," Sherrell said in the release.

Phoenix police Sgt. Steve Martos said Gilliland was one of eight people arrested this week as part of an "ongoing investigation."

Martos said members of the department's vice squad identified Gilliland as someone who was soliciting sex online, but he declined to discuss the case in more detail to protect investigators' techniques. He did not know how old Gilliland believed the girl to be.

A copy of the police report could not be obtained over the weekend.

Gilliland co-founded Boulder's Wild Oats Markets Inc. in 1987 and led the chain through acquisitions and an initial public offering. In 2002, a year after he severed his remaining ties with Wild Oats, Gilliland started Sunflower Farmers Market -- a discount natural foods grocer that bases its headquarters in Boulder. He is still CEO.

Sunflower Farmers Market has 12 stores in Colorado, including stores in Boulder and Lafayette. Another location in Longmont is expected to open this year. Sunflower also operates stores in Arizona, California, Nevada, Utah, New Mexico and Texas.

Fred Linder, CEO of Boulder-based New Hope Natural Media -- which produces industry trade publications and trade shows, including the Natural Products Expo West -- said he could not speak specifically about Gilliland or Sunflower but companies of that size usually have various succession or contingency plans in place for unexpected events.

Gilliland's grocery roots dig deep in Boulder. In 1984, he and his wife at the time bought a market on University Hill and named it Stella's Market and The Deli Named Desire and later were involved in the purchase of a Pearl Street market and named that store Lolita's. A third effort, The French Market, did not perform well initially.

In 1987, Gilliland and his business partners bought the Crystal Market at 1825 Pearl St. and converted the French Market to copy the Crystal Market's success. The French Market was renamed Wild Oats and was the first store in what grew to be a leading national chain that was acquired by competitor Whole Foods Market Inc. for $565 million in 2007.

According to records from the Maricopa County Assessor's Office, Gilliland bought a home outside of Phoenix in August 2010. He also has a home outside of Longmont, according to the Boulder County Assessor's Office.

Camera Business Writer Alicia Wallace and the Denver Post contributed to this report.