Quantcast
Get breaking news alerts via email

Click here to manage your alerts
Ex-UGA coach Jim Donnan charged in Ponzi scheme

$80 million » Donnan used his influence to get college coaches and former players to invest.

By KATE BRUMBACK

The Associated Press

First Published Aug 16 2012 11:11 am • Last Updated Aug 16 2012 09:04 pm

Atlanta • Former University of Georgia football coach Jim Donnan is accused of orchestrating an $80 million Ponzi scheme, using his influence to get high-profile college coaches and former players to invest, the U.S. Securities and Exchange Commission said Thursday.

Donnan and business partner Gregory Crabtree, of Proctorville, Ohio, convinced investors to pour millions of dollars into a business they said was unique and profitable with huge potential and little risk, said William P. Hicks, associate director of the SEC’s Atlanta office.

Join the Discussion
Post a Comment

The West Virginia-based liquidation company, GLC Limited, would buy appliances and furniture for resale, promising high rates of return that didn’t materialize, federal regulators said. The pair raised about $80 million from nearly 100 investors, but only about $12 million of that was used to buy merchandise for liquidation while the remainder was used to pay false returns to earlier investors or was spent by Donnan and Crabtree, the SEC said.

Donnan also funneled large sums to two of his adult children and a son-in-law, and regulators are seeking to recover at least some of that money, the SEC said.

The SEC’s complaint charges Donnan and Crabtree with violating federal securities laws.

A lawyer for Donnan did not immediately return a phone call and email message seeking comment. A lawyer for Crabtree did not immediately return a phone call.

Donnan’s attorney has previously acknowledged the former coach was paid lucrative commissions, but he said Donnan believed he was being paid from legitimate profits earned by the company.

Donnan was head football coach at Marshall University from 1990 through 1995 and at the University of Georgia from 1996 through 2000 and later became an ESPN analyst.

Among the coaches Donnan helped attract were Texas State football coach Dennis Franchione; Virginia Tech football coach Frank Beamer; ex-Dallas Cowboys coach Barry Switzer and Texas Tech football coach Tommy Tuberville.

Donnan used his influence with former players who looked up to him, federal regulators said. According to the SEC court filing, he told one player, "Your Daddy is going to take care of you," and, "if you weren’t my son, I wouldn’t be doing this for you," the SEC complaint said. That former player, who was not named, ended up investing $800,000.


story continues below
story continues below

A federal bankruptcy judge last month approved a settlement for Donnan and his wife. Creditors claimed the Donnans owe them more than $40 million. The exact amount they’ll receive won’t be known until a court-appointed trustee liquidates most of Donnan’s assets. A federal judge in Ohio, where GLC is being restructured in bankruptcy court, approved the settlement.

In outlining the alleged fraud, the SEC said Crabtree formed GLC in 2004 and began buying and selling liquidated, damaged, or returned merchandise. Donnan funded a GLC deal to buy and resell appliances in July 2007 and then began recruiting other investors.

Donnan typically offered investors a chance to provide money for specific "deals" by GLC. When deals were supposedly finished, Donnan often encouraged investors to "rollover" their principal or interest payments into new deals, the SEC said. He told some investors their profits were "guaranteed" and told at least one investor "you can’t lose your money; it’s already pumping oil."

In late 2009 or early 2010, Crabtree told Donnan that GLC could no longer pay the rates of return Donnan was promising investors. The company began missing interest payments due to investors in August 2010.

Around that time, Donnan told at least one investor things were slowing down. He also told his son’s in-laws, who were GLC investors and wanted to invest more, not to invest further.

But neither Donnan nor Crabtree disclosed GLC’s financial problems to new investors. And Donnan, with Crabtree’s knowledge, continued raising funds for deals while promising future returns, the SEC said.

Ultimately, a group of investors forced the appointment of a restructuring officer to run GLC. As that restructuring officer began to uncover the details of the fraud, Crabtree resigned and in February of last year, the restructuring officer had GLC file a voluntary bankruptcy petition.



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.