Jim Donnan, a Hall of Fame football
coach who led teams at the University of Georgia and Marshall
University, is facing regulatory claims that he helped run a
Ponzi scheme that defrauded former players and fellow coaches.
Donnan, who became a television commentator for ESPN after
leaving coaching, and a business partner siphoned more than $8
million while misleading investors in their West Virginia-based
business GLC Ltd., the U.S. Securities and Exchange Commission
said in a complaint filed in federal court in Atlanta. Donnan,
67, and Gregory Crabtree, 50, paid fraudulent returns from
investor funds, the SEC said in the complaint.
?Donnan and Crabtree convinced investors to pour millions
of dollars into a purportedly unique and profitable business
with huge potential and little risk,? William P. Hicks, an
associate director in the SEC?s Atlanta regional office, said in
a statement. ?They were merely pulling an old page out of the
Ponzi scheme playbook, and the clock eventually ran out.?
Crabtree started GLC with his wife in 2004 and enlisted
Donnan to recruit investors for the business, which they said
bought liquidated, damaged and returned merchandise from major
retailers for resale to discounters, the SEC said. The
investment program was a Ponzi scheme, with only $12 million of
the $80 million raised used to buy merchandise and much of that
left unsold in warehouses, the agency said in its complaint.
Adult Children
Donnan, who is accused of taking $7.4 million for himself,
is said to have passed proceeds to two of his adult children and
a son-in-law who were named as relief defendants in the
complaint, which seeks civil penalties as well as disgorgement
of illegal proceeds and interest. The former coach and his wife
filed for bankruptcy in Athens, Georgia, in July 2011.
Donnan coached Marshall to the National Collegiate Athletic
Association?s Division I-AA championship in 1992 and followed
that with multiple bowl-game wins with Georgia before he was
fired in 2000.
Barry Switzer, the former Dallas Cowboys coach who employed
Donnan as his offensive coordinator at the University of
Oklahoma in the 1980s, was included in bankruptcy court papers
on a list of those claiming they are owed money.
Other investors named in the bankruptcy documents included
Kendrell Bell, who played under Donnan at Georgia and later for
the National Football League?s Pittsburgh Steelers and Kansas
City Chiefs, who said he lost $2 million with GLC. Jonas Jennings, who played in the NFL for the Buffalo Bills and San
Francisco 49ers, said in court papers he lost $800,000.
?Your Daddy?
According to the SEC complaint, Donnan solicited an
investment from one of his former players by telling him, ?Your
Daddy is going to take care of you? and ?if you weren?t my
son, I wouldn?t be doing this for you.?
Former New York Giants coach Bill Parcells is quoted on
Donnan?s website, which touts his motivational speaking skills,
as saying, ?Jim always knew what buttons to push!?
Edward Tolley, Donnan?s Athens-based lawyer, and Michael
Schmidt, a Cincinnati-based lawyer for Crabtree, didn?t return
telephone messages seeking comment.
To contact the reporter on this story:
Jesse Hamilton in Washington at
jhamilton33@bloomberg.net
To contact the editor responsible for this story:
Maura Reynolds at
mreynolds34@bloomberg.net
Enlarge image
Hall of Fame Football Coach Ran Alleged Ponzi Scheme, SEC Says
Chris O?Meara/AP Photo
Then-Georgia football coach Jim Donnan in Tampa, Fla., in this file photo.
Then-Georgia football coach Jim Donnan in Tampa, Fla., in this file photo. Photographer: Chris O?Meara/AP Photo
Article source: http://www.bloomberg.com/news/2012-08-16/hall-of-fame-football-coach-ran-alleged-ponzi-scheme-sec-says.html
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