WASHINGTON (Legal Newsline) - The Securities and Exchange Commission announced Thursday that fraud charges were filed against a former college football coach involved in an $80 million Ponzi scheme.
Among those allegedly being duped were other college coaches and former players. The SEC alleges that Jim Donnan, a College Football Hall of Fame inductee who guided teams at Marshall University and the University of Georgia and later became a television commentator, conducted the fraud with his business partner Gregory Crabtree through a West Virginia-based company called GLC Limited.
Donnan and Crabtree allegedly told investors that GLC was in the wholesale liquidation business and earning substantial profits by buying leftover merchandise from major retailers and reselling those discontinued, damaged or returned products to discount retailers.
Investors were allegedly promised rates of return ranging from 50 to 380 percent. Yet, only about $12 million of the $80 million raised from nearly 100 investors was actually used to purchase leftover merchandise, the SEC says. The remainder of the money was allegedly used to pay earlier investors or misappropriated by Donnan and Crabtree.
"Donnan and Crabtree convinced investors to pour millions of dollars into a purportedly unique and profitable business with huge potential and little risk," said William Hicks, Associate Director of the SEC's Atlanta Regional Office. "But they were merely pulling an old page out of the Ponzi scheme playbook, and the clock eventually ran out."
According to the SEC's complaint filed in federal court in Atlanta, the scheme began in August 2007 and collapsed in October 2010 after Donnan had recruited the majority of investors by approaching contacts he made as a sports commentator and as a coach.