The United States Securities and Exchange Commission on Thursday brought fraud charges against former Georgia football coach Jim Donnan, who allegedly took part in an $80 million Ponzi scheme.
Donnan and business partner Gregory Crabtree were working through GLC Limited, a company based in West Virginia, and among the victims were other college coaches and former players. According to the SEC, Donnan and Crabtree told investors that GLC would buy leftover merchandise from major retailers and sell them to discount retailers for a profit, and they guaranteed rates of return anywhere from 50 to 380 percent.
The SEC determined that only $12 million of the $80 million raised from nearly 100 investors was used to purchase leftover merchandise and that the remaining amount was used to pay fake returns to earlier investors or was stolen by Donnan and Crabtree for other uses.
"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, the associate director of the SEC's Atlanta Regional Office. "They were merely pulling an old page out of the Ponzi scheme playbook, and the clock eventually ran out."
Among the more notable coaches Donnan persuaded were Frank Beamer, Dennis Franchione, Barry Switzer and Tommy Tuberville.
According to the SEC, the scheme began in August 2007 and folded in October 2010. In one instance, Donnan told a former player, "Your 'daddy' is going to take care of you," and that unnamed player later invested $800,000.
The SEC charges against Donnan are civil and not criminal, and Athens-based attorney Ed Tolley told the Athens Banner-Herald that Donnan does not face the possibility of jail time. Under terms of a bankruptcy settlement agreement last year, Donnan had to pay at least $4 million to GLC creditors.
Donnan was inducted into the College Football Hall of Fame in 2009, when his stints as Oklahoma's offensive coordinator (1985-89), Marshall's head coach (1990-95) and Georgia's head coach (1996-2000) were recognized. He won an NCAA Division I-A national championship with Oklahoma in 1985 and a I-AA title with Marshall in 1992, and he coached the Bulldogs to a 40-19 record.
His last four seasons in Athens produced a 35-13 record, but he was 4-12 in that stretch against the rivalry quartet of Auburn, Florida, Georgia Tech and Tennessee. Donnan was fired in December 2000 and replaced by current Bulldogs coach Mark Richt.