Ex-UGA coach Jim Donnan charged in Ponzi scheme
Former University of Georgia football coach Jim Donnan and a
business partner face charges that they operated a Ponzi scheme,
according to federal indictment unsealed Tuesday.
The grand jury last week returned the 85-count indictment
against Donnan and Gregory L. Crabtree of Proctorville, Ohio. The
charges include conspiracy, mail fraud and wire fraud, among
Charles Cox, a lawyer for Crabtree, said his client entered a
not guilty plea at his arraignment Tuesday in Macon and was
released on bond.
”We have no other comment, as neither Mr. Crabtree nor I had
seen the indictment before this afternoon,” Cox wrote in an email.
”The not guilty plea he entered today was the first step in his
defense of these charges.”
A lawyer for Donnan did not immediately respond to calls and an
email seeking comment. Donnan was also set to make his initial
court appearance Tuesday, but it wasn’t immediately known if he
The indictment says the pair ran the scheme through GLC Limited,
Inc., a West Virginia-based company that dealt in closeout
merchandise. Crabtree was president of the company and was
responsible for its day-to-day operation, while Donnan’s main role
was to recruit investors, the indictment says. The pair offered and
sold short-term investments, and promised investors rates of return
ranging from 50 percent to 200 percent.
Investors generally weren’t given much information about the
deals but threw their money in because they trusted Donnan. He and
Crabtree routinely lied to investors about the nature of the
business, the indictment says.
GLC had little income other than the investments, so money from
new investors was continually needed to pay expenses, to pay
Crabtree and Donnan and ”to perpetuate the scheme by paying what
was falsely represented to investors as being a return on their
investment from sales,” the indictment says. Between September
2007 and October 2010, the pair raised more than $81 million from
The indictment identifies investors only by their initials. But
the U.S. Securities and Exchange Commission last year filed a
complaint against Donnan and others, saying the ex-coach used his
influence to get high-profile college coaches and former players to
invest $80 million into a Ponzi scheme. That case is still pending
in federal court in Atlanta.
The individual losses ranged from a few thousand dollars to
about $4 million, an SEC official said last year.
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.
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 University
of Cincinnati 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
last year, 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.
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
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
Ultimately, a group of investors forced the appointment of a
restructuring officer to run GLC. As the officer began to uncover
the fraud, Crabtree resigned. In February 2011, the restructuring
officer had GLC file a voluntary bankruptcy petition.
Donnan and his wife also filed for bankruptcy, and creditors
claimed the Donnans owed them more than $40 million. A federal
judge in Georgia approved a settlement in the case last July and, a
judge in Ohio, where GLC is being restructured in bankruptcy court,
also signed off on the settlement.