Ex-players say they trusted Donnan and lost money
ATHENS, Ga. (AP) Former NFL and University of Georgia football player Jonas Jennings testified Thursday that he trusted his college coach, Jim Donnan, enough to invest more than half a million dollars with him, never dreaming that he would lose most of it in what prosecutors say was a fraud scheme.
Jennings, who played for the Buffalo Bills and the San Francisco 49ers, said he saw Donnan as a father figure and called him after he retired from the NFL in 2009 to talk about possibly going into coaching.
''He just told me that he had a better opportunity that would put me on Easy Street,'' Jennings said in federal court in Athens, where Donnan faces charges including conspiracy, mail fraud and wire fraud.
A federal indictment against Donnan and Gregory Crabtree, of Proctorville, Ohio, says the pair ran a fraudulent investment scheme from September 2007 to December 2010 through GLC, a West Virginia-based company that dealt in wholesale and closeout merchandise. Prosecutors have said Crabtree ran the day-to-day operations and Donnan used relationships of trust within his extensive network of personal and professional contacts to lure investors into the scheme.
The pair sold short-term investments and promised investors rates of return ranging from 50 percent to 200 percent. But the company wasn't generating enough profits and money from new investors was continually needed to pay the company's expenses and other investors, prosecutors have said.
''All I heard was `guaranteed' coming from a guy I knew well,'' Jennings said, adding that he figured Donnan could pay him back personally if anything went wrong.
The prosecution has argued Donnan falsely told investors that they were putting their money in ''presold deals'' - merchandise they would purchase for which Crabtree already had a committed buyer - when in fact they were buying merchandise and then looking to sell it.
In late 2009, problems surfaced as Crabtree was having trouble moving merchandise and started stocking it in warehouses because investor money was coming in faster than he could sell it. He spoke to Donnan about the troubles, and Donnan said he'd look into ways to help, Crabtree said. They ended up using investor money to pay other investors because they didn't have profits from sales to pay the high returns Donnan had promised investors, Crabtree said.
''Do you realize what that is, what that's called?'' prosecutor G.F. ''Pete'' Peterman III asked Crabtree.
''I do now,'' Crabtree said.
''What's that?'' Peterman asked.
''A Ponzi scheme,'' Crabtree said.
Jennings invested $500,000 in February 2010 and, when Donnan urged him to invest more, $300,000 in September 2010. He got some payouts at first, but when they stopped coming, he contacted his coach. His tone becomes increasingly urgent in a long string of text messages spanning several months that he read aloud in court, while Donnan seems to keep stalling.
One of his former UGA teammates, Kendrell Bell, who went on to play for the Pittsburgh Steelers and the Kansas City Chiefs, said he knew Donnan as a coach who ''looked out for the players.'' When his financial adviser told him Donnan had an investment opportunity for him, he was quick to sign on after a meeting during which Donnan implied it was a no-risk situation and that he would personally refund any money that was lost, Bell said.
In late 2010, Donnan called him and said things were falling apart and that Crabtree had been doing something wrong, Bell testified. His total investment of $2 million dollars was lost, though he later recuperated about half of it through legal proceedings.
Crabtree pleaded guilty last month to a single count of conspiracy and faces up to five years in jail.
He testified Thursday that Donnan presented a document to him in late 2010, after the scheme had unraveled, in which Crabtree was to certify that the ex-coach did not know that investor money was being used to pay other investors. Crabtree said Donnan said to him, ''Would you care to sign this letter to help me save face with my friends?''
When Crabtree pointed out that Donnan had been aware of how the payments worked, Donnan acknowledged that but said he needed Crabtree to sign the document so he could save face and try to salvage some of the business, Crabtree testified.
Donnan's attorney, Jerry Froelich, didn't address that document during his cross examination of Crabtree.