Hall of Fame Football Coach Donnan Accused in Ponzi Scheme

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

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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