The Securities and Exchange Commission has charged Jim Donnan and his Ohio-based business partner, Gregory Crabtree, for defrauding investors by promising them exceedingly high returns of 50-380 percent. Most of the victims of their Ponzi scheme were former football players and other college coaches.
The SEC filed a complaint in Atlanta federal court and said that Donnan and Crabtree lured investors by saying that West Virginia-based GLC Ltd. was earning hefty profits in the wholesale liquidation business. They raised over $80 million from about 100 investors, but invested only $12 million in GLC, and used the remaining amount to pay fake returns to earlier investors.
Their scam began in August 2007, and by the time it collapsed in October 2010, Donnan had swept $7 million, and Crabtree took out $1.1 million from the investors’ money. According to SEC, Jim Donnan assured the potential investors that, along with them, he himself was investing in the deals he recommended. He also told them that many other reputed football players and coaches had successfully invested in GLC.
Jim Donnan guided the football team of Marshall University, and later became the head coach at Georgia University from 1996-2000. He later became a television commentator at ESPN. He pulled in the contacts he had made in his professional career. Kendrell Bell, the former NFL player, said last year that Donnan had duped him of $2 million.
“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 headquarters. “But they were merely pulling an old page out of the Ponzi scheme playbook, and the clock eventually ran out.”
The SEC said that the son-in-law and two children of Donnan have been listed as relief defendants to recover the unlawfully collected funds. According to Washington Post, Donnan agreed to a settlement with GLC, which is in bankruptcy court for restructuring, in June. The Post added that Donnan is required to repay 80 percent of the losses to investors and $7.5 million to GLC Ltd.