Former College Football Coach Indicted in $80 Million Ponzi Scheme

Federal authorities unveiled criminal charges against the former University of Georgia football coach, alleging he scammed dozens of investors, including fellow coaches and former players, out of more than $80 million.  Jim Donnan, of Athens, Georgia, was charged in an eighty-five count indictment that also named his former business partner, Gregory L. Crabtree.  The criminal charges come less than a year after the U.S. Securities and Exchange Commission ("SEC") filed civil charges against the men.  Both men were released on $25,000 bond, and ordered to restrict their travel plans and surrender their passports.

Donnan and Crabtree operated GLC Limited ("GLC"), also known as Global Liquidation Center, which was formed in 2004 and purported to be in the wholesale liquidation business.  Beginning in 2007, the men solicited potential investors, promising short-term returns ranging from 50% to 200% from the purchase and resale of discontinued or damaged merchandise acquired from major retailers at a discount, which ranged from out-of-season toys, patio furniture, or holiday decorations.  Donnan was in charge of attracting investors, using his contacts from his previous tenure as head football coach of the University of Georgia to recruit fellow coaches and former players.  In total, nearly 100 investors contributed over $80 million to the scheme.   

However, out of the $80 million raised from investors, slightly more than 10% was used to purchase merchandise for resale, and the company booked less than $6 million in total sales.  The remainder, or nearly $64 million, was used to make payments of purported interest and principal redemptions to investors.  Crabtree and Donnan also misappropriated millions of dollars of investor funds, with Crabtree profiting by approximately $1.6 million and Donnan taking home more than $13 million on an initial $4.7 million investment.  Donnan's family is also said to have profited by over $1 million from the scheme.  When GLC began falling behind on interest payments, a group of investors obtained the appointment of a Restructuring Officer, who discovered the fraud and, in February 2011, caused GLC to file a voluntary bankruptcy petition.  Donnan and his wife also filed for personal bankruptcy following increasing claims from GLC victims.

According to Donnan's attorney, the failed business venture wiped Donnan out financially, but maintained that "there is no criminal intention here."  

Donnan enjoyed a storied career in college football, leading Marshall to a national championship and later being inducted to the College Football Hall of Fame.