Former UGA coach Donnan, partner indicted in alleged Ponzi scheme

awomack@macon.comApril 16, 2013 

Former University of Georgia football coach Jim Donnan was in a federal courtroom in Macon on Tuesday, dressed in a gray, pinstripe suit, a far cry from his old Sanford Stadium sideline attire.

Instead of coaching players, he stood silently before a judge.

Federal grand jurors indicted Donnan and his business partner, Gregory L. Crabtree of Ohio, in an alleged Ponzi scheme that dates to 2007. Both men pleaded not guilty Tuesday and were released on $25,000 unsecured bonds, with travel restrictions.

The 85-count indictment, unsealed Tuesday, alleges that Donnan and Crabtree operated GLC Limited Inc., also known as Global Liquidation Center, as part of a pyramid scheme in which investors lost $22.9 million. The company was incorporated in West Virginia in 2004 and listed its principal place of business in Huntington, W.Va.

At one time or another, the company had six retail discount stores in West Virginia, Ohio, North Carolina and Tennessee, along with six warehouses and a hardware store in Ohio.

Crabtree, who lives in Proctorville, Ohio, was president of the company and oversaw its day-to-day operations.

Donnan, who lives in Athens, allegedly represented himself to investors at various times as vice president, CEO, CFO and co-secretary. His job was to recruit investors, promising them returns of between 50 percent and 200 percent on their money, said Michael Moore, the U.S. attorney for the Middle District of Georgia.

Donnan and Crabtree offered and sold short-term investments, telling potential investors that their company purchased “seconds, close-out and discontinued merchandise” and was able to sell the merchandise for profit.

Between Sept. 10, 2007, and Oct. 12, 2010, Donnan and Crabtree raised more than $81 million from 94 investors, according to the indictment filed Thursday in Athens.

Moore said less than $11 million of the money was used to buy products or to ship them.

Instead of buying and selling presold merchandise as was represented to investors, Crabtree and Donnan allegedly used the money for other purposes -- to open new GLC retail stores and warehouses, for other business ventures and for their own use, according to the indictment.

The company had only about $5.3 million in sales.

Donnan contributed about $4.7 million to the company but took more than $13 million in payments. He used the money to close on a home, make deposits in investment funds, pay a loan, pay private school tuition, buy two cars and to buy certificates of deposit, according to the indictment.

Crabtree allegedly profited at least $1.6 million from the alleged scheme. He used the money to buy a pool, a Cadillac and stores. He also bought certificates of deposit.

New investors were continually needed to pay company expenses, pay Crabtree and Donnan and to pay what was falsely represented to investors as profits, according to the indictment.

Donnan’s family allegedly contributed $562,500 to the scheme and received a profit of $1.3 million.

The indictment charges Donnan and Crabtree with conspiracy to commit wire and mail fraud, mail fraud, wire fraud, unlawful transportation of interstate securities, conspiracy to launder the proceeds of unlawful activity, money laundering and engaging in monetary transactions with property criminally derived from wire and mail fraud.

The document includes a forfeiture notice for property that can be traced to the alleged criminal activity.

Donnan and Crabtree surrendered to U.S. marshals at the federal courthouse in Macon on Tuesday.

Crabtree, who has requested a court-appointed lawyer, was represented by Macon attorney Charles E. Cox.

Athens lawyer Edward Tolley is representing Donnan.

Tolley said Donnan has been involved in bankruptcy proceedings to try to satisfy debts to GLC investors, but a judge ruled that it wouldn’t be fair to other creditors for Donnan to just pay what’s owed to investors.

The case is still pending, he said.

“He doesn’t have anything left,” Tolley said of Donnan’s finances. “It wiped him out.”

Tolley said the case is complex, but added it’s clear that “there is no criminal intention here.”

According to previous court filings, among the football coaches who invested were Barry Switzer, Frank Beamer, Dennis Franchione and Tommy Tuberville. Donnan was Georgia’s head coach from 1996-2000. During his five years at the helm, the Bulldogs went 40-19 overall and 25-15 in SEC play, and his teams finished ranked in the top 20 his final four years.

He was fired after the 2000 season and eventually replaced by Mark Richt.

Donnan is a member of the College Football Hall of Fame, which inducted him in 2009. He was wildly successful at Marshall, which he guided to 64 wins in six seasons, including a national championship and three more appearances in the Division 1AA title game.

ESPN employed Donnan as a studio analyst for several years after his firing from Georgia. He had continued to live in Athens, and he was a semiregular at Georgia men’s basketball games.

Writer Seth Emerson contributed to this report. To contact writer Amy Leigh Womack, call 744-4398.

The Telegraph is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service