An Ohio man pleaded guilty Monday to his role in an alleged multimillion-dollar Ponzi scheme in which former University of Georgia football coach Jim Donnan allegedly recruited investors.
Gregory L. Crabtree, 52, pleaded guilty in federal court to one count of conspiracy to commit fraud in the sale of a security. Although his plea was taken in Macon, he will be sentenced in Athens June 24.
Crabtree remained quiet during the brief plea hearing Monday, aside from his responses to questions posed by U.S. District Judge C. Ashley Royal about whether he understood his rights.
His lawyer, Charles E. Cox Jr., said Crabtrees guilty plea represented his taking a step toward taking responsibility for his conduct.
Crabtree faces a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release. He also may be ordered to pay part of $22.9 million restitution.
Donnan, who has denied the charges against him, is scheduled to stand trial in Athens next month for his alleged participation in the scheme.
As part of his guilty plea, Crabtree signed an agreement with prosecutors that they could have proven a series of facts in Crabtrees case, had it gone to trial. The plea agreement included these statements:
Crabtree and Donnan were partners in GLC Limited Inc., a West Virginia-based business that operated retail discount stores, a hardware store and a sporting goods store, with six warehouses.
As part of a pyramid scheme, Crabtree and Donnan 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 goods for profit.
Crabtree ran the day-to-day operations while Donnan allegedly recruited investors.
Investors were promised rates of return ranging from 50 to 200 percent, but they werent given much information about their investment. They invested because of their trust in Donnan, Georgias head football coach from 1996 to 2000. Investors reportedly included Donnan, Donnans family members and current or former football coaches Barry Switzer, Frank Beamer, Dennis Franchione and Tommy Tuberville, among others.
Crabtree and Donnan allegedly made false statements to investors saying that merchandise was presold and that the company was a profitable and financially stable business capable of paying the promised rates of return. In truth, the company had little income other than the investors money, and money from new investors was continually needed to pay the companys expenses, investors and Crabtree and Donnan.
Of the more than $81 million raised from 2007 to 2010, about $10.9 million was used to purchase goods and pay for shipping.
Crabtree received at least $1.6 million in profit while Donnan made about $8.4 million, according to the agreement.
To contact writer Amy Leigh Womack, call 744-4398.