ATHENS, Ga. (AP) - Former University of Georgia football coach Jim Donnan abused the trust of friends and fellow coaches to lure them into a fraudulent $80 million investment scheme, a federal prosecutor said Tuesday.
A defense attorney countered that Donnan thought he’d found a good investment and wanted to share his good fortune with others.
The conflicting portraits of Donnan, 69, were outlined during opening statements in his trial on federal charges including conspiracy, mail fraud and wire fraud.
Donnan and Gregory Crabtree, of Proctorville, Ohio, ran the scheme through GLC Limited Inc., a West Virginia-based company that dealt in closeout merchandise, according to an indictment filed last year. The pair sold short-term investments and promised investors rates of return ranging from 50 percent to 200 percent, prosecutors said.
According to filings in a separate federal case, among those lured by Donnan to invest were Texas State football coach Dennis Franchione; Virginia Tech football coach Frank Beamer; ex-Dallas Cowboys coach Barry Switzer; Cincinnati football coach Tommy Tuberville; and North Carolina State basketball coach Mark Gottfried.
None of them responded Tuesday to calls from The Associated Press.
He routinely misrepresented the “deals” and promised phenomenal returns, McCommon said.
Donnan was head coach at Marshall University from 1990-1995 and at Georgia from 1996-2000. He later became an ESPN analyst.
GLC had little income, so money from new investors was continually needed for expenses, to pay Crabtree and Donnan and to send investors payouts that were falsely represented as returns on earlier investments, McCommon said. Between September 2007 and October 2010, prosecutors say the pair raised more than $81 million from 94 investors.
The indictment identifies investors only by their initials. But the U.S. Securities and Exchange Commission in 2012 filed a complaint against Donnan, saying he used his influence to get high-profile college coaches and former players to invest $80 million into a Ponzi scheme. That case is still pending.
The scheme crumbled in late 2010 when GLC was no longer able to pay the rates of return investors that had been promised and the company began missing interest payments, prosecutors have said. An investor reorganizing committee was appointed and it was discovered that the company had no means to control or track inventory or measure profits and losses.