Former Georgia football coach Jim Donnan was charged with fraud in an $80 million Ponzi scheme that included other college coaches and former players among its victims.
The U.S. Securities and Exchange Commission said Donnan and business partner Gregory Crabtree defrauded investors they'd promised extremely high rates of return -- from 50 to 380 percent -- under the guise of a wholesale liquidation business called GLC Limited.
Investors were told when the scheme was first hatched in 2007 that leftover merchandise -- primarily appliances and furniture -- from major retailers was purchased and resold at substantial profits. In reality, only about $12 million of the $80 million raised from almost 100 investors was used in that manner.
"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 remaining funds, the SEC said, were used to pay fake returns to earlier investors or stolen for other uses by Donnan and Crabtree.
Coaches, players and other contacts made during Donnan's career as a coach -- he was Georgia's head coach from 1996-2000 -- and later as a broadcaster for ESPN were among victims in the scheme.
One former Georgia and NFL player, Kendrell Bell, said last year that Donnan had bilked more than $2 million out of him in the scheme.
The SEC alleges Donnan typically told investors that he was investing along with them. He claimed he and many other college football coaches had been profitable investing in GLC. By October 2010, Donnan had siphoned $7 million out of the company and Crabtree had misappropriated more than $1 million, the SEC said.
Donnan reached a bankruptcy settlement for GLC in June.
Two of Donnan's children and his son-in-law are listed as relief defendants. The SEC alleges Donnan steered money to their accounts and intends to reclaim the illicit funds.