College Football Hall of Fame inductee Jim Donnan, former coach of teams at Marshall University and the University of Georgia, was charged with fraud by the Securities and Exchange Commission Thursday for teaming with an Ohio man to conduct an $80 million Ponzi scheme that counted other college coaches and former players among its victims.

The SEC alleges Donnan, who also worked as a television commentator, conducted fraud with his business partner Gregory Crabtree through a West Virginia-based company called GLC Limited. Investors were told GLC was in the wholesale liquidation business, earning substantial profits by buying leftover merchandise from major retailers and reselling the discontinued, damaged or returned products to discount retailers. Donnan and Crabtree promised the investors rates of return ranging from 50 to 380 percent, while only about $12 million of the $80 million raised from nearly 100 investors was actually used to purchase leftover merchandise and the rest used to pay fake returns to earlier investors or stolen for other uses by the two men.

The SEC complaint, filed in federal court in Atlanta, states the scheme began in August 2007 and collapsed in October 2010, after Donnan had recruited the majority of investors through his sports commentator and coach connections.

“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 P. Hicks, associate director of the SEC’s Atlanta regional office, in a statement. “But they were merely pulling an old page out of the Ponzi scheme playbook, and the clock eventually ran out.”

The complaint outlines one instance of Donnan telling a former player, who later invested $800,000: “Your Daddy is going to take care of you. If you weren’t my son, I wouldn’t be doing this for you.”

Donnan also talked up GLC’s success and profitability, telling investors the company could enter into even more merchandise deals with more capital. Donnan and Crabtree offered and sold short-term (two to 12 month) and purportedly high-yield investments, with returns paid to investors in monthly or quarterly installments or a one-time down payment.

Though Donnan told the investors there was little risk, as their money was purchasing specific items of merchandise that were often presold, the merchandise GLC actually purchased was merely unsold and abandoned in West Virginia and Ohio warehouses.

According to the complaint, Donnan also assured investors he was investing with them in any merchandise deal he offered, and that other prominent college football coaches had successfully and profitably invested as well.

The SEC complaint charges Donnan, resident of Athens, Ga., and Crabtree of Proctorville, Ohio, with violations of the antifraud and registration provisions of the federal securities law.

By the time the scheme ended in October 2010, Donnan had siphoned more than $7 million in investor funds from GLC and Crabtree misappropriated about $1.08 million.

The complaint names two of Donnan’s children and his son-in-law as relief defendants during the litigation to be led by W. Shawn Murnahan, for the purpose of recovering illicit funds Donnan steered to them.

The investigation was conducted in the Atlanta Regional Office by staff attorney Micheal D. Watson and assistant regional director Stephen E. Donahue.

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