College Basketball Nation: David Salinas

Late last week, ESPN's "Outside The Lines" examined the news that former Georgia football coach and ex-ESPN analyst Jim Donnan may have been involved in a Ponzi scheme run by a West Virginia-based retail liquidation company called GLC Enterprises. If that sounds shady, well, it allegedly is:
Federal bankruptcy documents filed last month allege that Donnan "solicited investments from more than 50 individuals and entities to GLC Enterprises" and made commissions ranging from 15 percent to 20 percent for any investments he solicited. Donnan and his family members made more than $14.5 million from GLC in the form of "approximately 293 transfers," according to the court documents.

According to the court filings, those individuals and entities included high-profile football coaches such as Barry Switzer, Frank Beamer and Tommy Tuberville. But football coaches weren't the only ones who allegedly gave their money away. According to bankruptcy court documents obtained by the Charlotte Observer, that list also includes new NC State coach Mark Gottfried, who invested $250,000 with the company. Yikes.

The good news? Gottfried made the investments before he was hired by the Wolfpack. He's not named as a defendant in the suit, nor is he accused of any wrongdoing.

The case is unrelated to the still-brewing David Salinas scandal, but it is of the same type. Salinas, a prominent figure in Houston AAU hoops, committed suicide in July after the SEC opened an investigation into his investment fund, J. David Financial Group. Dozens of prominent college hoops coaches invested their money with Salinas, and following the revelations, many in the public wondered if the investments served as a point of access for coaches to players in Salinas's AAU organization. In short, it's a mess.

Which brings us back to the original point: Why do college coaches seem so prone to Ponzi schemes? Is it outsized trust? A too-wide circle of hangers-on, agents, runners and money men? What is it about the profession that seems to encourage coaches to eschew safer places for their money -- banks, mattresses, a bunker filled with gold bullion and canned goods -- and instead place it into the hands of random investment funds and retail liquidation companies?

Anyone can be duped by a schemer, of course. Some sympathy is warranted here. But fellas, please, if you're that desperate for a place to put your money, hire an accountant. Just please stop giving your money to guys with shady investment opportunities. Deal?
First, a recap: On Sunday night, CBS reported the apparent suicide of David Salinas, a Houston-area financial manager who "doubled as the founder of a prominent Houston-area summer basketball program," Houston Select. The suicide apparently came on the heels of a Securities and Exchange Commission investigation into Salinas' investment practices for his investment fund, J. David Financial Group, practices which may have cost a score of college basketball coaches millions of dollars.

The fallout could be devastating for the coaches involved, which include former Arizona coach Lute Olson, Baylor coach Scott Drew, Texas Tech coach Billy Gillispie and Gonzaga assistant Ray Giacoletti, among others. If the investigation unearths a connection between investments and access to talent -- several of Salinas's players ended up playing for the coaches on the list of investors -- then repercussions from the NCAA could be soon to follow.

At best, a score of coaches invested their money in what appears to be a ponzi scheme. At worst, they did so in exchange for the ability to recruit players from Salinas' program. The first implication is embarrassing; the second could be downright explosive.

At the very least, it's a story that is bound to metastasize continually in the coming weeks and months. In fact, that process has already begun. On Monday, in the wake of the original report, former Houston coach Tom Penders told The Daily's Dan Wolken that Salinas approached him and made "a strong, strong implication" that investing would increase Penders's access to recruits:
“He talked about all these coaches that he had investing with him,” the former University of Houston coach told The Daily last night. “I told him because he was an AAU guy, I couldn’t possibly get involved in that. I said, ‘I think that’s kind of a rules violation, or could be.’ ” Penders, now retired, told The Daily that Salinas solicited him for a $100,000 investment in their first meeting and “made a strong, strong implication” that it would help Houston gain access to prospects that were part of the Houston Select, an AAU program that Salinas founded.

Amusingly, Penders also said he had no idea why college coaches -- who are "supposed to be street smart," to use his phrasing -- decided to invest money with an AAU program founder in the first place. Valid question, Tom. One can safely assume the NCAA Committee on Infractions will be wondering the exact same thing.

In the meantime, the coaches implicated in the budding scandal have all either confirmed their involvement or refrained from commenting. Only one, former Duquesne and Nebraska coach Danny Nee, openly issued a denial. Speaking with the Omaha World-Herald, Nee said:
“Whatever they said I did, I didn’t do,” Nee said. He called Salinas “a good friend.” “It’s a sad loss,” Nee said.

Today, CBS's Gary Parrish followed up with this:
Why did we report that?

Because a source provided us with a brochure from Select Asset Management, LLC -- another Houston-area investment firm that's run by Houston Select co-founder Brian Bjork and is associated with J. David Financial Group. The brochure features a "testimonial" from Nee, now the head coach at the United States Merchant Marine Academy. The testimonial reads: "I have been a client with J. David Financial Group since I was referred to them in 1995-96. After several financial planning sessions, I became very comfortable with their long-term visions and investment style. More importantly, I marvel at their track record in both up and down markets."

In other words, we stand by our report.

Note to the other coaches implicated in this mess: If your name and testimonial is on a J. David Financial Group brochure, it's probably best to come clean. Failing that, issue a quiet "no comment" and go on your way. This thing is going to get much worse before it gets any better.

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