Jim Donnan accused in Ponzi scheme

Updated: July 18, 2011, 1:13 PM ET
By John Barr | ESPN

ATHENS, Ga. -- Former University of Georgia football coach and ex-ESPN college football analyst Jim Donnan has been accused of making millions of dollars from a Ponzi scheme that also enriched his three children and their spouses, according to documents filed late last week in an Ohio bankruptcy case.

The federal court documents, filed Thursday and Friday, are part of a larger bankruptcy case involving West Virginia-based company GLC Ltd.

Formed in March 2004, GLC Enterprises, as it was known then, attracted investments from several high-profile figures from the world of sport. Among them are former University of Oklahoma and Dallas Cowboys coach Barry Switzer; Virginia Tech football coach Frank Beamer; Texas State football coach Dennis Franchione; and Texas Tech football coach Tommy Tuberville.

Donnan
Donnan

According to the court documents, Donnan and his wife, Mary, "solicited investments from more than 50 individuals and entities to GLC" and made commissions ranging from 15 percent to 20 percent for any new investments solicited.

"James Donnan is substantially, if not principally, responsible for the initiation and operation of a far-reaching ponzi scheme that defrauded GLC and its investors of approximately $27,752,159," the court documents state.

Donnan served as the offensive coordinator for the Sooners from 1985 to '89, winning the 1985 national championship under Switzer. Donnan coached Georgia from 1996 to 2000 after winning a national title as the coach of then-Division I-AA Marshall in 1992.

The Donnans, who are identified in the court documents as being the first investors in GLC Enterprises, invested more than $5.4 million in the company, a figure not disputed by Donnan's attorney, Edward Tolley.

The company, according to court documents and several investors who spoke to Outside the Lines, was "pitched" by Donnan to investors as a retail liquidation company, with its principal business being the re-sale of consumer products -- everything from refrigerators and clothing to children's toys.

According to court documents, investors sank nearly $82 million dollars into GLC Enterprises, but less than $12 million was spent on inventory and at least $13 million in investor money remains unaccounted for. With dwindling revenues, GLC eventually used money from new investors to pay old investors, which, according to the court documents, constituted a Ponzi scheme.

"Jim was the recruiter," Tuberville said when asked by ESPN how he came to invest in GLC Enterprises. "I think Jim was a little like the rest of us. He thought it was going to be a good deal and it just went bad."

Virginia Tech's Beamer also acknowledged he invested in GLC Enterprises on the advice of Jim Donnan.

"I just refuse to believe that Jim knew what it was when it started," Beamer said. "Knowing Jim over the years I don't think he'd get his friends into something like that."

"The suggestion that Jim Donnan was aware of a Ponzi scheme is totally false," said Tolley, Donnan's attorney in Athens.

Donnan's role in GLC Enterprises is disputed. In two separate lawsuits -- one filed Thursday against Donnan's children and their spouses and another filed Friday, which specifically names Donnan and his wife Mary as defendants -- Donnan is alleged to have been an officer in the company. According to the court documents, Donnan signed applications for GLC bank accounts and checks on behalf of the company. The lawsuit also says Donnan told potential investors he was an officer in the company -- identifying himself to investors at different times as the company's Vice President and secretary, a notion Donnan's lawyer disputes.

"Jim was not an officer in GLC," Tolley said. "He was never an officer. That's absolutely not true."

GLC is being restructured under new management. The current operators, who filed Thursday's lawsuit, declined to comment, as did their attorneys.

The Donnans and their family members made more than $14.5 million from GLC in the form of "approximately 293 transfers to James and Mary Donnan or their immediate family members," according to the court documents.

The lawsuit specifically names as defendants Donnan's son, Jeffrey "Todd" Donnan and wife Krista Donnan; Jim Donnan's daughter Tammy Donnan; and son-in-law, Gregory Johnson, who is married to Jim Donnan's daughter Mary Johnson.

"[Donnan's children] didn't have a damn thing to do with this," Tolley said.

But Thursday's lawsuit alleges that Jim Donnan and his wife transferred significant assets to their children, including a home valued at $1,050,000 that Donnan and his wife purchased for Todd and Krista Donnan, one of many transactions the lawsuit describes as "fraudulent transfers."

Jim Donnan, who has served as an ESPN college football analyst in past seasons, has declined repeated requests for interviews related to GLC.

Gregory and Linda Crabtree, the original officers of GLC Enterprises, and their attorney also have not responded to requests for comment.

GLC Enterprises filed for Chapter 11 bankruptcy in February in federal court in Ohio.

Jim and Mary Donnan followed with a Chapter 11 bankruptcy filing of their own earlier this month. Friday's lawsuit, which specifically names Donnan and his wife Mary as defendants, refers to the Donnan's recent bankruptcy filing "an eleventh-hour attempt to avoid responsibility for their wrongful, unlawful, and fraudulent acts."

The Donnans' filing, according to Tolley, came after Jim Donnan offered to pay back creditors roughly $5 million. The creditors wanted $8.25 million from Donnan, Tolley said.

"He [Donnan] offered $5 million, which is about all he has," Tolley said. "Beyond that I don't know how you get blood out of a rock but that seems to be what they're after."

John Barr is a reporter in ESPN's Enterprise Unit. He can be reached through email at jbarr-espn@hotmail.com. Enterprise Unit producer Greg Amante contributed to this report.

John Barr | email

Reporter ESPN Enterprise Unit