Jim Donnan charged in Ponzi scheme
By KATE BRUMBACK,Updated 9:44 a.m., Thursday, August 16, 2012
Georgia football coach Jim Donnan is accused of orchestrating an $80 million Ponzi scheme, using his own prominence to get high-profile college coaches and former players to invest, the U.S. Securities and Exchange Commission said Thursday.
Donnan and business partner Gregory Crabtree, of Proctorville, Ohio, convinced investors to pour millions of dollars into a business they said was unique and profitable with huge potential and little risk, said William P. Hicks, associate director of the SEC’s Atlanta office.
Donnan and Crabtree sold investments in West Virginia-based retail liquidation company GLC Limited and promised high rates of return that didn’t materialize, federal regulators said. The pair raised about $80 million from nearly 100 investors, but only about $12 million of that was used to buy merchandise for liquidation, the SEC said.
Donnan’s attorney has previously acknowledged the former coach was paid lucrative commissions, but he said Donnan believed he was being paid from legitimate profits earned by the company.
Donnan was the coach at Marshall University from 1990 through 1995 and at Georgia from 1996-2000 and later became an ESPN analyst.
Among the coaches Donnan helped attract were Texas State football coach Dennis Franchione; Virginia Tech football coach Frank Beamer; ex-Dallas Cowboys coach Barry Switzer and Texas Tech football coach Tommy Tuberville.
Tuckahoe Strategies’ Quick Crisis Analysis:
The Jim Donnan issue has been brewing for about a year. Presumably all those connected to him have already conducted internal investigations to determine any knowledge of involvement in the scheme – if not they need to do so NOW. Below is Tuckahoe Strategies’ quick crisis analysis:
Jim Donnan – Risk Factor = HIGH. Faces serious allegations. Neither he nor his attorneys are responding to media questions. According to reports, his attorney admitted to being paid lucrative commissions but assumed they were legitimate profits. If this is the case, then he should take steps now to clear his name.
ESPN – Risk Factor = LOW-to-HIGH. ESPN executives by now should have gathered the facts to determine whom, if anyone knew about the alleged scheme and what was done about it. Were any ESPN executives involved in the scheme? Did Donnan use his position at ESPN to advance the scheme? ESPN’s risk is probably LOW but could change if evidence surfaces that points to any knowledge or involvement in the scheme. A statement should be drafted and approved for use upon request. Based on the facts, ESPN needs to assess its relationship with Donnan if it hasn’t already done so.
Marshall University – Risk Factor = MEDIUM-to-HIGH. The company in which Donnan and his partner sold investments is located in West Virginia as is Marshall. Investigators have likely already combed through any connections between Donnan and Marshall and the media won’t be far behind. Marshall’s risk factor is medium as a result of the West Virginia connection. Marshall execs should move quickly to make sure they know what the Feds know – then develop a plan for how to handle.
University of Georgia – Risk Factor = LOW-to-HIGH. UGA administrators should be well engaged in the process of interviewing the Athletic Director and others to know anything and everything they need to know before investigators and media come a knocking.
College Football Coaches Tommy Tuberville (Texas Tech), Frank Beamer (VaTech), Dennis Franchione (Texas State) and ex-Dallas Cowboys coach Barry Switzer – Risk Factor = LOW-to-HIGH. Donnan reportedly recruited these high profile coaches to invest in the company. Where they part of the alleged scheme or are they victims? Each of them should be preparing for very specific questions. They should be speaking to their employers and their attorneys for guidance.