Former University of Georgia-Atlanta Coach Charged in Million Dollar Ponzi Scheme

The US Securities and Exchange Commission has charged Jim Donovan, former football coach and Hall of Fame inductee of University of Georgia- Atlanta, with running an $80 million ponzi scheme.

His partner in crime Gregory Crabtree, a resident of Proctorville, Ohio convinced the investors that the business had a huge potential with guaranteed results and little margin of risk.

The investors included many of the former players and other high-profile football coaches who were influenced by Donovan's reputation to invest millions of dollars into the West Virginia based company, GLC Limited headed by Donovan and Crabtree, according to the SEC officials.

Before assuming his role as a sports commentator on ESPN, Donovan coached football at University of Georgia and Marshall University. In fact, he was the reason for the football program at Marshall-U to gain national attention. In addition, he led the University of Georgia to four consecutive bowl game wins from 1997-2000, according to the university website.

Through the contacts made during his tenure as coach and commentator, Donovan approached potential investors. Nearly a hundred invested in the scheme and their investment ranged from few thousands to millions.

Donovan and Crabtree told investors that the GLC was in the wholesale liquidation business and earning substantial profits by buying leftover merchandise from major retailers and reselling those discontinued, damaged, or returned products to discount retailers. They promised investors huge returns ranging from 50 percent to nearly four times the amount invested.

But in the end, only about $12 million of the $80 million was used in reality to purchase leftover merchandise, and the remaining funds were used to pay fake returns to earlier investors or stolen for other uses by Donovan and Crabtree.

According to the SEC's complaint filed in federal court in Atlanta, the scheme began in August 2007 and collapsed in October 2010. By the time the scheme collapsed, Donnan had actually whisked more than $7 million away from GLC, and Crabtree misappropriated approximately $1.08 million in investor funds, according to the SEC.

The SEC has charged Donovan and Crabtree with violations of the antifraud and registration provisions of the federal securities laws.