[ by Howard Haykin ] The SEC filed fraud charges against a former college football coach who teamed with an Ohio man, to conduct an $80 million Ponzi scheme that targeted other college coaches and former players among its victims.  The scheme was operated through a WV-based entity, GLC Limited. Background Info on Defendants. Gregory L. Crabtree, age 50, of Proctorville, Ohio, was a co-owner and president of GLC from incorporation in 2004 until his resignation on 2/21/11.  Crabtree never held a securities license and has never been associated with any entity registered with the Commission. James Donnan, III, age 67, of Athens, GA, is a College Football Hall of Fame inductee and recent ESPN sports commentator, who served as head football coach at Marshall University ('90 to -95) and at the U. of Georgia ('96 to '00).  Donnan also never was registered and never was associated with any entity registered with the SEC. Todd Donnan, age 39, of Athens, Georgia - Donnan’s son - invested $232,000 in GLC with a business colleague and thereafter received periodic payments totaling $620,333. Tammy Donnan, age 49, of Marietta, Georgia - Donnan’s daughter - invested $16,000 in GLC and thereafter received periodic payments totaling $140,000. Gregory Johnson, age 47, of Oklahoma City, OK - married to Donnan’s daughter - invested $131,000 in GLC directly and through an entity he controls, and thereafter, received periodic payments totaling $617,875. SEC Findings and Allegations. Coach Donnan and business partner Gregory Crabtree allegedly told investors that 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. Investors were promised rates of return ranging from 50% - 380% - to be paid in monthly or quarterly installments or in a one-time payment. Investments were offered and sold in short-term durations - 2 to 12 months.   and purportedly high-yield, with returns paid to investors.  However, only about $12 million of the $80 million raised from nearly 100 investors was actually used to purchase leftover merchandise;  the remaining funds were used to pay fake returns to earlier investors or stolen for other uses by Donnan and Crabtree.

"Donnan and Crabtree convinced investors to pour millions of dollars into a purportedly unique and profitable business with huge potential and little risk.  But they were merely pulling an old page out of the Ponzi scheme playbook, and the clock eventually ran out." -- William Hicks, Assoc. Director of the SEC’s Atlanta Regional Office.

The scheme allegedly began in August 2007 and operated until October 2010 when it collapsed.  Donnan recruited the majority of investors by approaching contacts he made as a sports commentator and as a coach. He convinced a former player to invest $800,000, telling him, "Your Daddy is going to take care of you … if you weren’t my son, I wouldn’t be doing this for you." Donnan is further alleged to have typically assured investors that he was investing along with them in any merchandise deal that he offered, saying that he and other prominent college football coaches had successfully and profitably invested in GLC.  But, by the time the scheme collapsed, Donnan had actually siphoned more than $7 million away from GLC, and Crabtree misappropriated approximately $1.1 million in investor funds. SEC Staff Credits. Investigation by Atlanta staffers - attorney Micheal Watson, Asst. Regional Director Stephen Donahue; litigation will be led by Shawn Murnahan. For further details, go to:  [SEC PR 12-157, 8/16/12] and [SEC Complaint].