Securities and Exchange Commission v. James M. Donnan, III, et al., Case No. 1:12-CV-02831-ODE (N.D. Ga.).  On August 17, 2012, the SEC announced fraud charges against College Football Hall of Fame coach and ESPN sports commentator James Donnan and Gregory L. Crabtree.  The case concerns a Ponzi scheme run by GLC Limited (“GLC”), its owner Crabtree, and his business partner, Donnan.  Donnan and Crabtree offered investments in GLC that promised returns ranging from 50% to 380%.  They raised about $80 million from investors.  Donnan and Crabtree told investors that GLC was in the wholesale liquidation business, buying goods from retailers and then reselling them at a substantial profit to discount retailers and liquidators.  Donnan touted GLC’s success and told investors that with more funds, GLC could purchase even more goods and resell them to discount retailers at a profit.  In reality, however, the investment program was a Ponzi scheme.  Only about $12 million was used to purchase merchandise and much of it was never sold.  The remaining funds were used to pay fake returns to earlier investors or was misappropriated by Crabtree or Donnan.  Donnan also gave large sums to two of his adult children and a son-in law, who are named as relief defendants in the case.

Donnan and Crabtree are charged with violating Sections 5(a) and (c) and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.  The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil monetary penalties. The SEC also seeks disgorgement from the relief defendants.