A jury found former Georgia football coach Jim Donnan not guilty on 41 counts relating to a Ponzi scheme on Friday, capping off a trial in which he was accused of taking part in an $80 million Ponzi scheme, along with business partner Gregory Crabtree. Donnan was facing 41 counts of conspiracy, mail fraud, wire fraud and money laundering.
Jim Donnan with a loud cheer as he enters private room to cool down with his family and lawyers.— Seth Emerson (@SethEmerson) May 16, 2014
Jury foreman said govt "never pulled a smoking gun" to show Donnan was guilty of charges.— Seth Emerson (@SethEmerson) May 16, 2014
Donnan was 40-19 in five years at Georgia from 1996-2000, winning four bowl games. Before that, he coached Marshall to a Division I-AA National Championship, three runner-up finishes, and a semifinal appearance, from 1991-1995. He was inducted into the College Football Hall of Fame in 2009.
Donnan and Crabtree collected investment funds for a company called GLC Limited, based in West Virginia. However, the investments were alleged to have rarely been used for their intended purpose.
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Donnan and Crabtree "promised investors exorbitant rates of return ranging from 50 to 380 percent," [SEC spokesman John] Nestor said. "However, only about $12 million of the $80 million raised from nearly 100 investors was actually used to purchase leftover merchandise, and the remaining funds were used to pay fake returns to earlier investors or stolen for other uses by Donnan and Crabtree."
Donnan had also been accused of recruiting a former Georgia player and fellow coaches, including Virginia Tech's Frank Beamer and Cincinnati's Tommy Tuberville, into the scheme.
More details of how the scheme allegedly worked came out in the trial. According to the Atlanta Journal-Constitution, not much merchandise was sold, and money from early investors paid later investors. Donnan and GLC filed for bankruptcy in 2011.
"As is typical of a Ponzi scheme, it looked good for a while, but it was going to collapse," Assistant U.S. Attorney Paul McCommon told the jury. "And it collapsed."
The defense, according to the AJC, tried to claim Donnan was the victim, and that he was unaware of the greater scheme, which they say was run by Crabtree.
Donnan attorney Ed Tolley said the former coach "probably had one of the greatest football minds that ever came through Athens, Ga.," but he said the ex-coach didn't have a mind for business.
"It is not a crime to be not very smart," Tolley said. "It is not a crime to be somewhat careless."
Prosecutors, meanwhile, said Donnan knew exactly what was going on the entire time, and that he and Crabtree were partners from the beginning. Crabtree, unlike Donnan, did not go to trial. Instead, he pled guilty to one count of conspiracy to commit fraud and is awaiting sentencing.