Jim Donnan, former head coach of the University of Georgia football team, has been arrested for allegedly running a Ponzi scheme. Whether he is culpable remains to be seen, but if so, the Jim Donnan Ponzi scheme wouldn’t be the first time an athlete or related personnel pulled a scam.
Alleged $80 m fraud in Jim Donnan Ponzi scheme
Jim Donnan, a highly-respected former coach of the University of Georgia football team and member of the College Sports Hall of Fame, according to ABC, has been charged with allegedly running a Ponzi scheme that defrauded an estimated $80 million from investors. The Securities and Exchange Commission is suing Donnan and his partner, Gregory Crabtree, for fraud, though criminal charges haven’t been filed as of yet.
The alleged scheme was to buy surplus goods from sporting goods companies, especially sports-related merchandise, and sell it to discount retailers through the pair’s company, GLC Limited, according to the Washington Post. The company raised $80 million from investors, starting in 2007, but only spent $12 million actually purchasing goods. Investors stopped receiving payments in August 2010.
If it looks like a Madoff
Donnan had promised investors returns between 80 and 340 percent, which is astronomical. The company is alleged to have used investment capital to pay new investors for a time, just like a typical Ponzi scheme. The company collapsed totally by October of 2010, according to ABC. It is currently undergoing restructuring in court and Donnan has filed for bankruptcy.
Whether or not the alleged Jim Donnan Ponzi scheme was deliberate, or whether he’ll face jail time, remains to be seen. However, it isn’t the first time an athlete or someone highly associated with sports, has been busted for running a scam. Sometimes they make personal loans of their names to shady characters for help in promoting a product, service or business, and sometimes they use their position to do evil.
Sportspeople sometimes sell pigs in pokes
Sports and sportsmen, in America, are held in incredibly high regard. They played in a game which was entertaining for many people. Ergo, they are trustworthy. However, some really are far from trustworthy, as a number of famous athletes have been busted for investment scams.
Daniel “Rudy” Reuttinger, according to USA Today, was slapped with an SEC lawsuit this year for inflating the stock price for his company Rudy Nutrition, by making false claims about a sports drink made by the company. When the stock rose, the major shareholders sold the stock for profit, called a “pump and dump” scheme, leaving everyone else holding the bag when the bottom dropped out.
Former Bears wide receiver and Super Bowl XX winner Willie Gault is also being sued by the SEC for helping to raise investment capital for a company he helped run called Heart Tronics, which was working on a heart monitor. However, the device never came to market and investors’ funds disappeared.