College Football Hall Of Famer Jim Donnan Ran An $80 Million Ponzi Scheme, Says The Other SEC

The feds love to trumpet it when they've charged a sports figure with a crime, and this morning they reeled in a doozy in Jim Donnan, a 2009 College Football Hall of Fame inductee who was formally pinched on some major allegations of securities fraud.

As a quarterback at North Carolina State, Donnan was the 1967 ACC Player of the Year. He spent two decades bouncing around the country as an assistant coach, and he won a national title as Oklahoma's offensive coordinator in 1985. Donnan finally became a head coach in 1990, at Marshall, and he guided the Thundering Herd to the Division I-AA championship game four times in six seasons, winning a national title in '92. He later coached at Georgia and won four bowl games before spending some time as a TV analyst for ESPN. It's not your typical profile for a white-collar criminal, which is probably why the other SEC—the Securities and Exchange Commission—was so eager to put out a statement announcing the charges.

The SEC said Donnan and a business partner, Gregory Crabtree, allegedly got about 100 others to invest in their West Virginia-based "wholesale liquidation" company. The scheme was that Donnan and Crabtree allegedly promised extraordinary returns on the company's purchase of leftover merchandise from huge retailers that was then resold to discount retailers. But the feds say just $12 million of the $80 million raised was used to make actual purchases, while the rest was either divvied up in the form of fake returns to investors or simply skimmed by Donnan and Crabtree.

Donnan's and Crabtree's company filed for bankruptcy in February 2011, and Donnan and his wife later filed for bankruptcy last summer, when court documents were first filed accusing Donnan of engaging in a scheme.

Here's the really weird part from today's SEC statement, though:

According to the SEC's complaint filed in federal court in Atlanta, the scheme began in August 2007 and collapsed in October 2010. Donnan recruited the majority of investors by approaching contacts he made as a sports commentator and as a coach. For instance, he capitalized on his influence over one former player by 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." The player later invested $800,000.

Um, yeah. But get this: Two of Donnan's actual children and his son-in-law were also charged as relief defendants, since the other SEC says they allegedly made money off the scam, too.

[ Securities and Exchange Commission]