Official: Jim Donnan Under Federal Investigation

The United States Securities and Exchange Commission has officially announced it is investigating former Georgia head football coach Jim Donnan for “alleged violations of federal securities fraud.

In a recent court filing in objection to Donnan’s personal bankruptcy court plan to reorganize his family estate, attorney David W. Baddley filed the following statement on behalf of the United States of America:

… the SEC staff anticipates that the SEC will file a substantial claim in this case based on potential remedies for alleged violations of the federal securities laws.

Last year Donnan filed for bankruptcy to protect his personal assets after he was accused by an Ohio company of perpetrating a wide-ranging Ponzi scheme that allegedly bankrupted the company while costing several high profile college coaches and former players millions of dollars in the process.

Donnan’s alleged scam was to lure investors to “loan” money to the Ohio company - GLC Limited - at annual interest rates of up to 70%. GLC has since claimed in its own federal court filings that the ensuing pressure to honor such loans initiated by alleged GLC representative Donnan bankrupted the company.

Think of GLC as Donnan’s own (alleged) piggy bank, with that bank bearing outrageous interest rates - set by Donnan - for his family and friends.

The alleged Ponzi may have also involved Dennis Franchione, Tommy Tuberville and former ESPN announcer and college football coach Mike Gottfried, as Donnan noted in a Jan. 19, 2012, bankruptcy court filing that Franchione, Tuberville and Gottfried “invested and brought in friends whom Jim did not know and had never met.

Jim Donnan alleged Ponzi Scheme: Gillispie lost $1.9 million after alleged Franchione solicitations

(Donnan Handwritten Notes: Franchione “Commission” on Gillispie “Loan”)

One of those “friends” was Billy Gillispie, who “invested” millions in Donnan’s business venture allegedly via Franchione. After failing to recoup $1.9 million in “loans” attributed to Franchione’s alleged solicitations, Gillispie filed a claim for the same amount against Donnan’s family estate in the college football Hall of Famer’s current bankruptcy proceeding.

Donnan’s own handwritten notes, which can be seen in federal bankruptcy court documents, also indicate that Franchione received a substantial “commission” from Donnan - allegedly on behalf of GLC Limited - for luring Gillispie into business deals that may have never actually existed. GLC Limited, the Ohio company Gillispie allegedly “loaned” money to at annual interest rates up to 70%, is also now suing Franchione for $95,000 in “commissions” Franchione allegedly made from the transactions with the Texas Tech basketball coach.

Court Docs: Franchione made $95,000 on Gillispie Ponzi buy-ins

This week in federal bankruptcy court Donnan agreed to give the United States Securities and Exchange Commission more time to investigate his alleged Ponzi scheme. Donnan’s concession followed an ominous filing by an attorney for the Securities and Exchange Commission on March 13, 2012, that included the following:

The (Donnan) Disclosure Statement provides that in 2007 – prior to becoming involved with GLC – the Debtors had a net worth in excess of $3 million. (Disclosure Statement at p. 3). It appears that the Debtors’ investments in GLC resulted in net profits of at least $7,352,838 (See footnote 3).

These net returns would have increased the Debtors’ net worth to more than $10 million. The Plan, however, offers less than $5 million in assets for distribution to unsecured creditors, and there is very little information in the Disclosure Statement about what the Debtors did with the substantial profits they received from GLC, and why more money is not available to pay creditor claims.

Failure to Address Possible SEC Claim. The current deadline by which the SEC must file a proof of claim in this case is March 27, 2012 (Docket No. 186).

Although the SEC’s investigation is still ongoing, the SEC staff anticipates that the SEC will file a substantial claim in this case based on
potential remedies for alleged violations of the federal securities laws. The amount sought for disgorgement of ill-gotten gains may likely exceed $13 million, and the claim may also include amounts for civil penalties and prejudgment interest. The Disclosure Statement fails to acknowledge the upcoming bar date or any potential for an SEC claim, including how such a claim would be classified and treated under the Plan.

The U.S. Securities and Exchange Commission and Donnan agreed Thursday to a 60-day extension - which awaits court approval - beyond the aforementioned March 27, 2012 deadline for the Feds to “file a substantial claim” against Donnan.

In other words, the U.S.A.’s investigation and prosecution of Donnan’s alleged Ponzi may just be beginning.

Follow Brooks on Twitter or join him on Facebook for real-time updates

Gillispie to Donnan: Gimme Back My $1,913,167.00

Last August SbB reported that a West Virginia-based company, Global Liquidation Center Ltd. (GLC), had accused former Georgia and Marshall head football coach Jim Donnan of running a Ponzi scheme that eventually bankrupted the company.

Billy Gillispie asks for $1.9 million back from Jim Donnan

(Donnan on BCG’s $1.9MM claim: Pound Sand)

The civil action filed by GLC in a federal bankruptcy court last year was the first in what’s turned out to be a race by dozens of claimants to obtain what’s left of Donnan’s dwindling personal estate. After GLC filed for Chapter 11, Donnan quickly filed for bankruptcy himelf to protect around $5 million in assets from GLC and innumerable alleged Ponzi victims - including many sports celebrities.

From federal court exhibits posted by SbB seven months ago - which included fairly indecipherable and oft-incoherent handwritten notes from the former football coach -  here’s how Donnan’s Ponzi (allegedly) worked:

(Barry Switzer was sports acquaintance prey for (alleged) Donnan Ponzi)

1) Allegedly presenting himself as representative of GLC, Donnan would solicit “loans” from friends and sports celebs like Tommy Tuberville, Frank Beamer, Mark Gottfried and recruiting analyst Tom Luginbill with the promise of annualized returns of up to 70%. Donnan’s pitch was to tell alleged victims that their money was going to purchase surplus retail items that would eventually be resold. (Funding GLC’s business model/operation.)

2) Donnan allegedly enlisted Dennis Franchione to solicit multiple alleged Ponzi investors, including Billy Gillispie. In a separate legal action, GLC is now pursuing $95,000 in alleged commissions the current Texas State head football coach was allegedly paid by Donnan for luring Gillispie into the alleged scheme.

Court Docs: Franchione made $95,000 on Gillispie Ponzi buy-ins

3) After receiving the money allegedly solicited by Donnan and Franchione, GLC would pay out exorbitant fees to Donnan and Franchione for their “services” - along with sky-high loan interest rate payments to Donnan’s investors. Donnan and Franchione themselves also “invested” in the company with the expectation they’d recoup as much as 70% of their loan principal in 12 months.

More pertinent details:

  • Federal court docs submitted by GLC in its initial BK filing indicated that Donnan helped secure $81,916,000 from investors.
  • During the same period, GLC alleged that Donnan billed the company $14,557,228.50 in personal loan interest and commissions.
  • Of the $82 million in investor funds solicited by Donnan, GLC reported that $11,793,000 was invested in company operations.
  • Who exactly helped Donnan perpetrate his alleged Ponzi from within the company is subject to an ongoing investigation that could eventually see GLC executives and/or Donnan and/or Franchione charged in criminal court.

The highest-profile loser in Donnan’s alleged scheme, according to multiple court document filings, was/is Billy Gillispie.

On Oct. 24, 2011, Gillispie filed a claim against Donnan in federal bankruptcy court over $1,913,167.00 the Texas Tech basketball coach “loaned” to Donnan to invest in GLC company operations. In one loan document signed by the two parties and filed in federal bankruptcy court last year, Gillispie was to receive an annual 60% interest rate on a principal of $1,000,000 paid to GLC via Donnan.

In Donnan’s own handwritten notes - appearing in court docs - the ex-coach also noted that Franchione was to be paid a five percent commission for allegedly luring Gillispie into that particular deal. (Which GLC represenatives are now pursuing from the Texas State coach.)

In another federal court document, it appeared that Donnan and a GLC official drew up a $2,000,000 “loan” from Gillispie to GLC at “65 percent interest per year.

Gillispie though did not sign that agreement.

Gillispie’s initial claim was completely rebuffed by Donnan in a November 18, 2011, legal response. Two months later, Gillispie’s lawyer specifically alleged to the judge that Donnan misrepresented a Ponzi scheme as a legit business endeavor to his client, punctuating a lengthy court filing rife with legal citations by asking that …

the Court set a discovery deadline in this matter and a final hearing if deemed appropriate, and that it grant Claimants such other and further relief deemed to be just and proper.

A Jan. 25, 2012, hearing was subsequently set for possible disposition of Gillispie’s $1.9 million claim. Though that was just one of  36(!) other claims against Donnan scheduled for the same day. Because so many remain steadfast in their uncompromisig pursuit of the ex-Georgia football coach, the backed-up Athens, Georgia, federal court continued all civil proceedings until March 20, 2012.

And with remarkably few settlements in sight for the remaining claimants against Donnan, federal criminal investigators attempting to crack the case best pack a retard sandwich too.

Follow Brooks on Twitter or join him on Facebook for real-time updates

Did Franchione Lure Gillispie Into Donnan Ponzi?

Last month a West Virginia-based company, Global Liquidation Center Ltd. (GLC), accused former Georgia football coach Jim Donnan of running a Ponzi scheme that it claimed eventually bankrupted the company.

Jim Donnan lured Tommy Tuberville, Frank Beamer, Billy Gillispie and Dennis Franchione into his alleged Ponzi scheme

In a civil action filed in a federal bankruptcy court last month in Athens, Georgia, GLC alleged Donnan had committed fiduciary fraud, embezzlement and larceny in the company’s bid to obtain the $5 million remaining in Donnan’s personal estate. (Donnan filed for bankruptcy himelf after GLC declared Chapter 11.)

GLC alleges that Donnan, who was a major investor in the retail outlet liquidation company, used his formal role with the company to lure investors into loaning money to GLC at exorbitant interest rates. (Some documented agreements touted a 70 percent annual rate of return.) When GLC was unable to service its obligations to the Donnan investors who had loaned it money - and Donnan himself was unable to obtain fresh investment capital to help GLC service those loans - the company was forced into declaring bankruptcy.

In federal court documents the company reported that from 2007 to 2010 Donnan helped secure $81,916,000 from investors. During the same period, GLC alleges that Donnan billed the company $14,557,228.50 in his own personal loan interest and commissions - with much of that money transferred from Donnan to his immediate family members and wife.

Of the over $81M in investment funds, GLC reported in court documents that $11,793,000 was invested in company operations.

As part of its legal argument to obtain what’s left of Donnan’s personal estate, GLC noted in its filing last month:

James Donnan is substantially, if not principally, responsible for the initiation and operation of a far-reaching ponzi scheme that defrauded GLC and its investors of approximately $27,752,159.

A week after GLC filed its claim against Donnan, a federal bankruptcy court judge effectively froze his personal assets to allow for a formal, legal examination of the hundreds of pages of evidence and exhibits submitted to the federal court.

As for GLC’s Donnan-solicited investors, nowhere in those legal documents is an itemized accounting of who lost what. And from Donnan’s personal accounting practices, it isn’t unreasonable to think that he doesn’t know either.

From evidence presented by GLC to the court, it’s now been confirmed that the former football coach kept virtually all of his financial accounting in handwritten notes. Those notes give the only clues, for now, of how much individuals may have invested - and potentially lost - with Donnan.

Documents in Donnan’s handwriting submitted by GLC to the federal bankruptcy court indicate Texas Tech basketball coach Billy Gillispie gave Donnan at least $3 million - in separate payments - to “loan” to GLC at exorbitant annual interest rates.

Dennis Franchione made commission on Gillispie $1,000,000 payment to Donnan

In one of the payments to Donnan, Gillispie signed off on a GLC company document indicating a $1 million loan to GLC at a 60 percent annual interest rate. Donnan later noted in one of his handwritten accounting documents that current Texas State football coach Dennis Franchione was to be paid five percent of Gillispie’s seven-figure buy-in. ($12,500.)

Donnan, Franchione and Gillispie part of alleged Ponzi scheme

(Franchione’s $300,000 ‘loan’ to Donnan at 60% annual rate)

In another GLC loan agreement document, Gillispie was given a 65 percent annual interest rate in exchange for a $2 million loan - solicited by Donnan - to the company. (Though that document was not signed by Gillispie.)

In another federal court document submitted by GLC last month, Donnan’s handwriting shows Franchione as credited with a 10% commission on what appears to be a May 1 six figure payment from Gillispie to GLC via Donnan.

Donnan, Franchione and Gillispie part of alleged Ponzi scheme

Franchione is prominently featured throughout Donnan’s handwritten bookkeeping of “investor” information. Here’s a handwritten contract for a Franchione “loan” signed off on by Donnan and his wife Mary.

Jim Donnan Contract With Dennis Franchione

In a March 10, 2009, email to Donnan, Franchione directed the former Georgia coach to send him the payments for five other individuals who had also apparently “loaned” Donnan - and GLC - money.

Dennis Franchione received checks for several Donnan clients

Franchione wrote Donnan at the time:

The others can be done in checks mailed to me in their names and I’ll see that they get there.

Franchione and Gillispie were far from the only coaches and sports figures who, according to Donnan’s handwritten notes, loaned him large sums of money at staggering interest rates.

Interest rates that GLC, a small retail merchandise liquidation firm, was obligated to pay.

Here’s some of the sports figures listed in Donnan’s somewhat indecipherable handwritten notes - and what they may have paid the former coach. (At least based on Donnan’s primitive accounting practices.):

1) Tommy Tuberville: $800,000
2) Frank Beamer: $175,000
3) Billy Gillispie: $3,000,000+ (one of two loan agreements unsigned)
4) Dennis Franchione: $650,000
5) Mark Gottfried: $250,000
6) Kendrell Bell (Former NFL player): $2,075,000 (two of four loan agreements unsigned)
7) Jonas Jennings (Former NFL player): $500,000 (loan agreement unsigned)
8) Mike Gottfried (Former ESPN analyst, CFB coach): $250,000
9) Tom Luginbill (ESPN recrutiing analyst): $30,000
10) Barry Switzer: $50,000

Barry Switzer Gave Jim Donnan $50,000 In Ponzi Scheme

Here are some of the executed and non-executed “loan” agreements and more handwritten notes - this time from a Donnan associate:

Jim Donnan Loan Agreements

Not everyone was convinced of the veracity of Donnan’s business. GLC included in its federal court document dump one email exchange between Donnan, a potential Donnan investor and his investment advisor:

When dismissing one of Donnan’s claims to his client, the advisor wrote in an email, “someone’s been eating retard sandwiches.”

Brooks is on Twitter and Facebook

Video: A&M Star Slammed Franchione In March

Earlier today I reported that former Texas A&M star wide receiver Terrence Murphy accused his former coach Dennis Franchione of player abuse similar to what’s been alleged about former Kansas football coach Mark Mangino and suspended Texas Tech coach Mike Leach.

Terrence Murphy Slams Dennis Franchione

After the jump is video of Murphy dissing Franchione on camera when he was asked to compare Franchione to fellow A&M football coaches R.C. Slocum and Mike Sherman.

Read more…

Former A&M Star: Franchione Also Abused Players

Perhaps the greatest wide receiver in Texas A&M history, Terrence Murphy, posted an ominous message on his Facebook account today about former A&M head football coach Dennis Franchione:

Terrence Murphy Posted About Dennis Franchione On His Facebook Account

It is amazing that two coaches in the Big 12 are getting negative press for mis-treating players on their football teams. WOW, Coach Fran treated players at A&M like this the day he arrived at A&M.

Now that I am a man, looking back it hurts my heart to know how many of my teammates will never come back to A&M because of those antics, and how many kid’s life (sic) were altered because of it.

 Guess it did not happen to a football legend’s son,  so it was ignored. ESPN brought back bad memories. I fault myself for not stepping up as the leader of the team and saying something.

Franchione coached A&M for only five seasons, from 2003-07. He was bought out by the school following the ‘07 season. He coached Murphy during the 2003-04 seasons.

Terrence Murphy Posted About Dennis Franchione On His Facebook Account

Read more…

Mike Sherman To Coach Texas A&M, Keeping Tuberville in Auburn

AGGIES NAB EX-PACKERS COACH, TUBERVILLE STAYS PUT: Auburn fans can rest easy, as their head coach won’t be taking the next train to College Station.

Mike Sherman sleeping

The ASSOCIATED PRESS gets the newsletter that former Packers coach Mike Sherman has been tabbed by Texas A&M to replace the outgoing Dennis Franchione.Sherman had played QB and spent time as an assistant for the Aggies, last roaming the Kyle Field sidelines in 1996.

The current Houston Texans assistant won’t resume his new duties until after the NFL season. In the meantime, A&M defensive coordinator Gary Darnell will coach the team in their bowl game.

Reveille Texas A&M mascot Tommy Tuberville

The move ends speculation that Tommy Tuberville would be leaving the Auburn Plains for Aggieland. After the Tigers’ 6th straight Iron Bowl win, it’s just the latest national tragedy to befall Nick Saban.

Weis Rumored To Have Given Resignation To ND

IRISH COACH WEIS OFFERED TO SKIP OUT OF SOUTH BEND? As the season nears its end, the college football coaching rumors are twirling around fast & furious. It’s a foregone conclusion that Nebraska’s Bill Callahan will be leaving Lincoln, while UCLA’s Karl Dorrell may be all washed up in Westwood.

Callahan Franchione

Dennis Franchione might soon be emailing his VIP boosters that his time with Texas A&M is up, which may entice Tommy Tuberville to leave the Auburn Plains for College Station.Now Scott Wolf of INSIDE USC tosses the latest log on the coaching rumor fire, saying that Charlie Weis offered to resign, but Notre Dame wouldn’t accept:

We wouldn’t have tagged Charlie as a quitter, especially when it comes to eating. But if the Irish fall to Duke on Saturday, completing a winless season at home, maybe the whole school should just resign.On a side note, if the Dookies do manage to knock off Notre Dame, no one will be happier than offensive coordinator Peter Vaas.

The CHICAGO SUN-TIMES notes how the Blue Devils’ OC was ND’s QB coach last season, but was fired by Weis and replaced by former Irish signal-caller Rick Mirer.

Peter Vaas Charlie Weis

Vaas said the firing was a “surprise”, and Weis never gave any reasons for it. But Peter says he has moved on: “Charlie made a decision a year ago. It was a professional decision and one I’ve adjusted to and learned to accept. You move forward.”But we all know that deep down, Vaas has happy visions of voraciously vanquishing the villainous Veis, er, Weis.

Dennis Franchione Close To Accepting Buyout From Texas A&M Contract

FRANCHIONE TO LEAVE 12TH MAN BEHIND AFTER BUYOUT: Don’t know if this was covered in the newsletter, but Dennis Franchione could be cashing in his contract:

Dennis Franchione Texas A&M

CBS SPORTSLINE reports that the Texas A&M coach is close to accepting a buyout that would end his stay in Aggieland.A&M AD Bill Byrne had said that he will wait until the end of the season before determining Franchione’s status as a university employee.

Dennis is just over .500 at the school with a 31-28 record, but is only 2-12 against the teams that matter: Texas, Oklahoma & Texas Tech.

Dennis Franchione Texas A&M DVD

Add the turmoil of sending out secret emails to boosters for $1200 a subscription, and it appears Dennis’ days with the 12th Man are done.If Franchione flees, who’ll step in? The DECATUR (AL) DAILY says the eyes of Texas A&M are upon Auburn, as Tommy Tuberville has been rumored for the impending opening. However, Tubes says he won’t talk about the Aggies situation - at least not during the season.

Reveille Texas A&M mascot Tommy Tuberville

If Tommy T does leave the Auburn Plains, it will be the 2nd straight coach from Alabama to run around with Reveille. Franchione was previously rolling with the Crimson Tide before he arrived at College Station.And if Tuberville gets scalloped, there’s always UAB’s Neil Callaway or Troy’s Larry Blakeney - who can actually beat Big 12 schools.