by Michael Tarsala
Former Dallas Cowboys Super Bowl-winning coach Barry Switzer is among the alleged victims of a ponzi scheme run by Hall of Fame football coach Jim Donnan.
Donnan and partner Gregory L. Crabtree are accused of cheating investors – many of them former players including linebacker Kendrell Bell who played for the Pittsburgh Steelers – collectively out of $80 million.
Football fans may remember that Donnan helped put Marshall University on the football map in the 1990s, winning the NCAA Division 1-AA National title in 1992. He also coached at Georgia from 1996 to 2000, compiling a career record of 104 wins, 40 losses. He was inducted into the College Football Hall of Fame in 2009, and in recent years worked as a college football analyst for ESPN.
Donnan and his partner Crabtree reportedly raised money from about 100 investors in a business that bought leftover merchandise from retailers and sold it at a profit to discount stores. Investors were allegedly promised returns of 50 to 380%.
Instead, regulators say Donnan pocketed $7.4 million for himself; only $12 million was used to buy merchandise. The rest was used to pay off earlier investors in the venture.
“Donnan and Crabtree convinced investors to pour millions of dollars into a purportedly unique and profitable business with huge potential and little risk,” William P. Hicks, associate director of the S.E.C.’s Atlanta office, said in a press statement. “But they were merely pulling an old page out of the ponzi scheme playbook, and the clock eventually ran out.”
Frauds of all sorts — not just ones targeting athletes — are preying on a growing number of investors, says Pat Huddleston, former SEC enforcer and author of The Vigilant Investor.
The FTC has reported more than 1.5 million fraud complaints, up 62% in three years. He says the upward trend will likely continue, and sees potential for another giant Bernie Madoff-like scam.
Huddleston says that if returns seem too good to be true, that is likely the case.
Also, you should know where your money is at all times.
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Photo by: Jory’z Shotz
