Prosecutor: Donnan blinded by money; Defense: Coach duped - Beckley, Bluefield & Lewisburg News, Weather, Sports

Prosecutor: Donnan blinded by money; Defense: Coach duped

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ATHENS, Ga. (AP) -

A prosecutor said former University of Georgia and Marshall University head football coach Jim Donnan lured his friends into a fraudulent investment scheme because he was blinded by the enormous amount of money he could make.

Prosecutor Pete Peterman made that assertion May 14 in his closing argument in Donnan's trial on charges including wire fraud, mail fraud and money laundering.

Prosecutors say the 69-year-old and another man ran a fraudulent investment scheme from September 2007 to December 2010 through GLC Limited, a West Virginia-based company dealing in wholesale and closeout merchandise. Prosecutors say the pair promised high rates of return but paid investors with other investor money.

Prosecutors have said Donnan used his extensive personal and professional network to lure investors.

If convicted, Donnan could face a potentially lengthy prison sentence.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Defense: Investment scheme duped ex-UGA coach

ATHENS, Ga.  — Prosecutors said May 14 that Jim Donnan lured his friends into a fraudulent investment scheme because he was blinded by the enormous amount of money he could make, while defense attorneys argued the former University of Georgia and Marshall University football coach was duped and thought he was presenting them with a great opportunity.

Jurors were set to begin deliberating in the case after a lunch break after hearing from lawyers for both sides in Donnan's trial on charges including conspiracy, wire fraud, mail fraud and money laundering.

Prosecutors say the 69-year-old and Gregory Crabtree of Proctorville, Ohio, ran the scheme from September 2007 to December 2010, through GLC Limited, a West Virginia-based company dealing in wholesale and closeout merchandise. Prosecutors have said Crabtree ran the day-to-day operations and that Donnan used his relationships of trust in his extensive personal and professional network to lure investors.

Crabtree pleaded guilty last month to a single conspiracy charge and faces up to five years in prison. If convicted, Donnan could face a potentially lengthy prison sentence.

GLC was insolvent from the beginning and never had enough money to pay investors with profits from sales and, as a result, Donnan and Crabtree resorted to paying investors with money from other investors, prosecutor Pete Peterman said.

"It's obvious from the get-go that this was a Ponzi scheme," he said, adding that the scheme collapsed when Donnan ran out of people to get money from.

Donnan was aware that GLC wasn't viable but made false payouts to investors to convince them to make additional payments, a form of money laundering, Peterman said. He also used ill-gotten gains from the scheme to make purchases — including expensive cars, investments and private school tuition — which amounts to another form of money laundering, Peterman said.

Donnan ran with a wealthy and powerful crowd and consistently presented himself as an executive and a partner in GLC when he told friends about the opportunity, and he was well aware the business was bogus or should have been since he controlled the financial decisions, Peterman said.

"He took advantage of these people's trust because he blinded himself — he was blinded by the money he was able to make," Peterman said, adding that Donnan's story is a textbook case of willful ignorance.

Donnan's attorneys countered that Donnan may not have the best head for finance but that he sought advice from friends who were powerful business leaders and truly believed that GLC was a great investment opportunity that he wanted to share with those he cares about. His son testified that family members invested, too.

"He thought he was doing these people a favor. He thought he was benevolent. He thought this was going to be a great thing for everyone," defense attorney Ed Tolley told jurors.

Defense attorneys attacked Crabtree, who, they reminded jurors, reached a deal with prosecutors to keep from having to spend the rest of his life in jail and agreed to testify against Donnan. Crabtree led Donnan to believe that he was purchasing "presold deals" — merchandise for which he already had a buyer — when in reality he didn't have one and in some cases wasn't even completing the deals.

Donnan introduced Crabtree to a number of his friends who have a great deal of business savvy and they were all impressed by Crabtree, Tolley said.

"There wasn't any reason for (Donnan) to know that this business wasn't being run properly or, as the government alleges, as a Ponzi scheme," Tolley said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.