A parade of investors who lost money in a money-making scheme touted by former University of Georgia football coach Jim Donnan testified on Friday in his trial on fraud charges.
Prosecutors also called to the stand a couple of witnesses who actually made money from what prosecutors say was a Ponzi scheme, when money from later investors is paid to earlier investors who bought in, chasing the promise of sky-high returns on their investment.
Retired UGA Athletic Department administrator Dick Bestwick said in an Athens courtroom he lost $40,000 investing in GLC Limited, the company Donnan ran with Greg Crabtree, the West Virginia man who was Donnan’s partner in the business.
Carrollton physician David Helton said he lost $294,500. Braselton real estate developer Ed Price said he lost $1.1 million.
Donnan and Crabtree men had been charged with more than 40 counts of wire fraud, mail fraud and money laundering in an indictment handed down earlier this year.
Facing jail sentences that would keep him behind bars for the rest of his life, Crabtree pleaded guilty to a single count of fraud last month in a plea agreement that will give him five years in prison. The agreement also called for him to testify for the prosecution.
Earlier this week, Crabtree told jurors that Donnan knew GLC was paying earlier investors’ money with later investors cash instead of profits made from reselling goods.
“There’s no tremendous difference in my lifestyle,” Price testified, but said it was no fun to lose that much money.
A neighbor of Donnan’s, a landscaping company owner named Bo Thurston, testified that he actually made money from his GLC investment. But he had to pay most of it back as the company went through bankruptcy and winners among the early investors were forced to pay back some of the money to people who invested later and got stuck with little or nothing.
He was talking with Donnan one day and told the former coach he was in a financial bind, trying to figure out how to finance a child’s college education.
Donnan put $16,000 of his own money in a GLC investment in Thurston’s name, Thurston testified. Donnan said Thurston could pay him back with landscaping work.
Thurston got $68,000 back from GLC, but then had to refinance his home when ordered to return $47,500 to bankruptcy court, he testified.
But like some of the losing investors, Thurston said he and Donnan are still friends.
UGA and former Olympic swimming coach Jack Bauerle lost $100,000, but said he and Donnan remain close friends, “probably closer” after GLC collapsed owing investors and other creditors $23 million and forcing Donnan into bankruptcy.
“I trust Jim totally. I think he had my best interests in mind,” said Bauerle, who got $12,000 to $15,000 of his investment back through GLC’s court-approved bankruptcy plan.
But others who testified Friday did not express faith that Donnan was sincere when he told them about the big returns they could get investing in GLC, whose supposed business was to buy salvaged or overstocked goods from retailers and resell them at a profit.
“That was our retirement. When my husband passed away, that left me pretty much in financial difficulty,” said Valerie Fennell, whose husband, Dr. Stephen Fennell, turned over $450,000 to Donnan to invest in GLC shortly before he died in May 2011.
They only got $45,000 of it back, according to court documents.
Athens urologist David Allen made several investments in GLC deals, the final one for $1 million shortly before the company began to collapse and started missing payments promised to investors.
Allen said he got good returns from his investments in GLC at first. But he wound up losing nearly $1.4 million, according to documents prosecutors introduced into evidence Friday, the fourth day of trial.
Allen had invested smaller amounts, $100,000 and $150,000, in GLC deals before he got a call from Donnan in July 2010, the doctor told the jury.
Donnan told Allen that a couple of partners in a deal he was in had dropped out, but it could go forward with Allen’s investment.
Allen was reluctant to turn over $1 million to Donnan for the GLC deal, he said. It was money he had set aside for his family, not investment money. He had experienced some health issues, would soon turn 60, and wanted his family to be provided for, he explained.
But when Donnan called back, “he seemed distraught,” Allen said. Donnan told him he was in trouble and might even lose his house, Allen recalled.
Allen called a mutual friend and investor in GLC, who said that if Donnan was in trouble then they should help him.
“I invested … and that’s what transpired,” Allen testified.
Donnan’s trial is set to resume Monday in U.S. District Court for the Middle District of Georgia in Athens. Prosecuting attorneys have estimated they will finish their case on Wednesday and the defense might conclude at the end of next week.