- Associated Press - Thursday, May 8, 2014

ATHENS, Ga. (AP) - In a story May 7 about the trial of former University of Georgia coach Jim Donnan, The Associated Press reported erroneously the hometown of retired ESPN executive Daniel Shoemaker. He is from Huntington, West Virginia, not Huntsville.

A corrected version of the story is below:

Friend says he trusted Georgia coach in investment

Friend says trust in former UGA coach Jim Donnan was a factor in decision to invest in company

By KATE BRUMBACK

Associated Press

ATHENS, Ga. (AP) - A friend of Jim Donnan testified Wednesday that his trust in the former University of Georgia football coach and an assurance that he wouldn’t lose his principal were important factors in his decision to invest in a company that dealt in closeout merchandise.

The testimony of Nelson E. Bowers III came during Donnan’s trial in federal court in Athens on charges including conspiracy, mail fraud and wire fraud. Bowers ultimately lost about $1 million when GLC Limited, Inc., crumbled, according to bank records submitted to the court by prosecutors.

A federal indictment against Donnan and Gregory L. Crabtree of Proctorville, says the pair ran a fraudulent investment scheme through GLC, a West Virginia-based company. Prosecutors have said Crabtree ran the day-to-day operations of the business and Donnan used relationships of trust to lure investors into a fraudulent scheme.

Crabtree pleaded guilty last month to a single conspiracy charge and is expected to testify in Donnan’s trial.

Bowers said Donnan telling him about the potential investment carried great weight because he trusted the ex-coach.

“I would say that perked my interest,” Bowers said under questioning by prosecutor Paul McCommon.

But Bowers, who owns nine car dealerships as well as several other businesses, said retail salvage seemed like a good bet to him and he’d spoken to others who got high returns on investments in GLC.

Jurors also heard on Wednesday from Daniel Shoemaker, a retired ESPN executive from Huntington, West Virginia, who initially put Donnan and Crabtree in touch with each other. Crabtree had done construction work and odd jobs for him, and he’d known Donnan from the former coach’s days at Marshall University.

Shoemaker knew Crabtree had an auction business and that Donnan was always looking for projects in his retirement, he testified. He knew Crabtree to be careless in his business transactions and thought Donnan had good business sense, so he thought they might be a good match, Shoemaker testified.

Shoemaker said he told Donnan several times that he was concerned about Crabtree’s ability to manage the business. During summer 2010, Crabtree approached Shoemaker about investing in a shipment of Christmas toys he said he planned to turn around. When he called Donnan to ask about the deal, Donnan said he didn’t know much about it but that he thought Crabtree had been successful with similar deals in the past, Shoemaker said.

Shoemaker ended up losing the $50,000 he invested and said he later found out Crabtree had never bought the shipment of toys.

Prosecutors also called Jim Burritt who was brought on by GLC as a chief restructuring officer in December 2010. As he began digging into the company’s files, he found that it had no budget, no financial plan and was producing meaningless financial statements, he testified. While some of the retail stores operated by Crabtree might have a short burst of profitability, none turned a profit on a yearlong basis, he said.

Crabtree said he ran the day-to-day operations of GLC while Donnan raised money from investors, and Donnan corroborated that, Burritt said.

GLC had little income, so money from new investors was used to cover expenses, to pay Crabtree and Donnan and to send investors payouts that were falsely represented as returns on their investments, prosecutors have said. The company raised more than $80 million from 94 investors between September 2007 and December 2010, and nearly $23 million of that was lost, according to the indictment.

According to filings in a separate federal case, among those lured by Donnan to invest were Texas State football coach Dennis Franchione; Virginia Tech football coach Frank Beamer; ex-Dallas Cowboys coach Barry Switzer; Cincinnati football coach Tommy Tuberville; and North Carolina State basketball coach Mark Gottfried.

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