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Ex-UGA coach Donnan's co-defendant set to testify

May 8, 2014
Associated Press

ATHENS, Ga. (AP) — A man accused along with former University of Georgia football coach Jim Donnan of operating a fraudulent investment scheme testified Thursday that Donnan asked him to sign a document saying Donnan wasn't aware that investor money was being used to pay other investors.

Gregory Crabtree's testimony came during Donnan's trial on federal charges including conspiracy, mail fraud and wire fraud. Crabtree pleaded guilty last month to a single count of conspiracy

A federal indictment against Donnan, of Athens, and Gregory L. Crabtree, of Proctorville, Ohio, says the pair ran a fraudulent investment scheme from 2007 to 2010 through GLC, a West Virginia-based company that dealt in closeout merchandise. Prosecutors have said Crabtree ran the day-to-day operations and Donnan used relationships of trust to lure investors into the fraud scheme.

Donnan presented a document to Crabtree in late 2010, after the scheme had unraveled, in which Crabtree was to certify that the ex-coach did not know that investor money was being used to pay other investors. Crabtree said Donnan said to him, "Would you care to sign this letter to help me save face with my friends?"

When Crabtree pointed out that Donnan had been aware of the way the payments worked, Donnan acknowledged that but said he needed Crabtree to sign the document so he could save face and try to salvage some of the business, Crabtree testified.

Crabtree and Donnan began working together after a mutual friend put them in touch. Crabtree had some opportunities to buy wholesale or closeout merchandise but didn't have the money to buy it. After Donnan provided the capital for several deals and got a good return, he asked Crabtree if there were more opportunities because he knew other people who would be interested, Crabtree testified.

They began working together, talking every day, Crabtree said.

In late 2009, problems started as Crabtree was having trouble moving merchandise and started stocking it in warehouses because investor money was coming in faster than he could sell it. He spoke to Donnan about the troubles, and Donnan said he'd look into ways to help, Crabtree said. They ended up using investor money to pay other investors because they didn't have profits from sales to pay the high returns Donnan had promised investors, Crabtree said.

"Do you realize what that is, what that's called?" prosecutor G.F. "Pete" Peterman III asked Crabtree.

"I do now," Crabtree said.

"What's that?" Peterman asked.

"A Ponzi scheme," Crabtree said.

 
 

 

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