Official: Jim Donnan Under Federal Investigation

The United States Securities and Exchange Commission has officially announced it is investigating former Georgia head football coach Jim Donnan for “alleged violations of federal securities fraud.

In a recent court filing in objection to Donnan’s personal bankruptcy court plan to reorganize his family estate, attorney David W. Baddley filed the following statement on behalf of the United States of America:

… the SEC staff anticipates that the SEC will file a substantial claim in this case based on potential remedies for alleged violations of the federal securities laws.

Last year Donnan filed for bankruptcy to protect his personal assets after he was accused by an Ohio company of perpetrating a wide-ranging Ponzi scheme that allegedly bankrupted the company while costing several high profile college coaches and former players millions of dollars in the process.

Donnan’s alleged scam was to lure investors to “loan” money to the Ohio company - GLC Limited - at annual interest rates of up to 70%. GLC has since claimed in its own federal court filings that the ensuing pressure to honor such loans initiated by alleged GLC representative Donnan bankrupted the company.

Think of GLC as Donnan’s own (alleged) piggy bank, with that bank bearing outrageous interest rates - set by Donnan - for his family and friends.

The alleged Ponzi may have also involved Dennis Franchione, Tommy Tuberville and former ESPN announcer and college football coach Mike Gottfried, as Donnan noted in a Jan. 19, 2012, bankruptcy court filing that Franchione, Tuberville and Gottfried “invested and brought in friends whom Jim did not know and had never met.

Jim Donnan alleged Ponzi Scheme: Gillispie lost $1.9 million after alleged Franchione solicitations

(Donnan Handwritten Notes: Franchione “Commission” on Gillispie “Loan”)

One of those “friends” was Billy Gillispie, who “invested” millions in Donnan’s business venture allegedly via Franchione. After failing to recoup $1.9 million in “loans” attributed to Franchione’s alleged solicitations, Gillispie filed a claim for the same amount against Donnan’s family estate in the college football Hall of Famer’s current bankruptcy proceeding.

Donnan’s own handwritten notes, which can be seen in federal bankruptcy court documents, also indicate that Franchione received a substantial “commission” from Donnan - allegedly on behalf of GLC Limited - for luring Gillispie into business deals that may have never actually existed. GLC Limited, the Ohio company Gillispie allegedly “loaned” money to at annual interest rates up to 70%, is also now suing Franchione for $95,000 in “commissions” Franchione allegedly made from the transactions with the Texas Tech basketball coach.

Court Docs: Franchione made $95,000 on Gillispie Ponzi buy-ins

This week in federal bankruptcy court Donnan agreed to give the United States Securities and Exchange Commission more time to investigate his alleged Ponzi scheme. Donnan’s concession followed an ominous filing by an attorney for the Securities and Exchange Commission on March 13, 2012, that included the following:

The (Donnan) Disclosure Statement provides that in 2007 – prior to becoming involved with GLC – the Debtors had a net worth in excess of $3 million. (Disclosure Statement at p. 3). It appears that the Debtors’ investments in GLC resulted in net profits of at least $7,352,838 (See footnote 3).

These net returns would have increased the Debtors’ net worth to more than $10 million. The Plan, however, offers less than $5 million in assets for distribution to unsecured creditors, and there is very little information in the Disclosure Statement about what the Debtors did with the substantial profits they received from GLC, and why more money is not available to pay creditor claims.

Failure to Address Possible SEC Claim. The current deadline by which the SEC must file a proof of claim in this case is March 27, 2012 (Docket No. 186).

Although the SEC’s investigation is still ongoing, the SEC staff anticipates that the SEC will file a substantial claim in this case based on
potential remedies for alleged violations of the federal securities laws. The amount sought for disgorgement of ill-gotten gains may likely exceed $13 million, and the claim may also include amounts for civil penalties and prejudgment interest. The Disclosure Statement fails to acknowledge the upcoming bar date or any potential for an SEC claim, including how such a claim would be classified and treated under the Plan.

The U.S. Securities and Exchange Commission and Donnan agreed Thursday to a 60-day extension - which awaits court approval - beyond the aforementioned March 27, 2012 deadline for the Feds to “file a substantial claim” against Donnan.

In other words, the U.S.A.’s investigation and prosecution of Donnan’s alleged Ponzi may just be beginning.

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Gillispie to Donnan: Gimme Back My $1,913,167.00

Last August SbB reported that a West Virginia-based company, Global Liquidation Center Ltd. (GLC), had accused former Georgia and Marshall head football coach Jim Donnan of running a Ponzi scheme that eventually bankrupted the company.

Billy Gillispie asks for $1.9 million back from Jim Donnan

(Donnan on BCG’s $1.9MM claim: Pound Sand)

The civil action filed by GLC in a federal bankruptcy court last year was the first in what’s turned out to be a race by dozens of claimants to obtain what’s left of Donnan’s dwindling personal estate. After GLC filed for Chapter 11, Donnan quickly filed for bankruptcy himelf to protect around $5 million in assets from GLC and innumerable alleged Ponzi victims - including many sports celebrities.

From federal court exhibits posted by SbB seven months ago - which included fairly indecipherable and oft-incoherent handwritten notes from the former football coach -  here’s how Donnan’s Ponzi (allegedly) worked:

(Barry Switzer was sports acquaintance prey for (alleged) Donnan Ponzi)

1) Allegedly presenting himself as representative of GLC, Donnan would solicit “loans” from friends and sports celebs like Tommy Tuberville, Frank Beamer, Mark Gottfried and recruiting analyst Tom Luginbill with the promise of annualized returns of up to 70%. Donnan’s pitch was to tell alleged victims that their money was going to purchase surplus retail items that would eventually be resold. (Funding GLC’s business model/operation.)

2) Donnan allegedly enlisted Dennis Franchione to solicit multiple alleged Ponzi investors, including Billy Gillispie. In a separate legal action, GLC is now pursuing $95,000 in alleged commissions the current Texas State head football coach was allegedly paid by Donnan for luring Gillispie into the alleged scheme.

Court Docs: Franchione made $95,000 on Gillispie Ponzi buy-ins

3) After receiving the money allegedly solicited by Donnan and Franchione, GLC would pay out exorbitant fees to Donnan and Franchione for their “services” - along with sky-high loan interest rate payments to Donnan’s investors. Donnan and Franchione themselves also “invested” in the company with the expectation they’d recoup as much as 70% of their loan principal in 12 months.

More pertinent details:

  • Federal court docs submitted by GLC in its initial BK filing indicated that Donnan helped secure $81,916,000 from investors.
  • During the same period, GLC alleged that Donnan billed the company $14,557,228.50 in personal loan interest and commissions.
  • Of the $82 million in investor funds solicited by Donnan, GLC reported that $11,793,000 was invested in company operations.
  • Who exactly helped Donnan perpetrate his alleged Ponzi from within the company is subject to an ongoing investigation that could eventually see GLC executives and/or Donnan and/or Franchione charged in criminal court.

The highest-profile loser in Donnan’s alleged scheme, according to multiple court document filings, was/is Billy Gillispie.

On Oct. 24, 2011, Gillispie filed a claim against Donnan in federal bankruptcy court over $1,913,167.00 the Texas Tech basketball coach “loaned” to Donnan to invest in GLC company operations. In one loan document signed by the two parties and filed in federal bankruptcy court last year, Gillispie was to receive an annual 60% interest rate on a principal of $1,000,000 paid to GLC via Donnan.

In Donnan’s own handwritten notes - appearing in court docs - the ex-coach also noted that Franchione was to be paid a five percent commission for allegedly luring Gillispie into that particular deal. (Which GLC represenatives are now pursuing from the Texas State coach.)

In another federal court document, it appeared that Donnan and a GLC official drew up a $2,000,000 “loan” from Gillispie to GLC at “65 percent interest per year.

Gillispie though did not sign that agreement.

Gillispie’s initial claim was completely rebuffed by Donnan in a November 18, 2011, legal response. Two months later, Gillispie’s lawyer specifically alleged to the judge that Donnan misrepresented a Ponzi scheme as a legit business endeavor to his client, punctuating a lengthy court filing rife with legal citations by asking that …

the Court set a discovery deadline in this matter and a final hearing if deemed appropriate, and that it grant Claimants such other and further relief deemed to be just and proper.

A Jan. 25, 2012, hearing was subsequently set for possible disposition of Gillispie’s $1.9 million claim. Though that was just one of  36(!) other claims against Donnan scheduled for the same day. Because so many remain steadfast in their uncompromisig pursuit of the ex-Georgia football coach, the backed-up Athens, Georgia, federal court continued all civil proceedings until March 20, 2012.

And with remarkably few settlements in sight for the remaining claimants against Donnan, federal criminal investigators attempting to crack the case best pack a retard sandwich too.

Follow Brooks on Twitter or join him on Facebook for real-time updates

Tx Tech Rep: SbB’s Use Of School Logo Is Illegal

In 10 1/2 years of operating SbB, I’ve never been sued or been faced with any serious legal action. None.

IMG complaint to SbB on behalf of Texas Tech regarding SbB's illegal use of Texas Tech logo

(Texas Tech rep IMG fired legal guns 72 hours after SbB’s BCG revelations)

Over the years I’ve reported on Texas Tech quite a bit - especially as it pertains to Mike Leach, and more recently, Tommy Tuberville and Billy Gillispie. The accuracy of those numerous reports has never been specifically disputed on the record by anyone associated with Texas Tech.

Texas Tech Coach Tommy Tuberville reacts to SbB Facebook Posts About Him

(SbB post on TT football coach Tuberville caused Lubbock media uproar)

If you’ve read my exhaustive coverage of the unfortunate circumstances of Leach’s departure from the school, you’re well aware of the varying forms of documentation I’ve posted that portray Texas Tech officials - and others associated with the school - in an unflattering manner throughout the former football coach’s legally-challenged ouster.

In addition to Leach and Tuberville, on August 23 I reported details of the regrettable early tenure of newly-hired Texas Tech basketball coach Billy Gillispie. None of the facts of that story have been challenged on the record by anyone associated with Texas Tech.

Mike Leach New Book: Swing Your Sword

(TT rep IMG included “Truth” image linked to Leach book in SbB complaint)

On August 26, yesterday, I received an email from the company Texas Tech uses to oversee its licensing: IMG. The email, originated from IMG’s “enforcement” department, claimed that SbB’s use of the Texas Tech logo was, in fact, illegal.

The text of the email is below. [Note: IMG owns and operates ‘Collegiate Licensing Company’, ‘CLC’]

Please find attached a letter from the Collegiate Licensing Company Legal Department. Thanks.

Judy Martin | Enforcement & Compliance Assistant

IMG College and The Collegiate Licensing Company - an IMG Company

VIA CERTIFIED OR ELECTRONIC MAIL

August 26, 2011
Sports by Brooks

Re:  Unauthorized Use of Texas Tech University Trademarks

Mr. Brooks:

This letter serves to put you on notice of the proprietary interests of Texas Tech University. Read more…

Exclusive: Bully Gillispie Already Wrecking Tech

Last we left Billy Gillispie here at SbB, he had signed away as much as $3 million of his own money as part of “loan” agreement - at up to 65% annual interest! - with now-outed Ponzi schemer Jim Donnan.

Donnan, Franchione and Gillispie part of alleged Ponzi scheme

(Gillispie may have lost millions in two separate Ponzi schemes this summer)

The extent of Gillispie’s astonishing losses in the Donnan Ponzi, unreported in the media, came after Pablo Torre of SPORTS ILLUSTRATED reported last month that Gillispie monetary loss in an alleged Ponzi involving a Houston businessman may have also reached well into seven figures.

It isn’t unreasonable to think that had those revelations surfaced before Gillispie was hired by Texas Tech in March to take over its basketball program, he may not have gotten the job. Though Gillispie’s lacking business acumen is most likely the last concern Texas Tech Athletic Director Kirby Hocutt and TT Chancellor Kent Hance has about Gillispie at the moment.

Since Gillispie was named Texas Tech coach four months ago, several basketball staffers have left the program. Included in those defections is well-respected Red Raider trainer Jon Murray, whose 13-year Tech tenure included the Bob and Pat Knight years.

Longtime Tech basketball secretary Leslie Hartline, whose TT athletic dept. career traversed the entire Knight era at Tech, also recently walked out on Gillispie. Though Texas Tech officials have since prevailed upon Hartline to stay on as an administrative assistant with the school’s fundraising Red Raider Club.

Gillispie is now on his third secretary since taking the Tech job four months ago.

While some may write off those defections, among others, as typical turnover due to a coaching change, the situation involving former Tech basketball assistant Chris Beard cannot be similarly ascribed.

Beard recently left the program after serving as a Tech basketball assistant for nine years under Bob and Pat Knight - and being retained by Gillispie. But two months after Gillispie officially announced that Beard would stay on, the assistant coach’s departure was suddenly, and quietly, announced by the school and Gillispie.

From David Just of the LUBBOCK AVALANCHE-JOURNAL:

Chris Beard’s tenure on Billy Gillispie’s staff was a short one.

The Texas Tech men’s basketball assistant coach announced Thursday that he’s leaving his post to pursue other opportunities less than three months after being hired.

Beard was the associate head coach under former head coach Pat Knight, who was fired in March after three seasons. Billy Gillispie reinstated Beard on April 7, making him the first member of his staff.

Gillispie would only comment through a statement released by Texas Tech on Thursday evening.

“We hate to lose Chris,” Gillispie said in the statement. “He did a fantastic job and we appreciate the effort. He has been an important part of the program for several years and in the time we were together, it was obvious he has a great love for this university and this community.”

Beard could not be reached for comment.

“I’ve enjoyed and appreciate the opportunity to coach at Texas Tech University,” Beard said in a statement. “My family and I have equally enjoyed living in Lubbock. I wish Texas Tech nothing but the best.”

The Beard quote? He never said it. Tech made it up.

Beard left the program after multiple, heated altercations with the irascible and intractable Gillispie, the final of which was physically broken up by Texas Tech Athletic Director Kirby Hocutt.

That final conflict was a mediation of sorts after Beard had previously decided to leave the program because of Gillispie’s poor treatment of Tech employees, a former player and concern over Gillispie’s fast-and-loose recruiting tactics.

Remember, Beard was a guy who got along famously with Bob Knight throughout the notorious coach’s tenure and was a close confidante of Pat Knight as his top assistant. Gillispie was also a previous admirer of Beard, having tried to hire Beard at one of his previous coaching stops.

But the throwdown in front of Tech AD Hocutt was the final straw for Beard, who was cursed by Gillispie on multiple occasions in front of Hocutt before responding to the Tech coach in kind.

In exchange for Beard’s silence about Gillispie’s ill-advised stewardship of the program, Texas Tech has since paid Beard a hefty sum in an exit agreement that included a confidentiality clause. (Beard was not a source for this story, nor did he initiate or have any role whatsoever in its production or publication.)

Billy Clyde Gillispie

(Someone needs a wakeup call. Literally)

Beyond rampant, voluntary staff defections and the alarming circumstances surrounding Beard’s departure, Tech officials also have current concerns about Gillispie’s increasingly erratic behavior and well-chronicled fondness for, shall we say, a spirited off-court lifestyle.

Check back here for followups to this story - and at my Twitter and Facebook account.

Did Franchione Lure Gillispie Into Donnan Ponzi?

Last month a West Virginia-based company, Global Liquidation Center Ltd. (GLC), accused former Georgia football coach Jim Donnan of running a Ponzi scheme that it claimed eventually bankrupted the company.

Jim Donnan lured Tommy Tuberville, Frank Beamer, Billy Gillispie and Dennis Franchione into his alleged Ponzi scheme

In a civil action filed in a federal bankruptcy court last month in Athens, Georgia, GLC alleged Donnan had committed fiduciary fraud, embezzlement and larceny in the company’s bid to obtain the $5 million remaining in Donnan’s personal estate. (Donnan filed for bankruptcy himelf after GLC declared Chapter 11.)

GLC alleges that Donnan, who was a major investor in the retail outlet liquidation company, used his formal role with the company to lure investors into loaning money to GLC at exorbitant interest rates. (Some documented agreements touted a 70 percent annual rate of return.) When GLC was unable to service its obligations to the Donnan investors who had loaned it money - and Donnan himself was unable to obtain fresh investment capital to help GLC service those loans - the company was forced into declaring bankruptcy.

In federal court documents the company reported that from 2007 to 2010 Donnan helped secure $81,916,000 from investors. During the same period, GLC alleges that Donnan billed the company $14,557,228.50 in his own personal loan interest and commissions - with much of that money transferred from Donnan to his immediate family members and wife.

Of the over $81M in investment funds, GLC reported in court documents that $11,793,000 was invested in company operations.

As part of its legal argument to obtain what’s left of Donnan’s personal estate, GLC noted in its filing last month:

James Donnan is substantially, if not principally, responsible for the initiation and operation of a far-reaching ponzi scheme that defrauded GLC and its investors of approximately $27,752,159.

A week after GLC filed its claim against Donnan, a federal bankruptcy court judge effectively froze his personal assets to allow for a formal, legal examination of the hundreds of pages of evidence and exhibits submitted to the federal court.

As for GLC’s Donnan-solicited investors, nowhere in those legal documents is an itemized accounting of who lost what. And from Donnan’s personal accounting practices, it isn’t unreasonable to think that he doesn’t know either.

From evidence presented by GLC to the court, it’s now been confirmed that the former football coach kept virtually all of his financial accounting in handwritten notes. Those notes give the only clues, for now, of how much individuals may have invested - and potentially lost - with Donnan.

Documents in Donnan’s handwriting submitted by GLC to the federal bankruptcy court indicate Texas Tech basketball coach Billy Gillispie gave Donnan at least $3 million - in separate payments - to “loan” to GLC at exorbitant annual interest rates.

Dennis Franchione made commission on Gillispie $1,000,000 payment to Donnan

In one of the payments to Donnan, Gillispie signed off on a GLC company document indicating a $1 million loan to GLC at a 60 percent annual interest rate. Donnan later noted in one of his handwritten accounting documents that current Texas State football coach Dennis Franchione was to be paid five percent of Gillispie’s seven-figure buy-in. ($12,500.)

Donnan, Franchione and Gillispie part of alleged Ponzi scheme

(Franchione’s $300,000 ‘loan’ to Donnan at 60% annual rate)

In another GLC loan agreement document, Gillispie was given a 65 percent annual interest rate in exchange for a $2 million loan - solicited by Donnan - to the company. (Though that document was not signed by Gillispie.)

In another federal court document submitted by GLC last month, Donnan’s handwriting shows Franchione as credited with a 10% commission on what appears to be a May 1 six figure payment from Gillispie to GLC via Donnan.

Donnan, Franchione and Gillispie part of alleged Ponzi scheme

Franchione is prominently featured throughout Donnan’s handwritten bookkeeping of “investor” information. Here’s a handwritten contract for a Franchione “loan” signed off on by Donnan and his wife Mary.

Jim Donnan Contract With Dennis Franchione

In a March 10, 2009, email to Donnan, Franchione directed the former Georgia coach to send him the payments for five other individuals who had also apparently “loaned” Donnan - and GLC - money.

Dennis Franchione received checks for several Donnan clients

Franchione wrote Donnan at the time:

The others can be done in checks mailed to me in their names and I’ll see that they get there.

Franchione and Gillispie were far from the only coaches and sports figures who, according to Donnan’s handwritten notes, loaned him large sums of money at staggering interest rates.

Interest rates that GLC, a small retail merchandise liquidation firm, was obligated to pay.

Here’s some of the sports figures listed in Donnan’s somewhat indecipherable handwritten notes - and what they may have paid the former coach. (At least based on Donnan’s primitive accounting practices.):

1) Tommy Tuberville: $800,000
2) Frank Beamer: $175,000
3) Billy Gillispie: $3,000,000+ (one of two loan agreements unsigned)
4) Dennis Franchione: $650,000
5) Mark Gottfried: $250,000
6) Kendrell Bell (Former NFL player): $2,075,000 (two of four loan agreements unsigned)
7) Jonas Jennings (Former NFL player): $500,000 (loan agreement unsigned)
8) Mike Gottfried (Former ESPN analyst, CFB coach): $250,000
9) Tom Luginbill (ESPN recrutiing analyst): $30,000
10) Barry Switzer: $50,000

Barry Switzer Gave Jim Donnan $50,000 In Ponzi Scheme

Here are some of the executed and non-executed “loan” agreements and more handwritten notes - this time from a Donnan associate:

Jim Donnan Loan Agreements

Not everyone was convinced of the veracity of Donnan’s business. GLC included in its federal court document dump one email exchange between Donnan, a potential Donnan investor and his investment advisor:

When dismissing one of Donnan’s claims to his client, the advisor wrote in an email, “someone’s been eating retard sandwiches.”

Brooks is on Twitter and Facebook

Calipari: ‘They want to be us. Not beat us, be us

While talking about Kentucky’s upcoming matchup against Ohio State in the NCAA tournament during his weekly radio show on Tuesday, UK basketball coach John Calipari dropped off this gem:

John Calipari: We All Want To Be Kentucky

“It doesn’t matter who’s on your team, you have Kentucky across the front. It means something.

“They (Ohio State) want to be us. Understand that.

“They want to be us. Not beat us, be us.

“So they’re coming at you trying to say you win against Kentucky it shows that we’re them.”

Right, no idea.

Then again, that may explain the dropoff in the state’s identity theft rate since Gillispie left. Read more…

Gillispie Formally Meets With TTU, Hiring Imminent

Former Kentucky and Texas A&M basketball coach Billy Gillispie met with new Texas Tech athletic director Kirby Hocutt, school president Guy Bailey and TTU chancellor Kent Hance - along with other representatives of the school -  this morning in Boca Raton, Florida.

Billy Gillispie

(BCG met with AD Hocutt in Florida & Texas Tech officials in Dallas last week)

The meeting, which took place in south Florida because Hocutt’s last official day as Univ. of Miami Athletic Director isn’t until Friday, was to allow for a formal interview of Gillispie for the vacant Texas Tech basketball coaching job. Read more…

Sources: Wyoming Wants Kent, BCG Talks To TTU

On Feb. 7, I broke the news that Wyoming had fired head basketball coach Heath Schroyer.

Billy Gillispie and Ernie Kent: Kent to Wyoming, Gillispie to Texas Tech

(Gillispie and Kent: Two guys who could use a hug)

At the time I suggested that the job was perhaps the worst in college coaching because of Schroyer’s salary, a paltry $160,000, and Wyoming’s somewhat lacking hoops facilities.

Since that time things have apparently changed in Laramie.

I was told yesterday that Wyoming Athletic Director Tom Burman is attempting to make as splashy a hire as possible under the circumstances. (A hire that may go a long way to saving his job.) Facilitating Burman in that endeavor has been Univ. of Wyoming President Tom Buchanan, who has stepped up the school’s financial backing to allow Burman to pursue more recognizable names.

Until recently, rumored candidates throughout the process have been former Wyoming head coach and current Florida assistant Larry Shyatt, BYU assistant Dave Rice, USF assistant Jeremy Cox, St. John’s assistant Mike Dunlap and Kansas assistant Joe Dooley.

I’ve also been told that there was a major push by Wyoming boosters to try to get Billy Gillispie some consideration for the job. Despite the search firm involved in the process signing off on BCG and school president Buchanan also approving of Gillispie consideration, Burman nixed an interview for the former Kentucky coach. That despite Bill Self personally calling the school to recommend his former assistant at Tulsa after Gillispie made it known he had interest in the job. (Regardless of what you may hear, he did.) Read more…

Tom Penders Out As Houston Basketball Coach

Tom Penders is out as head basketball coach at the University of Houston.

Tom Penders fired by Houston

A college basketball source told me that in a meeting with UH Athletic Director Mack Rhoades today, the 64-year-old Penders was given the option of being reassigned within the athletic department, resign or be fired. Penders has chosen to resign.

A press conference has been scheduled for Monday to make the announcement.
Rhoades has hired Laurie Wilder of Parker Executive Search to reach out to potential candidates for the job. That process is currently underway. Perhaps not coincidentally, Parker Executive Search is the same firm that placed Rhoades at Houston.

Read more…

I Prefer Gillispie’s Commemorative Rolling Paper

Bourbon producer Maker’s Mark announced today a commemorative John Calipari bottle. 24,000 bottles of the Kentucky-distilled booze produced will net $300,000 for the UK Symphony Orchestra and the UK School of Music.

John Calipari Maker's Mark Photo

(Cal’s jowled jaundice wonderfully depicted on booze bottles)

You can only buy the booze in Kentucky, and it’ll sell for $50 a throw. Read more…