ATHENS, Ga. -- Former University of Georgia and Laney High School football star Kendrell Bell says former UGA football coach Jim Donnan deceived him into investing $2 million in a West Virginia company that turned out to be a Ponzi scheme, using money from new investors to pay inflated returns to people who put money into the company early on — including Donnan.
The company, GLC Limited, filed for bankruptcy last year owing some $27 million to investors and lenders.
Bell played for Donnan at UGA, then went on to play for the Pittsburgh Steelers. The linebacker was the league’s defensive rookie of the year in 2001, but his career was cut short by injury.
“James Donnan guaranteed (Bell) that his investment was safe and that James Donnan would protect him,” according to legal documents filed by Bell’s lawyers. “James Donnan was a father-figure to (Bell), and (Bell) trusted him implicitly.”
Donnan was a key figure in the company’s fundraising, according to the former football star’s lawyers.
“James Donnan, as one of the two architects of the Ponzi scheme, was the prime salesman and largest beneficiary of the scheme,” according to Bell’s attorneys. “In short, James Donnan duped (Bell) into investing $2 million, and then diverted his money from GLC to (Jim and his wife Mary Donnan) or other investors.”
Lawyers for Donnan have said that the former UGA coach acted in good faith, telling friends and acquaintances that GLC was a good investment opportunity.
The company’s owners, Greg and Linda Crabtree, claimed to be using investors’ money to buy discontinued appliances, furniture and other goods for resale. But according to court documents, the company collected some $82 million from investors, and bought less than $12 million in inventory. The rest went to pay big returns to earlier investors, including the Crabtrees, Donnan and members of Donnan’s family.
The Donnans were among the first investors, putting about $5.4 million in GLC, then getting $14.6 million back, according to documents filed by Bell’s lawyers.
Donnan got a commission of 15 percent to 20 percent when he solicited other investors to invest in or loan money to GLC, according to court documents filed by lawyers for Bell and for GLC.
The Donnans themselves filed for bankruptcy protection in July, proposing a plan in which the Donnans would repay some of the money they received from GLC. But some of those who lost money have objected, including the widow of Athens physician Stephen Fennell.
Lawyers for Valerie Fennell say Donnan persuaded her husband to invest $450,000 in GLC to buy inventory at a time when Fennell was dying of leukemia and unable to make sound financial decisions, the lawyers said. He only got a fraction of his money back.
“In an increasingly desperate effort to pay for his own medical bills, he bought Mr. Donnan’s story about GLC’s inventory purchases,” according to court documents filed by Valerie Fennell’s attorneys, who include Keegan Federal and Bill Rothschild of Atlanta.
Federal and Rothschild were in court Thursday for a pre-trial hearing with Donnan’s bankruptcy lawyer, Ernie Harris of Athens, but except for routine matters, the issues to be discussed at the hearing were postponed until March.
Bell’s lawyers argued in a Tuesday hearing that they should be allowed to join Fennell in claiming part of Donnan’s assets ahead of other investors, despite missing a deadline to file a claim against the Donnans.