Former Coach Donnan, GLC Limited Propose Settlement for Alleged Ponzi Scheme

by Tony Rutherford HuntingtonNews.Net Reporter
Former Coach Jim Donnan
Former Coach Jim Donnan

MACON, GA (HNN) – A motion to approve a settlement agreement has been made in the case of former Marshall University and University of Georgia football coach, Jim Donnan and the bankrupt Proctorville, Ohio retailer, GLC Limited.

Court documents allege that Jim 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 $27,752,159.00.” The July 15, 2011 document alleged that defendants James and Mary Donnan “received approximately $14,557,228.50 from GLC ,  a profit of nearly $10,000,000.”

However, when the defendants did not secure the “volume of new investments necessary” to maintain the scheme, GLC defaulted on its financial obligations, including notes to investors solicited by Defendants.”  GLC filed it Chapter 11 bankruptcy petition February 28, 2011, in the Bankruptcy Court for the Southern District of Ohio (11-11090).”

The Donnan’s filed their voluntary Chapter 11 petition on July 1, 2011 with a re-payment plan due  along with a disclosure statement on October 31, 2011.

Once GLC filed their adversary complaint, they asked that the Donnan discharge be rescinded due to “fiduciary fraud, embezzlement and larceny,” along with an emergency motion to stop the Donnan’s use of “cash collateral” and to establish a “constructive trust or other equitable relief.”

On August 9, 2011, Donnan and his wife offered a settlement agreement to GLC while denying direct involvement in “orchestrating” the alleged Ponzi scheme.

“They also recognize that if they received the funds as part of a Ponzi scheme, they would be liable for return of much of their net winnings,” the settlement states.

However, by counsel, the Donnan’s acknowledge that GLC may be able to prove a part of its allegations, which would merit a settlement.

The bankruptcy court will review the settlement documents at an August 29 hearing in Macon, Ga.

The ADVERSARY complaint filed by GLC may be viewed below in PDF format , as can the DOCKET REPORT for the Donnan case.