Donnan facing new bankruptcy claims from SEC
There have been new developments in the bankruptcy case of former University of Georgia football coach Jim Donnan. Court documents filed earlier this month indicate that the Securities and Exchange Commission has asked a bankruptcy judge to reject Donnan’s plan to repay some of his creditors and also intends to file a claim against him for as much as $13 million, for alleged violations of federal securities laws involving a Ponzi scheme.
The company at the center of that Ponzi scheme is GLC Limited, which owed more than $25 million to investors at the time it filed for bankruptcy last year.
Creditors in the bankruptcy case say that Donnan convinced them to invest in the West Virginia-based company based on the profits he himself had made since investing in 2007. The SEC says that like others who invest in Ponzi schemes early, Donnan and his wife did quite well with their returns. In fact, the couples net worth increased from about $3 million in 2007 to more than $10 million in just a few years.
Lawyers for the federal agency are also concerned about the lack of information in Donnan’s Disclosure Statement regarding “what the (couple) did with the substantial profits they received from GLC, and why more money is not available to pay creditor claims.”
In a somewhat ironic note, lawyers for GLC are seeking to get much of that money back as a creditor in Donnan’s bankruptcy case, claiming that GLC paid Donnan and his wife more than $13 million “as returns on investments and as commissions for Mr. Donnan soliciting investments by others.”
Donnan’s attorney has expressed confidence that the SEC will ultimately decide not to file a claim in this bankruptcy case after speaking with his client.
Source: Athens Banner-Herald, “Federal SEC investigates Donnan bankruptcy,” Lee Shearer, March 26, 2012