ATHENS – One of Jim Donnan’s then-close friends testified Friday that the former Georgia head football coach talked him into investing $1 million of family savings, which was later lost.
David Allen, a urologist in Athens, said he had been friends with Donnan since Georgia hired him in 1996. More than a decade later Allen became an investor in ill-fated GLC after Donnan and Allen ran into each other at a Five Guy’s Burger restaurant in Athens.
“Jim mentioned he was into a new business endeavor and was doing quite well,” Allen said Friday.
Donnan, 69, is on trial on 41 counts of fraud related to what the federal government said was an $81 million Ponzi scheme. The company collapsed in late 2010, costing investors millions. Donnan also lost a great deal of money, according to his lawyers.
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A few months prior to GLC’s collapse in 2010, Donnan called Allen to solicit another investment, Allen testified on Friday. Donnan told Allen to say he had a “very important” investment that included five other investors, two others of whom had not been able to fulfill that part of it.
“Jim asked that I be able to help pick this up so the investment would go through and he would not be harmed significantly,” Allen said.
Allen said he had $1 million set aside for at least a decade, and initially told Donnan that the money wasn’t available to anybody but his family. So he turned Donnan down.
But Allen testified that Donnan eventually called back, and sounded distraught to Allen, saying the situation could affect him badly, and cause the loss of his house.
“I subsequently invested,” Allen said.
Jerry Froelich, one of Donnan’s attorneys, then began his cross examination by bringing up a past statement by Allen that he had helped run a hedge fund out of college. That led to a contentious exchange that the judge finally put to an end, telling Froelich to move on.
Allen later testified that Nelson Bowers, another investor, called him to say that “Jim is in trouble and we need to help him.”
Several other investors in GLC testified on Friday, including former Virginia football head coach Dick Bestwock, who lost $40,000 on his family's investment. Edd Price, an Athens resident, said he lost more than $1 million.
Donnan and his defense have blamed GLC's founder, Gregory Crabtree, for duping the former coach and running a Ponzi scheme. Donnan's side argues that he was just the first investor in GLC, and recruited investors in the genuine belief that GLC would work.