Many of the investors testifying Monday described scenarios in which they were promised by Donnan large rates of return — typically 30 to 70 percent — on investments that GLC was supposed to use to purchase closeout inventory for resale to pre-determined buyers.
The prosecution has argued that relatively little merchandise was actually sold and that early investors were repaid with the contributions of later investors. But Donnan’s knowledge of what was happening in the business is in sharp dispute, with his lawyers contending the former coach believed GLC was a great investment and wanted to share it with friends and family members. Some of the people who lost money have testified they don’t believe Donnan was deliberately deceiving anyone.
All four coaches who testified Monday said they lost money in GLC, which filed for bankruptcy protection in 2011.
After recovering some funds through the bankruptcy proceedings, Gottfried and Franchione estimated their net losses at around $300,000 and $900,000, respectively. Gillispie said he had a net loss of about $700,000 after recovering some money through the bankruptcy proceedings and a confidential agreement with Franchione. Tuberville indicated he and his wife had a combined loss, but the amount wasn’t specified.
Gottfried is currently the men’s basketball coach at N.C. State. Franchione is the football coach at Texas State after previously holding the position at Alabama and Texas A&M. Tuberville is the football coach at Cincinnati after previous stints at Auburn and two other colleges. Gillispie, a former basketball coach at Kentucky and three other colleges, said he’s “not currently doing anything.”
Gottfried testified that Donnan told him the investments had “pretty much no risk” because they would be used to buy merchandise that GLC had arranged in advance to re-sell. Gottfried said Donnan likened the business to oil wells “already pumping.”
Franchione testified that he has known Donnan for 35-plus years and “trusted him” in making the investment. “If he was invested in it and doing well, it gave me confidence,” Franchione said. Under cross-examination, Franchione said he is “still friends” with Donnan.
Tuberville said that when he was considering investing, Donnan told him to contact Franchione.
“It wasn’t a forcible sale whatsoever,” Tuberville said. “He said, ‘Don’t take my word for it. Call Dennis Franchione; feel him out because he’s been in it for a while.’ And that’s what I did.”
Of the four coaches who testified, Gillispie expressed the strongest sentiments about how things turned out.
“I was looking for a safe investment,” Gillispie said. “I didn’t want to waste any money. When (Donnan) told me everything … was going to be pre-sold before (GLC) bought it, it sounded like something I wanted to be involved in.”
Gillispie said he was told “on several occasions” by Donnan that “there was zero risk” of losing principal.
Donnan is facing charges of conspiracy, wire fraud, mail fraud, money laundering and security fraud — 41 counts in all.
One of just four head football coaches at Georgia in the past half-century, Donnan was the Bulldogs’ coach from 1996 through 2000.