WASHINGTON -- The Securities and Exchange Commission has brought fraud charges against ex-UGA football coach Jim Donnan and a second man for conducting an $80 million Ponzi scheme.

The SEC says Donnan and his business partner Gregory Crabtree managed the fraud through a West Virginia-based company, GLC Limited. They said Donnan and Crabtree told investors that GLC was in the wholesale liquidation business and earned "substantial profits" by buying leftover merchandise from major retailers and reselling those products to discounters.

RELATED | Download the SEC complaint document

Donnan and Crabtree promised investors rates of return that ranged anywhere from 50 to 380 percent. However, according to the SEC, only $12 million of the $80 million raised from nearly 100 investors was actually used to purchase leftover merchandise, and the remaining funds were used to pay fake returns to earlier investors or stolen for other uses by Donnan and Crabtree.

One of the investors is Valerie Fennell of Athens. She says her late husband Steven was a golfing buddy of Jim Donnan. She says the former Georgia football coach urged her husband to invest nearly $450,000. "All of this money was supposed to be for her retirement," said her attorney Keegan Federal.

"He just wore him down. He would personally guarantee him what he put in, he would get back," Mrs. Fennell said in August 2011.

Donnan has filed for bankruptcy, and has declined to answer questions about the alleged scheme. The federal complaint says Donnan approached many of the victims by using his status as a college football coach and TV commentator to persuade them to invest. Federal says he did so knowing the scheme was unsound.

"It's hard to believe that coach Donnan, from very early on, that the money he was raising from new investors was going to pay off the returns to the old investors," said Federal. "Classic Ponzi scheme."

In a Thursday news conference, the SEC's associate regional director, William Hicks, said that of the victims the largest losses were as much as $4 million, ranging down to a few thousand dollars.

SEC officials declined to release the names of any of the victims right away, but pointed out that at least some of the names were made public in the bankruptcy filing paperwork for GLC Limited.

"Donnan and Crabtree convinced investors to pour millions of dollars into a purportedly unique and profitable business with huge potential and little risk," said William P. Hicks, Associate Director of the SEC's Atlanta Regional Office in a release Thursday. "But they were merely pulling an old page out of the Ponzi scheme playbook, and the clock eventually ran out."

The SEC says Donnan told investors the company could enter into even more merchandise deals with more capital. They claimed the short-term -- two- to 12-month -- investments would bring high returns that would be paid out to investors in monthly or quarterly installments, or as a one-time payment.

Donnan said the money was being used to purchase specific items of merchandise that was often presold, so there was supposedly little to no risk of investing in any deal. The SEC says much of the merchandise that GLC actually purchased was left unsold and left abandoned in warehouses in West Virginia and Ohio.

In addition to Donnan and Crabtree, the SEC's complaint names two of Donnan's children and his son-in-law as relief defendants for the purposes of recovering illicit funds that Donnan directed to them.

Officials said a recovery of the ill-gotten gains by Donnan and Crabtree, along with a civil penalty would be sought in the case. When asked about any potential criminal charges, Hicks declined to comment.

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