Topic: H-D: Donnan trial

[biggreenarms]

ATHENS, Ga. — Huntington native Dan Shoemaker believed former Marshall University football coach Jim Donnan was savvy enough to help an area liquidations business succeed, despite the shortcomings of its founder Greg Crabtree of Proctorville, Ohio.

But those hopes did not come to fruition, as GLC Limited's chief restructuring officer told jurors Wednesday he needed less than three hours to uncover fraud and realize bankruptcy would be inevitable in what a federal investigator testified was a Ponzi scheme that bilked investors of nearly $23 million.

"The business wasn't a viable, operating entity," testified chief restructuring officer Jim Burritt. "My opinion is it was never a real business."

The three men testified Wednesday in Athens, Ga., where a federal prosecutor repeatedly mentioned Huntington-area businesses in his effort to convict Donnan on multiple counts of conspiracy, mail fraud, wire fraud, money laundering and securities fraud.

Donnan, 69, of Athens, compiled a 64-21 record at Marshall between 1990 and 1995 before moving onto the University of Georgia and eventually sports commentary at ESPN.

Defense attorney Ed Tolley will cross-examine Burritt when trial resumes at 9 a.m. Thursday, May 8, before U.S. District Judge C. Ashley Royal. The prosecution told the judge Crabtree, who has pleaded guilty to a single felony count in the case, will be their next witness.

Federal prosecutor Paul McCommon on Wednesday introduced documents from First Sentry Bank, First State Bank and Edward Jones, all of Huntington, in reconstructing the method by which $81 million of investments flowed into the Tri-State.

Jurors ended the day with photographs of Dan's Sport Shop along 4th Avenue, formerly part of GLC Limited, and a Huntington warehouse where the company possessed no mechanism to track its inventory.

The photographs showed industrial shelving filled floor to ceiling with additional boxes stacked upon each other and aisles once designed for a forklift with barely a walking path. The boxes contained everything from clothes to 3,000 bags of expired potato chips. Burritt compared the warehouse's smell to that of a building overtaken by mice.

"It's just completely unorganized," Burritt testified. "There's no way to tell what was there."

Shoemaker and Burritt joined other witnesses Wednesday indicating Crabtree ran the business's day-to-day operations, while Donnan raised its capital. That was similar to the partnership Shoemaker envisioned in suggesting the two men contact each other.

Shoemaker, who initially hired Crabtree to complete work on Oliver's restaurant and with whom he later built a house, told jurors he had no confidence in Crabtree's ability to run a business of any size. He described the Proctorville man as the type of person who comingled personal and business spending and needed help remembering to pay his taxes.

"Greg and I had a decent friendship, probably one sided, but nonetheless I liked him," Shoemaker testified. "I think I've always had a soft spot for people who try real hard and don't ever seem to get ahead."

But the retired ESPN vice president, now deputy athletic director at College of Charleston in South Carolina, still believed Crabtree's idea for a liquidations company would succeed in Huntington and the surrounding area, a region he described as economically depressed where Big Lots, Dollar General, flea markets and auctions are popular.

That optimism prompted Shoemaker to give each man the other's phone number. His belief in Donnan was based upon their friendship and their joint investment in West Virginia Media Holdings, parent company of WOWK-TV in Huntington and Charleston.

Shoemaker, at some point upon learning their partnership indeed materialized, told jurors he reminded Donnan of Crabtree's shortcomings and urged the former coach to make sure GLC had the accountants, lawyers and other experts necessary to run a multi-million company.

Donnan replied he was pushing Crabtree to do just that, Shoemaker testified.

Financial records submitted into evidence by FBI contractor Raymond Kyle indicate Shoemaker lost at least $50,000 in GLC. Shoemaker testified the investment, for which he borrowed half, came in summer 2010 amid Crabtree's request for support in a deal for Christmastime toys.

Crabtree represented that the toys would arrive from China, move through GLC and be purchased by stores such as Big Lots and Dollar General, Shoemaker testified. He told jurors Donnan knew little of the deal, but indicated similar investments had worked in the past.

But the deal did not did close by October as Crabtree promised. Months later, Shoemaker said he learned from Burritt no inventory had been purchased during that time period, toys or otherwise.

Shoemaker, under cross-examination, also recalled a $50,000 deal between himself and Crabtree for hardwood floors. He recalled seeing Crabtree drive a new Hummer a short time after he received money for flooring that never arrived.

Nelson Bowers, an investor, was the fourth of five witnesses from Wednesday. He testified Crabtree admitted to having used investments to pay earlier investors, but twice told him Donnan was not aware of his actions.

Bowers testimony, Shoemaker's account that Donnan lacked knowledge of the toy deal and Crabtree's misrepresentation regarding the toys' purchase were consistent with defense arguments, which suggest Donnan knew nothing about his partner's actions.

But Shoemaker's recounting of times he warned Donnan, along with testimony from Burritt, Internal Revenue Service criminal investigator Bryan Settle and Kyle supported the prosecution's theory.

Burritt showed the jury emails from Donnan and handwritten notes with his initials, both of which directed GLC staff in Huntington as to which investors to pay, when to pay them and by what method.

Settle showed Donnan's signature on investment payouts from GLC's checking account at First Sentry Bank. He testified Donnan signed onto the account's signature card as co-secretary at the urging of three wealthy investors who wanted the former coach to be more involved.

Settle, under cross-examination, told jurors Donnan had no involvement in Dan's Sport Shop, a GLC-operated hardware store in Proctorville or any of its Global Liquidation retail stores, which were located in Huntington and as far away as Tennessee and Indiana.

Settle also testified Donnan had no signature rights to GLC accounts at Edward Jones or First State Bank; however, he answered McCommon in testifying some First State Bank payout checks seemed to have the handwriting of two people.

Kyle testified as to winnings earned by Donnan and his family. The former coach realized a personal gain of $8.44 million and his family a profit of $1.36 million. That included a gain in excess of $500,000 on an estimated $80,000 investment by Todd Donnan, who quarterbacked the Thundering Herd under his father's leadership in the early 1990s.

http://www.herald-dispatch.com/news/x1315748194/GLC-officer-says-business-wasnt-viable

[IM4DHERD]

DShoe is the Forest Gump of Marshall Athletics.  He has always been smack dab in the middle of everything from hires to conference realignment to scheduling and now all this.

[The E-Man]

DShoe is the Forest Gump of Marshall Athletics.  He has always been smack dab in the middle of everything from hires to conference realignment to scheduling and now all this.

Yeah, and I'm sure this is one Shoe wishes he wasn't a part of.
I hate this for all involed, especially coach Donnan and his family.