The Securities and Exchange Commission is calling out a former college football coach for allegedly acting in less than a sportsmanlike manner, accusing him of taking $80 million from other coaches and players and losing it in a Ponzi scheme. The man was inducted into the College Football Hall of Fame in 2009 for his time coaching at two universities.
He’s now facing civil charges of fraud for the alleged scheme, which began in 2007 and ran until October 2010 when the SEC got a whiff of the operation the coach and business partner were involved in. Feds say he and his cohort told investors they’d get big returns from putting their money into a wholesale liquidation business that purchased unwanted merchandise from retailers and resold it at a discount.
The SEC claims the company promised “exorbitant” returns of 50% to 380%, but only $12 million of the $80 million invested was ever used to buy merchandise. Most of those products just ended up sitting in abandoned warehouses sprinkled across Ohio and West Virginia, says the SEC.
Seems he had an interesting relationship with his former players, as CNN says he allegedly told one man who gave him $800,000: “Your Daddy is going to take care of you.”
The coach’s lawyer says this is all nonsense, and that a business gone bad can easily be labeled a Ponzi scheme when it fails.
“We’ve said all along that [the business] certainly did not start out to be what is called a Ponzi scheme,” he said. “It’s easy to call that to businesses that have gone bad.” He added that there’s no point in suing his client because he doesn’t have any money. Funny how $80 million can disappear.
The coach and his partner wouldn’t go to jail if found guilty, since the charges are civil. Instead, investors would hope to recoup their financial losses — a hope that will unfortunately not be likely to pan out, said an SEC regional director.
“As in a lot of Ponzi schemes, some money went to early investors, some was taken out by people controlling it, some of it was lost and some of it was unaccountable,” he said.