ATHENS, Ga. -- Former University of Georgia football coach and ex-ESPN analyst Jim Donnan has reached a settlement agreement in his pending bankruptcy case that would have him return millions of dollars he made from an alleged Ponzi scheme, according to court documents.
Under the terms of the settlement filed Tuesday as part of Donnan's Georgia bankruptcy case, Donnan would pay $5.5 million to the creditors of West Virginia-based GLC Enterprises.
"At the end of the day, his [Donnan's] net worth is going to be pretty close to nothing," a source familiar with the settlement agreement told ESPN's "Outside the Lines."
Donnan, according to his attorneys, was the first investor in GLC, a liquidation company that generated revenue through the purchase and resale of consumer products. He's acknowledged investing $5.4 million in the company, which is also now in bankruptcy proceedings.
Donnan was also GLC's biggest winner.
"There is no dispute that the Donnans [including their immediate family members] were the largest net winners of all investors in GLC as they received from GLC approximately $9,157,000 more than they invested," the settlement agreement states.
Sources recently told "Outside the Lines" that Donnan and the original operators of GLC, Greg and Linda Crabtree of Proctorville, Ohio, are being investigated by both the FBI and IRS for their roles in running what appears to be a Ponzi scheme.
According to court documents, investors sank roughly $82 million into GLC, but less than $12 million was spent on actual inventory. With dwindling revenues from the sale of consumer products, GLC's first operators -- the Crabtrees -- began paying existing investors with money raised from new investors, which, according to the court documents, constituted a Ponzi scheme.
In the end, "GLC net losers lost $27,752,159," according to the settlement agreement.
Donnan, through his attorneys, has repeatedly denied any knowledge of a Ponzi scheme and maintains that he's been committed since late 2010 to paying back GLC investors who lost money.
"The Donnans want the investors who lost money to recoup as much of their losses as possible," the settlement agreement states. "They also recognize that if they received the funds as part of a Ponzi scheme, they would be liable for return of much of their net winnings."
"Outside the Lines" has learned that in the years prior to seeking Chapter 11 bankruptcy protection, GLC, largely with the help of Donnan, attracted millions of dollars in investments from several high-profile figures from the world of sport. Former University of Oklahoma and Dallas Cowboys coach Barry Switzer, and current Virginia Tech football coach Frank Beamer, Texas State football coach Dennis Franchione and Texas Tech football coach Tommy Tuberville are among them.
Donnan served as the offensive coordinator for the Sooners from 1985 to '89, winning the 1985 national championship under Switzer. He coached Georgia from 1996 to 2000 after winning a national title as the coach of then-Division I-AA Marshall in 1992.
Last month, the current operators of GLC sued Donnan, his wife, their children and their spouses alleging "James Donnan is substantially, if not principally, responsible for the initiation and operation of a far-reaching Ponzi scheme that defrauded GLC and its investors of approximately $27,752,159."
Donnan's role in GLC Enterprises remains in dispute. In lawsuits filed by the current operators of GLC, Donnan is alleged to have been an officer in the company.
According to the court documents, Donnan signed applications for GLC bank accounts and checks on behalf of the company.
"Jim was not an officer in GLC," Donnan's lawyer, Edward Tolley, told "Outside the Lines." "He was never an officer. That's absolutely not true."
Donnan's settlement offer is not yet a done deal. The agreement still must receive approval from the bankruptcy court, and any of the creditors in GLC's bankruptcy case are entitled to raise objections, according to a source familiar with the bankruptcy proceedings. A hearing on the deal could be held as early as Aug. 29.
Donnan also could be required to pay GLC creditors an additional $2 million over and above the $5.5 million he's offered to re-pay through the settlement.
Under the terms of the agreement, Donnan would keep his home in Athens and personal property (the agreement goes so far as to itemize Donnan's $600 shotgun and $2,000 in football memorabilia as items excluded from the settlement agreement).
"The court may require him to sell some of those additional assets," the source familiar with the deal told "Outside the Lines."
But the source acknowledged those who lost money investing in GLC should not expect a complete payback.
"The likelihood of paying everybody back in full is probably low," the source said.
John Barr is a reporter and Greg Amante is a producer in ESPN's Enterprise Unit. Barr can be reached through email at email@example.com.