Jim Donnan has been accused of running a Ponzi scheme at the expense of a company called Global Liquidation Center Ltd, and the company recently filed a suit against Donnan alleging "fiduciary fraud, embezzlement, and larceny." Sports by Brooks obtained some documents from the filing.
GLC alleges that Donnan, who was a major investor in the retail outlet liquidation company, used his formal role with the company to lure investors into loaning money to GLC at exorbitant interest rates. (Some documented agreements touted a 70 percent annual rate of return.) When GLC was unable to service its obligations to the Donnan investors who had loaned it money - and Donnan himself was unable to obtain fresh investment capital to help GLC service those loans - the company was forced into declaring bankruptcy.
In federal court documents the company reported that from 2007 to 2010 Donnan helped secure $81,916,000 from investors. During the same period, GLC alleges that Donnan billed the company $14,557,228.50 in his own personal loan interest and commissions - with much of that money transferred from Donnan to his immediate family members and wife.
Of the over $81M in investment funds, GLC reported in court documents that $11,793,000 was invested in company operations.
Donnan received investments from a number of prominent sports figures, including Dennis Franchione, Billy Gillispie, Tommy Tuberville, Barry Switzer, and Frank Beamer. According to the documents, Mark Gottfried loaned Donnan $250,000. The FBI and IRS are looking into the case.
As it turns out, Gottfried's involvement is old news. This story from mid-March names Gottfried but escaped attention locally. My guess is that happened because the story appeared weeks before NC State hired him.
It doesn't mean there is any culpability on Gottfried's part--this type of thing requires plenty of people who don't have a clue about what they're getting themselves into--but as it's a federal investigation and looks bad by association, Gottfried will have to address this. Since WTVD's Mark Armstrong has already inquired, I imagine that'll be sooner rather than later.