CHICAGO – In an attempt to recover $104 million, federal authorities have sued former Chicago Bears quarterback Jim McMahon and eight others involved in a now-failed bank that was at the center of the campaign for President Obama's old U.S. Senate seat.
Seven former directors -- including McMahon -- and two officers of Broadway Bank ignored federal warnings about just how risky some of the bank's loans were, according to the Federal Deposit Insurance Corp. lawsuit filed last month. Two loans were approved in 2008 on the very day regulators "specifically warned" about "the risks that these types of loans posed to the Bank."
In all, $104 million in losses from 17 loans "were caused by gross negligence" and breaches of fiduciary duty by the defendants, the lawsuit says.
McMahon's involvement was confirmed Monday by a person close to the case who spoke on condition of anonymity because he was not authorized to speak publicly about the details. It was first reported by the Chicago Sun-Times.
McMahon, the brash leader of the Bears, led the team to the 1986 Super Bowl victory over New England. He is now among dozens of retired players who have sued the NFL, blaming the league for concussion-related dementia and brain trauma.
Also named in the FDIC lawsuit are relatives of former Illinois treasurer and Senate candidate Alexi Giannoulias. Giannoulias, who was an officer at the bank that was founded by his father before being elected state treasurer in 2006, is not named in the lawsuit. But the allegations of shady loans at the bank that was shutdown in 2010 dogged him throughout his unsuccessful Senate bid against Mark Kirk that year.
In a statement released through his attorneys, McMahon said Broadway Bank's failure stemmed from the bank's inability to "withstand the greatest market decline since the Great Depression" and not any wrongdoing.
"With the advantage of 20-20 hindsight, the FDIC now blames Broadway's former officers and directors for not anticipating the same unprecedented market forces that also surprised central bankers, national banks, economists, major Wall Street firms, and the regulators themselves," he said. "I am proud to have served as an outside independent director for a brief part of the bank's history. The allegations in the complaint are utterly without merit and I expect to be fully vindicated."
McMahon was on the board of directors from 2003 through late December 2008. The FDIC says McMahon played a role in only one of the 17 bad loans, when the board approved a $28 million loan that resulted in a loss of $19 million.
"Despite his board responsibilities," the lawsuit also says, "McMahon repeatedly missed critical board meetings."