BY DAN MIHALOPOULOS Staff Reporter email@example.com July 17, 2012 2:10AM
Former quarterback Jim McMahon listens as President Barack Obama honors the 1985 Super Bowl XX Champions Chicago Bears football team during a ceremony on the South Lawn of the White House in Washington, Friday, Oct. 7, 2011. (AP Photo/Charles Dharapak)
Updated: August 18, 2012 6:07AM
As a Super Bowl-winning quarterback for the Chicago Bears, Jim McMahon scrambled to elude pass rushers.
Now, in a new court filing, the federal government accuses him of attempting “to duck responsibility” for the collapse of the politically connected Broadway Bank, where he allegedly amounted to no more than a “figurehead” board member.
The former Bear known as the “Punky QB” was among seven former board members and two bank executives who were targeted personally by the Federal Deposit Insurance Corp. in a lawsuit filed in March. The feds want to recover $104 million lost from 17 bad loans from the now-closed bank, which was owned by the family of Alexi Giannoulias, the former state treasurer and losing Democratic nominee for President Barack Obama’s old U.S. Senate seat.
Like the other bank officials, McMahon is seeking to have the case against him dismissed. But in a filing in U.S. District Court on Wednesday, lawyers for the FDIC argued that McMahon should be held culpable “in many respects.”
“Defendant McMahon’s conduct is a paradigm case for director negligence,” the feds allege in their most detailed criticism yet. “He appears to have approved loans he was told to approve without questioning. He received critical regulatory reports but did nothing in response. He did not read bank status reports; he missed many meetings. There is no substitute for the disciplined work required to be a responsible bank director. This is something that McMahon does not acknowledge or appear to understand.”
The feds’ rebuke of McMahon concludes by citing the ruling in another case brought against officers and directors of a failed bank: “An outside director who functions as a ‘figurehead’ is engaged in a risky undertaking.”
The FDIC says there were “serious deficiencies” in the loans that McMahon and the other defendants approved. Loans were approved without specific purposes given for how the money would be spent and without proper underwriting, according to the suit.
McMahon was on the Broadway board from 2003 until he resigned in December 2008, months after federal regulators began questioning the bank’s lending practices.
McMahon lawyer John M. George Jr. declined to comment on the case Friday. In McMahon’s motion to have the case thrown out last month, his other lawyer, Nancy A. Temple, wrote that the economy was to blame for the problems at Broadway.
“The directors here cannot be liable for not anticipating the full extent and depth of the greatest economic crisis since the Great Depression,” she argued. “Federal regulators, including the FDIC itself, have conceded that no one anticipated the market downfall.”