Feds aim to sack ex-Bears QB Jim McMahon
By TIM NOVAK, CHRIS FUSCO & DAN MIHALOPOULOS Staff Reporters email@example.com April 9, 2012 4:44PM
Jim McMahon in front of McMahon's Arena near Glenview in 2002. | File photo
WHO’S BEING SUED
Seven former directors and two former vice presidents of the failed Broadway Bank are being sued by the Federal Deposit Insurance Corp. regarding 17 bad loans:
♦ Demetris Giannoulias: Succeeded his late father Alexis Giannoulias as bank president and CEO in 2006. Board member from 1994 until regulators shut down the bank in 2010.
♦ George Giannoulias: Middle son of Alexis Giannoulias. Board chairman from 2006 until the bank closed.
♦ Jim McMahon: Former Chicago Bears quarterback. Board member between 2003 and Dec. 22, 2008.
♦ Sean Conlon: Developer with close ties to the Daley family. Board member between 2005 and Dec. 22, 2009.
♦ Steven Dry: Conlon associate. Board member from 2005 until the bank closed.
♦ Donna Zagorski: Former FDIC official. Board member from 2006 until the bank closed.
♦ Steven Balourdos: Major Gold Coast landlord. Board member from 2006 until the bank closed.
♦ Gloria Sguros and Anthony D’Costa: Vice presidents of lending from 2005 until the bank closed.
Updated: May 10, 2012 8:15AM
The federal government is looking to throw former Chicago Bears Super Bowl quarterback Jim McMahon for a loss.
Long after his football career ended, McMahon quietly spent six years as a board member for Broadway Bank, owned by the family of Alexi Giannoulias, the former Illinois state treasurer who made an unsuccessful run for President Barack Obama’s old U.S. Senate seat two years ago.
The Federal Deposit Insurance Corp. shut down the failed bank in April 2010. And now McMahon is among seven former Broadway Bank board members and two former bank executives who have been personally targeted in a lawsuit the FDIC filed to recover $104 million lost from 17 bad loans the bank made before regulators shut it down.
McMahon — who quarterbacked the 1985 Bears to victory in the Super Bowl and retired from pro football in 1997 — was the only celebrity on the bank board, though not many people knew that.
When the FDIC sued him and the other bank officials last month, it identified him as “James McMahon.” Sources have confirmed to the Chicago Sun-Times that the James McMahon being sued by the FDIC is the former Bear who was known as the “Punky QB.”
McMahon joined the bank’s board in 2003. That same year, McMahon’s Arena restaurant on Milwaukee Avenue near Glenview closed its doors, turning over its keys to its lender — Broadway Bank. The Giannoulias family now owns the vacant restaurant, which was built to resemble the old Chicago Stadium.
McMahon resigned from the bank board on Dec. 22, 2008, months after federal bank regulators had begun questioning Broadway’s lending practices.
Court records show the former Bear voted to approve just one of the 17 bad loans — a two-year, interest-only $28 million loan for a condo project in Miami Beach. The bank lost $19.5 million on that one, according to the FDIC, which says McMahon wasn’t the most diligent board member.
“Despite his board responsibilities, McMahon repeatedly missed critical board meetings,” the federal agency’s lawsuit says.
According to the FDIC, the entire bank board was “grossly inattentive to the affairs of the bank — deferring excessively to the whims of the Giannoulias family. As a consequence, reports were not closely read, little or no due diligence into the bank’s condition was done, regulatory criticisms were discounted, and, for defendant McMahon, important board meetings frequently were missed or ignored.”
After leaving the bank board, McMahon, 52, sold his home in Northbrook and moved to Arizona.
McMahon couldn’t be reached for comment for this story but says in a written statement released by his lawyers: “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.
“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.”
Separately, McMahon is among dozens of former players who are suing the National Football League, claiming the league withheld information about head injuries and concussions. McMahon says he suffers memory loss and other health problems from the 15 years he spent in the NFL, seven of them with the Bears.
Three years after retiring as a football player, McMahon teamed with restaurateur Constantine “Gus” Cappas to open the 400-seat McMahon’s Arena in May 2002.
Cappas built the restaurant using a $4 million construction loan from Broadway Bank. That loan isn’t part of the FDIC lawsuit, which centers on loans made after the restaurant had closed.
Cappas gave McMahon a $125,000 stake in the restaurant in exchange for using his name and displaying items from McMahon’s football career at the restaurant, according to court records, which say McMahon also was supposed be paid $4,000 a month and get 5 percent of gross sales.
McMahon’s Arena closed about a year after it opened, and McMahon sued Cappas, claiming breach of contract and seeking $200,000. They reached an undisclosed settlement in 2006. While that lawsuit was pending, Cappas turned over the property to Broadway Bank, according to documents signed by then-Broadway senior loan officer Alexi Giannoulias.
The FDIC isn’t suing the former state treasurer, a Democrat who’s one of Obama’s basketball buddies.
During the time Giannoulias worked at the bank, only one of the 17 bad loans was made by the board of directors, which included his older brothers, Demetris Giannoulias and George Giannoulias, according to the FDIC.
McMahon was on the bank board in June 2004 when Broadway transferred the now-shuttered restaurant to Giannoulias Enterprises LLP. The Giannoulias family-owned business still owns the property, which has sat vacant for years.