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Jim McMahon named in bank neglect case; one of many ex-players on wrong side of big money

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The guy in the bear suit hasn't been charged with anything. Yet. (Getty Images)

Ex-NFL quarterback Jim McMahon, whose most persistent worry used to be the wrath of Mike Ditka, has a bit more on his mind these days. As reported by the Chicago Sun-Times, McMahon is one of seven former board members of Illinois' Broadway Bank facing a lawsuit brought by the FDIC. The suit is an attempt to recover $104 million from 17 bad loans before the bank was shut down in 2010. According to the Sun-Times, the bank was 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.

McMahon, who led the 1985 Chicago Bears to a victory in Super Bowl XX and was known as the "Punky QB" for his rebellious attitude and constant clashes with clenched-jaw head coach Ditka, played in the NFL from 1982 through 1996. He joined the board of the Broadway Bank in 2003, the same year he turned over his Arena Restaurant to the bank. He served on the board through 2008, when the investigations began. He then sold his home in Chicago and moved to Arizona, where he now resides.

[ Related: Warren Sapp files for bankruptcy despite millions in assets ]

According to the federal suit, McMahon voted to approve one of the bad loans, a $28 million loan for a Miami Beach condominium project. The FDIC says that the bank lost $19.5 million on the loan.

The FDIC also accused McMahon of inattention to the bank's affairs, which was not uncommon among the board, per the suit:

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."

McMahon's attorneys released a statement on his behalf:

"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."

Sadly, McMahon isn't the only former NFL player to get caught up in alleged financial misdeeds. The recent recession, brought about as it was by unprecedented and often fraudulent asset value inflation, brought all sorts of unexpected names to light.

Former Chicago Bears receiver Willie Gault, who caught quite a few of McMahon's passes in a career that lasted from 1983 through 1993, was arrested in December 2011 and charged with several counts of securities fraud. The SEC is interested in Gault's involvement with a company called Heart Tronics, and the possibility that he "authorized his signature to be used on public filings that contained false and misleading statements about the company's sales."

Add in the allegations of tax fraud against former receiver Freddie Mitchell, the six years served by punter Russell Erxleben for mail fraud and securities fraud, Fran Tarkenton's repayment to the SEC for fraud, and most certainly the "interesting" life led by quarterback Art Schlichter, and it would seem that the long-told tales of former athletes getting ripped off by shysters has been modified by a new spin that has the players wearing the black hats.

The question is, how many of these athletes go into these schemes with the intent to defraud, and how many are caught up in larger con games? Gault's move from football figurehead to "co-CEO of operations" at Heart Tronics seems to be a fairly common one -- the face becomes a larger figure over time.

Andrew Geist, partner with O'Melveny & Myers and a former senior SEC attorney, led the Tarkenton investigation and told NJ.com that the obvious track with athletes is the pull of the name. "That certainly helps get the message across to people who are not regular readers of the business pages," he said.

The need for the money, the need to feel important as they did when they were in the spotlight, and a lack of financial sophistication are all factors that can lead ex-NFL players down the wrong path. While the NFL and NFLPA have taken steps to try and ensure that players are prepared to deal with their finances, it isn't taking in a lot of cases, and on both sides of the equation.

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