The Chicago Sun-Times said McMahon spent six years as a board member for Broadway Bank, owned by the family of former Illinois State Treasurer Alexi Giannoulias.
The Federal Deposit Insurance Corp., which shuttered the bank in April 2010, is suing McMahon, six other board members and two former bank executives, to recover $104 million lost from 17 bad loans, the newspaper said Monday.
The Super Bowl-winning quarterback resigned from Broadway Bank's board Dec. 22, 2008, after federal bank regulators began questioning the bank's lending practices. He voted to approve just one of the 17 bad loans -- a $28 million loan for a condo project in Miami Beach. The bank lost $19.5 million on that alone, the FDIC said.
The FDIC alleges McMahon repeatedly missed critical board meetings.
McMahon moved to Arizona after leaving the board.
"I am proud to have served as an outside, independent director for a brief part of the bank's history," McMahon said in a statement released by his attorneys. "The allegations in the complaint are utterly without merit, and I expect to be fully vindicated."