Average Joe or star athlete: The housing slump played no favorites

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Rick Mahorn, former Detroit Piston and member of the 1989 NBA championship team, has hit hard times. In the last year Mahorn, 51, and his wife lost their home in Rochester Hills, Michigan, and filed Chapter 7 bankruptcy. Plus, they owe the Internal Revenue Service more than $200,000.

All this in spite of the fact that Mahorn earned millions during his playing career and continues to work in and around sports. Now the couple lives in a rented residence and, although the two are working, both are looking for ways to increase their income to dig their way out of their financial slump.

"Like any normal American, I'm trying to find a job to better myself", Mahorn said. "I'm doing everything possible."

What happened? The same thing that happened to a lot of Americans. Last year, after the value of the Mahorns’ home tumbled by $300,000 to less than half its value, they found themselves underwater on the house with a mortgage of $539,000. When they were unable to successfully renegotiate the loan, they were sued in a Rochester Hills district court by U.S. National Bank. The bank won a judgment for possession last November. Since then, the couple has surrendered the house and moved into a rental in Detroit.

Mahorn blames failed investments for his economic slide, though he declined to give details. In December 2009 he and his wife filed for Chapter 7 bankruptcy protection listing assets of $228,603 and liabilities of $518,688. The case is now pending in Detroit’s U.S. Bankruptcy Court.

Recently, the bankruptcy trustee questioned Mahorn about missing assets including his NBA pension and championship rings – one from his stint with the Pistons and from his one season as coach of the WNBA Detroit Shock. Mahorn refuses to talk about his pension. He told reporters he gave the Pistons ring to his late mother and would not say what eventually became of it. Mahorn’s attorney plans to update the paperwork filed in bankruptcy court to account for discrepancies.

During his 18 years as a defensive player for the Washington Bullets, the Pistons, the Philadelphia 76ers, and the New Jersey Nets, Mahorn earned more than $6.8 million. Since retiring as a player in 1999, he coached several teams including the Atlanta Hawks and teams in the Continental Basketball Association. Currently Mahorn is part of the Pistons radio broadcast team and also works for Palace Sports & Entertainment.

In 2008, the couple’s income was $161,000, but fell to approximately $100,000 in 2009, according to The Detroit News. They are looking at monthly expenses of roughly $12,700 against monthly income of about $6,200. Among their debts, the Mahorns listed state and federal income tax liens in unspecified amounts. Public records show that since 2006, the IRS has filed roughly $214,000 in liens. Mahorn’s attorney, Scott Zochowski, told reporters the tax debt has been paid. Last year, approximately $35,000 was taken from Mahorn’s paychecks to satisfy the tax debt, according to bankruptcy court records.

A wave of tax trouble for Detroit sports stars

In the same way that Hollywood celebrities have been hit with a wave of financial woes, Detroit area sports stars also are being hit. Mahorn is joined by former Lions first-round draft pick Luther Ellis, who also lost his home and filed for bankruptcy protection. He said recently that he plans to walk away from the mortgage on his suburban Detroit home, attributing the problems to bad choices and failed investments.

Late last year, former Detroit Red Wings player Darren McCarty was charged by the IRS with failing to pay more than $62,000 in federal taxes.

Derrick Coleman, another former Piston star, filed for bankruptcy in early 2010. He reports assets worth approximately $1 million and debts of $4.6 million.

Boxer Thomas “Hitman” Hearns racked up IRS liens of roughly $1 million and, in recent weeks, auctioned off prized possessions in an attempt to straighten out his finances.

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