The NCAA is investigating whether the living arrangement violated rules prohibiting student-athletes and their families from receiving extra benefits from agents or their representatives.

Pac-10 commissioner Tom Hansen said earlier this week that a Pac-10 investigation could start soon, but gave no specific time frame. USC could forfeit its 2005 Pac-10 football title if Bush is ruled ineligible, he said.

Any violation could also put Bush in a precarious position with the organization that awards the Heisman Trophy; the award ballot states that the winner must be in compliance with NCAA rules. Heisman officials have said they will wait until the Pac-10 investigation is complete before deciding if any action needs to be taken.

USC coach Pete Carroll, reached late Thursday night, said: “I don’t know the details of it, so I have no comment about it.”

According to Watkins, the scenario began when LaMar Griffin, Bush’s stepfather, approached Lake during the player’s sophomore season in the fall of 2004 with a proposal to form a sports management business. Watkins described Lake — a documented gang member from El Cajon who is now serving time in prison for a probation violation — as a longtime friend of the Bush family.

Griffin and Lake teamed up with Michaels to form New Era, he said. Michaels was a close associate of Lake’s, according to a 2002 FBI affidavit filed in support of arrest warrants for Lake and other accused San Diego gang members.

At one point, San Diego-based sports agent David Caravantes joined the team, with the plan being that New Era would market Bush and Caravantes would represent him.

Because Michaels is a member of the Sycuan Indian tribe, the group approached the tribal council in search of more investments.

The tribe declined to join the venture, said Adam Day, Sycuan’s assistant tribal manager.

Around then, Watkins told the Times, the Griffins started asking for money.

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“They had some financial problems and couldn’t focus on building the business,” he said.

The falling out between Michaels and Bush’s family began when the player hired another marketing representative — Mike Ornstein — and another agent — Joel Segal.

The Bush controversy is not the only public relations problem facing the Southern California football program.

Backup quarterback Mark Sanchez was released from jail Thursday as police continued to investigate a female student’s accusation he sexually assaulted her.

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