First CU Stock Sale WasSet-Up
FEASTERVILLE, Pa. - (05/16/05) --The first takeover of a credit unionconvert was arranged long before the credit union even converted tostock form in the first initial public offering of an ex-creditunion, according to documents disclosed in a recent lawsuitreported in the Philadelphia Inquirer. The suit shows that even asdirectors of Jade Financial Corp., the parent of IGA FederalSavings Bank (formerly IGA FCU) were planning to sell stock to thepublic they had already agreed to sell the credit union convert toPSB Bancorp., parent of First Penn Bank. A merger agreement hadapparently been agreed to months before the October 1999 IPO forthe credit union convert, enriching dozens of insiders and at leastnine influential state lawmakers who were closely tied to IGAChairman Jack O'Connell, a well-known lobbyist in the stateCapital. The newspaper also reported that upon its initial publicoffering the former credit union set up a tax-exempt charity whichit endowed with $200,000 but never used the charity for anythingother than a federal income tax break.