ROCKFORD, Ill. - Federal authorities have seized about $2.4 million of common stock in FirstRock Bancorp as part of an investigation of possible fraud during the company's conversion from the mutual to the stock form of ownership.
FirstRock, the parent of First Federal Savings and Loan Association of Rockford, said it was informed by the U.S. attorney's office of the investigation into allegedly illegal stock purchases by speculators.
The company said it was told that neither it nor First Federal is a target of the investigation.
The company also said it has completed its offering of 2,645,000 common shares at $8.75 each, totaling $23.1 million. The amount seized, 278,000 shares, equals 10.5% of the outstanding shares.
Stock Forfeiture Sought
Fred Foreman, U.S. attorney for the Northern District of Illinois, said at a press conference Monday that civil complaints had been filed, seeking forfeiture of the stock and alleging that speculators had obtained it fraudulently during the conversion.
These speculators allegedly offered up to $1,500 in cash to depositors eligible to buy shares in the conversion. A depositor could order up to $210,000 worth of stock for the speculators, while falsely representing that the purchase was his own.