Sigma Plastics Group Chairman Alfred Teo has been indicted on criminal charges by the federal government for alleged securities fraud and insider trading, heaping onto his recent legal troubles.
Teo, owner of the largest plastic-bag producer in the United States, was indicted on similar charges in April by the Securities and Exchange Commission.
The SEC case carries civil-enforcement penalties, including fines and the potential barring of Teo's participation on publicly held boards of directors. The criminal case, filed April 18 in U.S. District Court in Newark, N.J., carries the possibility of a prison sentence - 10 years for each of 46 counts - and a total fine of $1.25 million.
In both cases, Teo is accused of hiding his ownership interest in Musicland Stores Corp. and submitting false documents to SEC to defraud investors. Those actions allowed Teo to reap more than $10 million in illegally gained profit, the cases allege.
The federal indictments also charge Teo with insider trading in his purchase of thousands of Musicland shares and with tipping off friends and associates of the ultimate sale of Musicland record stores to Best Buy Co. Inc.
Also named as defendants in the newly filed criminal suit are Sigma Chief Financial Officer John Reier and Mitchell Sacks, a former partner of Teo's in a hedge fund. Both are charged with insider trading.
Teo and lawyers representing both him and the other defendants declined to comment Aug. 19. Teo is based in Lyndhurst, N.J., as is Sigma. The company recorded $935 million in sales last year, primarily from extruding polyethylene bags and film.
The defendants will be arraigned the week of Aug. 23, said U.S. Attorney John Vazquez, who is prosecuting the criminal case.
SEC is awaiting a response to its case from Teo's lawyers, who have until the end of August to file a reply, said SEC litigator Kay Lackey. However, with the filing of the criminal suit, that response again may be delayed, she said.