08-18-04 -- Teo, Sr., Alfred S. et. al. -- Indictment -- News Release

Three Indicted For Securities Fraud and Insider Trading

NEWARK - A Kinnelon, New Jersey man alleged to have reaped millions of dollars through securities fraud and insider trading in connection with the sale of Sam Goody Stores to Best Buy Company, Inc. in 2001 was indicted today, U.S. Attorney Christopher J. Christie announced. Two other individuals were also indicted on charges of violating the federal securities laws.

Alfred S. Teo, Sr, (DOB April 15, 1946), the chairman of Sigma Extruding Corp., Alpha Technologies, Inc. and Lamda Financial Service Corp., was charged in a 46 Count Indictment with hiding the extent of his vast ownership interest in Musicland Stores Corporation, which operated Sam Goody Stores throughout the Country, and submitting false documents to the Securities and Exchange Commission in order to defraud investors and avoid the triggering of a shareholders rights plan. According to the Indictment, this fraud permitted Alfred S. Teo, who ultimately was the beneficial owner of approximately 36% of all of the outstanding shares of Musicland, to reap illicit profits of more than $10 million when Musicland was sold to Best Buy.

The Indictment also charges Teo with insider trading in that he purchased thousands of shares of Musicland Stock for himself after he learned that Musicland was to be sold to Best Buy, but before the general public became aware of the formal announcement. Through this insider trading, the Indictment alleges that Teo reaped approximately $185,000 in illicit profits.

In addition to benefitting himself through insider trading, the Indictment alleges that Teo tipped a number of friends and associates about the impending sale of Musicland to Best Buy. Those individuals in turn purchased shares of stock in Musicland and reaped illicit profits totaling approximately $1.3 million when the company was sold.

The Indictment also charges Teo with obstruction of justice for submitting a false document to the Securities and Exchange Commission which was investigating him for his fraudulent activities.

Aside from his securities fraud and insider trading with respect to Musicland, the Indictment also charges Teo with insider trading with respect to his purchase and sale of stock in C-Cube Microsystems, Inc. According to the Indictment, Teo was a director in Cirrus Logic, Inc. and through this position learned that C-Cube was actively seeking to be acquired. After learning this information, which was confidential and not known to the investing public, Teo purchased shares of stock in C-Cube that he was able to sell at a large profit after C-Cube was later acquired by another company.

John D. Reier, (DOB March 22, 1959), the Chief Financial Officer of several companies owned by Teo, and Mitchell Lester Sacks, (DOB April 11, 1963), a former partner of Teo's in a hedge fund, were also charged in the indictment with insider trading relating to the Musicland and C-Cube acquisitions, respectively.

"Criminals who attempt to subvert the integrity of our securities trading markets will be found, prosecuted and sent to jail" said Christopher, J. Christie, the United States Attorney for the District of New Jersey. " My Office continues to place a high priority on corporate fraud and those who perpetrate such crimes will be held accountable for their illegal activity and removed from society" said Christie.

Each count of securities fraud in the Indictment carries a maximum statutory penalty of ten years in prison and a $1,000,000 fine. The obstruction count carries a maximum statutory penalty of five years in prison and a $250,000 fine.

Despite Indictment, every defendant is presumed innocent, unless and until found guilty beyond a reasonable doubt, following a trial at which the defendant has all of the trial rights guaranteed by the U.S. Constitution and federal law.

Christie credited the staff of the Northeast Regional Office of the SEC, under the direction of Regional Director Mark K. Schonfeld, as well as the Newark Division of the Federal Bureau of Investigation, under the direction of S.A.C. Joseph Billy, Jr., with developing the case.

Assistant U.S. Attorney John M. Vazquez and Special Assistant U.S. Attorney Craig Carpenito of the Securities and Health Care Fraud Unit of the Criminal Division of the U.S. Attorney's Office in Newark represent the Government.

Defense Counsel:

Alfred S. Teo, Sr.: Eric Tunis, Esq., Newark, NJ

John D. Reier: John P. McDonald, Esq., Sommerville, NJ

Mitchell Lester Sacks: Michael Critchley, Esq., West Orange, NJ