Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Sunday, June 23, 2024 | Back issues
Courthouse News Service Courthouse News Service

Plastic Bag Tycoon Whacked for $49 Million

WASHINGTON (CN) - A plastics industry executive accused of lying in SEC filings about his ownership of Musicland Stores Corp. stock, and a trust he controlled, were ordered to pay $49.5 million, the SEC said.

A federal jury in Newark convicted Alfred S. Teo Sr. of securities fraud and disclosure violations in May, and also found the MAAA Trust he controlled liable for disclosure violations, the SEC said in a statement.

Under SEC rules, when a person or group acquire more than 5 percent of a voting class of a public company's stock, they must file a Schedule 13D with the SEC. Teo, who is chairman of several private companies that are some of the largest producers of plastic bags in North America, was charged by the SEC in 2004 with filing false and misleading 13D forms and failing to make other required filings from 1998 to 2001, the SEC said.

U.S. District Judge Susan Wigenton issued the final judgment in the case this week.

Trial evidence showed that Teo, of Kinnelon, N.J., and Fisher Island, Fla., lied in SEC filings about the amount of shares he controlled in order to avoid triggering Musicland's shareholders rights plan or "poison pill," the SEC said in its statement.

"Teo understood that triggering the poison pill would have significantly diluted his stock and caused massive losses to him. Teo deceptively purchased millions of Musicland shares well above the poison pill threshold, which he eventually sold to receive illicit profits.

"Specifically, the court ordered Teo and the trust to pay $17,422,054.13 in disgorgement plus $14,649,034.89 in prejudgment interest, and penalties of $17,422,054.13. In addition to that $49,493,143.15 final judgment, Teo previously paid $996,782.68 in disgorgement and prejudgment interest for insider trading violations pursuant to a court order in this case on March 15, 2010. Teo also paid a $1 million fine and was sentenced to a 30-month prison term in a parallel criminal action for his insider trading crimes," the SEC said.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.