HSBC Watch News Release Forum Index
Forum Name: - Best Buy
Topic Title: Best Buy Musicland Fraud
Thu Aug 19, 2004 10:27 pm
Musicland investor charged with fraud
David Voreacos, Bloomberg News
August 19, 2004
A federal grand jury on Wednesday indicted Musicland Stores Corp. investor Alfred Teo Sr., charging him with engaging in securities fraud and insider trading before Best Buy Co. Inc. bought the Minnetonka company in 2001.
Teo, 58, hid the fact that he owned 36 percent of Musicland shares and made more than $10 million in illicit profits from the Best Buy transaction, according to an indictment returned in Newark, N.J.
The indictment alleged that Teo made $185,000 in insider trading profits and tipped associates, who made another $1.3 million in illicit profits.
Teo also obstructed justice by giving a false chronology of events to the Securities and Exchange Commission during an interview on May 21, 2001, prosecutors allege.
Teo will make an initial appearance in federal court in Newark today.
The SEC sued Teo last spring, claiming that he bought 45,000 shares of Musicland stock after company executives told him of the Best Buy offer. Then, the suit alleged, he told eight others, including his wife's sister, business acquaintances and the builder of his yacht.
Also last spring, Teo resigned from the board of Navarre Corp. of New Hope.
Teo is chairman of the Lyndhurst, N.J.-based Alpha Industries Group of closely held companies making plastic packaging.
Richfield-based Best Buy, the world's No. 1 electronics retailer, announced a tender offer in December 2000 for Musicland, then the largest U.S. specialty retailer of recorded music and videos. The sale was completed a month later. However, Musicland languished, and Best Buy essentially gave Musicland to an investment firm about a year ago.
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