The announcement came a day after oil speculator Clayton R. Smart, 67, of Okmulgee, Okla. was arrested in that city and was charged in Michigan in a related case.
The grand jury in Memphis also indicted Smart's business partner Stephen Smith, 60, of Muskogee County, Okla., and financial adviser Mark Singer, 41, of New Hope, Pa., according to a news release from the prosecutor. All three are accused of theft and money laundering.
Both Smith and Singer have been taken into custody and are awaiting extradition to Tennessee, the release said.
Tennessee officials allege that Smart, Smith and Singer looted more than $20 million from trust funds for three cemeteries and funeral homes in Memphis owned by Smart and Smith.
"They raided the trust and moved the money to other funds for their personal benefit," Gibbons said in a telephone interview from Memphis.
He said the office will try to track down that money and return it to the over 13,000 families in the Memphis area are affected by the theft.
"I can't tell you today how much we'll be able to recover, but I hope it's a sizable part," he said.
In Michigan, Smart is charged with 39 felony counts of racketeering, embezzlement and misuse of cemetery funds. Attorney General Mike Cox said Smart is accused of embezzling up to $70 million from 28 Michigan cemetery trust funds.
Smart is being held in Oklahoma with bond set at $4.2 million - $300,000 for the charges in Tennessee and another $3.9 million for the Michigan charges, said James Poulin, chief criminal investigator with the Okmulgee County Sheriff's Department.
Poulin said the Okmulgee sheriff's office wants to extradite Smart either to Michigan or Tennessee, but he is fighting it.
Calls to Smart and Smith seeking comment were not immediately returned. Singer couldn't be located for comment.
A Tennessee judge has allowed state regulators to take over the three funds in Memphis. Michigan authorities have also seized control of Smart's funeral businesses there.
The Tennessee case stems from Smart's announcement last July that more than 13,000 people with prepaid burial contracts would have to pay more - thousands of dollars in some cases - for those contracts to be honored.
Smart has blamed the problems on inflation and other people's mismanagement.
The Tennessee indictment claims that Smart, Smith and Singer stole trust fund money and transferred it into various accounts and businesses under the guise of investing the money for the benefit of the trusts. In reality, the benefit was to the defendants.
State officials say the value of the trusts dropped from approximately $29 million in 2004 to about $9 million at the end of 2006 as a result of their actions.
Michigan charged Smart with embezzling $61 million that had been set aside for burials and maintenance and failing to set aside an additional $9 million as required by state law for cemeteries 10 acres and larger. The Tennessee theft and money laundering charges carry a sentence of eight to 12 years in prison. A third charge, conspiracy to commit theft, carries a sentence of three to six years. Smart faces another 20 years in Michigan, if convicted. AP-CS-04-27-07 1336EDT