Comptroller Daniel Hynes, the state official responsible for regulating cemeteries, has said that he was revoking the three licenses that cemetery has in order to perform so-called "pre-burial needs" for clients.
"While the owner apparently is cooperating with the investigation I also believe he has to be held responsible for what his employees did," said Hynes.
Blues singers Willie Dixon and Dinah Washington are also buried at the cemetery.
ABCNews.com learned that a class action will be filed on behalf of at least eight families who claimed the bodies of their loved ones were wrongly disinterred.
Attorney Louis C. Cairo told ABCNews.com that the lawsuit will be filed in the circuit court of Cook County, Ill., and is likely to grow in size as more families learn that the Burr Oak Cemetery gravesites have been tampered with or destroyed.
Cairo said that one of his client's, who declined to be named, went to visit her mother's grave site in February and could not find it.
"She found a mound of fresh dirt and a completely different gravestone," said Cairo. He said the client realized this week that her mother had likely fallen victim to the grave digging scheme.
Cook County authorities have said they believe at least 300 graves were disrupted by the four individuals who have since been arrested and charged in connection with the crime.
The suspects besides Towns include 45-year-old Keith Nicks, 39-year-old Terrence Nicks and 61-year-old Maurice Dailey. They are all being held in protective custody at the Cook County Jail.
Each are charged with one felony count of dismembering a body and if convicted, could face up to 30 years in prison. Bond was set at $250,000 for Towns, the cemetery's manager, and at $200,000 for the other three.
Hart said that Towns is suspected of being the ringleader in the elaborate operation.
"Individuals who worked at this cemetery had an arrangement where an individual in the front office would take cash payments and then give an unsuspecting individual a deed for a plot," Hart said.
"After they did that they'd get a gravedigger to disinter a grave and take the remains from that grave and dump them in a back area of the cemetery," said Hart. "Then they'd use the grave, and the person would be none the wiser that it was a used grave."
Hart said that the he was "horrifically" sorry for families whose relatives had been treated horribly by cemetery employees.
"This was not done in a very, very delicate way, folks," said Hart. "They would excavate a grave and an entire site, then they'd proceed to dump the remains wherever they found a place to do it in the back of the ground."
FBI Special Agent Tom Troutman has said that his agency is working to map out the cemetery and will use thermal imaging to find relocated bodies.
"Right now we don't know what we have," said Troutman. "We don't know if these people were all dumped together and co-mingled."
"We don't know what we have back there," he said.
This story has been corrected from a previous version because of incorrect information originally supplied by the first lady's office. The Associated Press contributed to this report.