US v. AED (Russell MacArthur, et al.)

The trial has been rescheduled for March 6, 2006.  The trial is expected to last several weeks.  The trial will take place in Miami, Florida, before Judge Jose Martinez, 301 N. Miami Avenue, Third Floor, Courtroom 3.

11/23/05 Update:

No change in status.

01/26/06 Update:

The trial has been rescheduled for October 10, 2006. The trial is expected to last several weeks. The trial will take place in Miami, Florida, before Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3.

3/7/06 Update:

08/18/06 Update:

On August 1, 2006, defendant James R. MacArthur pled guilty. James MacArthur was the president of AED. He is scheduled to be sentenced at 1:00 p.m. on October 19, 2006, by Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3, Miami, Florida.

On August 17, 2006, defendant Evan J. Feig pled guilty. Feig was a salesman at AED. Feig is scheduled to be sentenced at 9:00 a.m. on October 26, 2006, by Judge Martinez.

The five remaining defendants remain scheduled for trial before Judge Martinez beginning October 10, 2006.

09/07/06 Update:

On September 6, 2006, Judge Martinez ordered defendant Karl Wagner into custody and ordered that he undergo a mental evaluation to determine his competency to plead guilty or stand trial.

09/14/06 Update:

A change of plea hearing for defendant Michael H. Menkes has been rescheduled for 1:00 p.m. on September 19, 2006, by Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3, Miami, Florida.

09/19/06 Update:

On September 18, 2006, defendant Michael H. Menkes pled guilty. Menkes was a salesman at AED. He is scheduled to be sentenced at 1:30 p.m. on November 28, 2006, by Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3, Miami, Florida.

09/29/06 Update:

On September 27, 2006, defendant Athanasios Cakiades made his initial appearance in United States v. Athanasios Cakiades, Case No. 06-60250-CR-Dimitrouleas (S.D. Florida). Cakiades was a reference for AED. Cakiades is charged with one count of conspiracy to commit mail fraud. A change of plea hearing for Cakiades has been scheduled for 9:00 a.m. on October 6, 2006, before Judge William P. Dimitrouleas, 299 East Broward Boulevard, 2nd Floor, Fort Lauderdale, Florida.

On September 28, 2006, defendant Mauricio Paz made his initial appearance and pled guilty to one count of mail fraud in United States v. Mauricio Paz, Case No. 06-60249-CR-Marra (S.D. Florida). Paz was a closer and a manager of the closers at AED. Paz is scheduled to be sentenced at 10:00 a.m. on December 18, 2006, by Judge Kenneth A. Marra, 299 East Broward Boulevard, 2nd Floor, Fort Lauderdale, Florida.

On September 28, 2006, Judge Martinez scheduled a hearing for 9:00 a.m. on October 10, 2006, to determine defendant Karl Wagner's competency. Jury selection in United States v. Edmond Grigorian, Cesar Menendez, and Karl Wagner, Case No. 05-60203-CR-Martinez (S.D. Florida) will begin at 9:30 a.m. on October 10, 2006, before Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3, Miami, Florida.

10/23/06 Update:

On October 6, 2006, defendant Athanasios Cakiades pled guilty to one count of conspiracy to commit mail fraud. Cakiades was a reference for AED. Cakiades is scheduled to be sentenced at 9:30 a.m. on December 15, 2006, by Judge William P. Dimitrouleas, 299 East Broward Boulevard, 2nd Floor, Fort Lauderdale, Florida.

On October 10, 2006, defendant Karl Wagner pled guilty to one count of conspiracy to commit mail fraud and wire fraud and four counts of wire fraud. Wagner was a reference for AED. Wagner is scheduled to be sentenced at 1:00 p.m. on December 19, 2006, by Judge Jose E. Martinez, 301 N. Miami Ave., 3rd Floor, Miami, Florida.

On October 19, 2006, defendant James R. MacArthur was sentenced to 10 years and 1 month in prison and ordered to pay $12,029,198.06 in restitution. MacArthur was the president of AED. MacArthur was required to report to prison on January 19, 2007.

The restitution amount represents the total loss reported by AED victims to the United States Probation Office. While he is in prison, MacArthur will be required to pay 50% of any prison wages toward restitution or, if he does not earn wages while in prison, $25 per quarter toward restitution. Once he is released from prison, MacArthur will be required to pay 10% of his monthly gross earnings toward restitution.

Under federal law, restitution is ordered in criminal cases, in general, on the basis of losses a defendant causes and without regard to the defendant’s ability to pay the restitution. See 18 U.S.C. § 3664 (f)(1)(A), which provides: "In each order of restitution, the court shall order restitution to each victim in the full amount of each victim’s losses as determined by the court and without consideration of the economic circumstances of the defendant." Any payments made by the defendant will go to the Court and will then be shared among victims. Any amount due a victim shall be reduced by any amount the victim recovers for the same loss from any other source.

On October 20, 2006, a jury found Edmond Grigorian and Cesar Menendez guilty of conspiracy, mail fraud, and wire fraud. Grigorian and Menendez were salesmen at AED. The jury returned the verdict after a two-week trial during which the government called 21 witnesses and introduced hundreds of exhibits. Both defendants testified in their defense. Grigorian and Menendez were taken into custody after the jury announced its verdict. Grigorian is scheduled to be sentenced at 1:00 p.m. on January 4, 2007, and Menendez is scheduled to be sentenced at 1:30 p.m. on January 4, 2007, by Judge Jose E. Martinez, 301 N. Miami Ave., 3rd Floor, Miami, Florida.

A total of nine defendants have now been convicted in the AED prosecution. A tenth defendant, Russell G. MacArthur, Jr., fled after being indicted and is in custody in Costa Rica, pending extradition

A press release about these developments can be found at: US Attorney's Office Press Release 10-20-06.

11/07/06 Update:

The sentencing of defendant Evan Feig has been rescheduled for 1:30 p.m. on November 28, 2006, before Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3, Miami, Florida.

The sentencing of defendant Athanasios Cakiades has been scheduled for 1:00 p.m. on December 18, 2006, before Judge William P. Dimitrouleas, 299 East Broward Boulevard, 2nd Floor, Fort Lauderdale, Florida. (The sentencing of defendant Mauricio Paz remains scheduled for 10:00 a.m. on December 18, 2006, by Judge Kenneth A. Marra, 299 East Broward Boulevard, 2nd Floor, Fort Lauderdale, Florida.)

The sentencing of defendant Michael H. Menkes has been rescheduled for 1:30 p.m. on December 19, 2006, before Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3, Miami, Florida. (The sentencing of defendant Karl Wagner remains scheduled for 1:00 p.m. on December 19, 2006, before Judge Martinez.)

11/17/06 Update:

The sentencing of defendant Evan Feig has been rescheduled for 1:00 p.m. on December 20, 2006, before Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3, Miami, Florida.

12/4/06 Update:

The sentencing of defendant Evan Feig has been rescheduled for 1:00 p.m. on March 23, 2007, before Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3, Miami, Florida.

The sentencing of defendant Mauricio Paz has been rescheduled for 10:30 a.m. on March 30, 2007, before Judge Kenneth A. Marra, 299 East Broward Boulevard, 2nd Floor, Fort Lauderdale, Florida.

12/20/06 Update:

On December 18, 2006, defendant Athanasios Cakiades was sentenced to 1 year and 1 day in prison and ordered to pay $3,419,914 in restitution. Cakiades was a reference for AED who told potential customers that his DVD vending machine business was profitable, even though he never had a machine. Cakiades was taken into custody immediately.

On December 19, 2006, defendant Karl Wagner was sentenced to 2 years and 6 months in prison and ordered to pay $7,576,223 in restitution. Wagner was a reference for AED who told potential customers that his DVD vending machine business was profitable, even though his machine rarely worked and never made money. Wagner was taken into custody immediately.

While in prison, Cakiades and Wagner will be required to pay 50% of any prison wages toward restitution or, if they do not earn wages while in prison, will be required to pay $25 per quarter toward restitution. Once released from prison, Cakiades and Wagner will be required to pay 10% of their monthly gross earnings toward restitution.

Under federal law, restitution is ordered in criminal cases, in general, on the basis of losses a defendant causes and without regard to the defendant’s ability to pay the restitution. See 18 U.S.C. § 3664 (f)(1)(A), which provides: "In each order of restitution, the court shall order restitution to each victim in the full amount of each victim’s losses as determined by the court and without consideration of the economic ircumstances of the defendant." Any payments made by the defendant will go to the Court and will then be shared among victims. Any amount due a victim shall be reduced by any amount the victim recovers for the same loss from any other source.

The sentencing of defendant Michael H. Menkes has been rescheduled for 10:00 a.m. on January 5, 2007, before Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3, Miami, Florida.

1/8/07 Update:

On January 4, 2007, defendant Edmond Grigorian was sentenced to 9 years in prison and ordered to pay $3,113,799 in restitution. Grigorian was a salesman at AED. Grigorian has been in prison since being found guilty of conspiracy, mail fraud, and wire fraud at the end of a two-week jury trial on October 20, 2006.A press release about these developments can be found at: US Attorney's Office Press Release 01-04-07.

On January 5, 2007, defendant Cesar Menendez was sentenced to 8 years in prison and ordered to pay $2,130,650 in restitution. Menendez was a salesman at AED. Menendez has been in prison since being found guilty of conspiracy, mail fraud, and wire fraud at the end of a two-week jury trial on October 20, 2006.

A press release about these developments can be found at: US Attorney's Office Press Release 01-05-07.

On January 5, 2007, defendant Michael Menkes was sentenced to 3 years and 5 months in prison and ordered to pay $1,475,348 in restitution. Menkes was a salesman at AED. Menkes was ordered to report to prison on February 5, 2007.

A press release about these developments can be found at: US Attorney's Office Press Release 01-05-07.

There is no parole in the federal system and the maximum reduction of a prison sentence for good behavior is 15 percent.

3/26/07 Update:

On March 23, 2007, defendant Evan Feig was sentenced to 2 years and 2 months in prison and ordered to pay $1,167,990 in restitution. Feig was a salesman at AED who pled guilty to conspiracy to commit mail fraud and wire fraud. Feig was ordered to report to prison on June 22, 2007. The district judge described Miami as "the fraud capital of the world" and said he is "glad the federal government is making a push to stop this." Feig is the eighth defendant to be sent to prison in the case.

The sentencing of defendant Maurcio Paz has been rescheduled for 1:00 p.m. on April 18, 2007, before Judge Kenneth A. Marra, 701 W. Clementis Street, West Palm Beach, Florida.

4/23/07 Update:

On April 18, 2007, defendant Mauricio Paz was sentenced to 3 years and 6 months in prison and ordered to pay $4,821,284 in restitution. Paz was a salesman at AED who pled guilty to mail fraud. Paz was ordered to report to prison on June 15, 2007. Paz is the ninth defendant to be sent to prison in the case.

A press release about this development can be found at: US Attorney's Office Press Release 04-18-07.

To date, no defendant has paid any of the ordered restitution. Under federal law, restitution is ordered in criminal cases, in general, on the basis of losses a defendant causes and without regard to the defendant’s ability to pay the restitution. See 18 U.S.C. § 3664 (f)(1)(A), which provides: "In each order of restitution, the court shall order restitution to each victim in the full amount of each victim’s losses as determined by the court and without consideration of the economic circumstances of the defendant." Any payments made by the defendant will go to the Court and will then be shared among victims.

While in prison, Paz will be required to pay 50% of any prison wages toward restitution or, if he does not earn wages while in prison, will be required to pay $25 per quarter toward restitution. Once released from prison, Paz will be required to pay 10% of his monthly gross earnings toward restitution.

The criminal investigation of AED is continuing. If additional criminal charges are filed, information about such charges will be provided on this website.

6/13/07 Update:

On June 1, 2007, Russell G. MacArthur, Jr., was extradited from Costa Rica to the United States. MacArthur is now in custody at the Miami Federal Detention Center. On June 7, 2007, Magistrate Judge Barry Garber ordered that MacArthur be detained until trial. A trial date has not yet been set.

7/23/07 Update:

On July 19, 2007, a federal grand jury in Miami returned a superseding indictment against Russell G. MacArthur, Jr., and Anthony Rocco Andreoni. MacArthur and Andreoni were the owners and operators of AED. MacArthur and Andreoni are scheduled to stand trial at 9:00 a.m. on February 4, 2008, before Judge Jose Martinez, 301 N. Miami Ave., Third Floor, Courtroom 3, Miami, Florida.

MacArthur was charged with one count of conspiracy, two counts of mail fraud, three counts of wire fraud, and one count of criminal contempt. MacArthur was originally indicted in 2005, fled to Costa Rica, and was extradited to the United States in June 2007 to stand trial.

Andreoni was charged with one count of conspiracy, nine counts of mail fraud, six counts of wire fraud, and five counts of money laundering. Andreoni had not previously been charged.

Also on July 19, 2007, a criminal information was filed against Neal Isanuk (Case No. 07-20551-CR-Jordan). Isanuk was a closer at AED. Isanuk is charged with one count of conspiracy. He is scheduled to make his initial appearance on July 25, 2007.

A press release about these developments can be found at: US Attorney's Office Press Release 07-19-07.

On February 29, 2008, Brian D. Gordon, was sentenced by the Honorable Judge Zloch to two terms of 66 months of imprisonment to run concurrently with each other for each of the two conspiracy counts to which he had pled guilty previously. The court also imposed a $200 special assessment to cover both counts, and found that the defendant was unable to pay a fine. The Court also imposed restitution in the amount of $30,056,316.83 for the defendant's role in both the AED business opportunity fraud case as well as one other (Pantheon Holdings), holding the defendant jointly and severally liable with the other convicted defendants in the AED-related cases as well as the Pantheon-related cases.

6/4/08 Update:

On May 29, 2008, Allen Mogavero was sentenced to 2 years and 10 months in prison and ordered to pay $3.6 million in restitution. Mogavero was a salesman at AED. He pled guilty in March to one count of interstate travel fraud. Mogavero was ordered to report to prison on July 30, 2008. Mogavero is the fourteenth defendant associated with AED who has been sent to prison.

On July 1, 2008, Thomas Kling's supervised release was revoked and he was sentenced to serve 11 months in the Bureau of Prisons. Kling previously completed serving his sentence in connection with AED, but has been back in custody since late June 2008 for violating the terms of his supervised release.

8/19/08 Update:

On August 8, 2008, the 11th Circuit of Appeals upheld the convictions of Edmond Grigorian and Cesar Menendez, who were found guilty of all charges against them after a two-week jury trial in October 2006. Grigorian and Menendez were salesmen at AED. Grigorian is currently serving a 9-year prison term and Menendez is currently serving an 8-year prison term.

3/26/09 Update:

Russell MacArthur, Jr., has appealed his sentence and his appeal is currently pending before the 11th Circuit Court of Appeals. Briefs in the case were filed in the fall of 2008. MacArthur is currently serving his 23-year prison sentence.