From Arrest to Acquittal: Why CEO Stephen Giordanella’s 2010 Indictment Still Matters
On January 18, 2010, Stephen Gerard Giordanella was arrested in Fort Lauderdale by U.S. Marshals. He had been indicted days earlier on federal charges including Conspiracy to Commit Money Laundering, which was dismissed. He would later be charged with violations of the Foreign Corrupt Practices Act, part of a sweeping 22-defendant federal case filed April 16, 2010.
Roughly two years later, Giordanella was acquitted. The case against him did not hold up in court, and he was cleared of all charges.
That should be the end of the story. But in franchising, especially when you are selling a brand-new concept to financially vulnerable investors, a full picture of leadership background isn’t just good practice, it’s required by law.
So here’s the question: Were Mac and Cheese Franchise Operations, LLC, Stephen Giordanella, and FDD drafters Marci Adler (formerly Rubin) and Kevin Ayers legally required to disclose this arrest and case in the company’s Franchise Disclosure Documents starting in 2017?
Let’s look at what the law says.
What the Franchise Rule Requires
The Federal Trade Commission’s Franchise Rule lays out mandatory disclosures in the FDD, especially in Item 2 (Business Experience) and Item 3 (Litigation):
Item 2 requires the franchisor to list the principal officers and their business experience over the past five years.
Item 3 requires disclosure of any material legal actions, including:
Pending criminal or civil actions involving fraud, violations of franchise law, or similar.
Any felony convictions.
Any administrative actions alleging a violation of franchise, business opportunity, securities, or unfair/deceptive trade practices law over the previous 10 years.
Giordanella’s 2010 arrest and indictment involved felony charges and alleged corruption under the FCPA. The indictment included multiple conspiracy counts and money laundering charges. He was not convicted, but the lookback period for reporting such legal matters is 10 years.
Even if you argue the case ultimately resulted in acquittal, and thus disclosure might feel optional, it was not resolved until 2012. That puts it squarely within the 10-year look-back window for every FDD Mac and Cheese Franchise Operations, LLC issued from 2017 through at least 2022.
Was There a Legal Duty to Disclose?
Yes, there was.
A federal indictment on felony charges of conspiracy and money laundering, particularly in a case led by the Department of Justice and involving international corruption, meets the threshold of materiality for an FDD. While the case ended in an acquittal, the existence of the case and its seriousness are exactly the kinds of issues the FTC expects franchisors to disclose.
There is no exception in the Franchise Rule that says a franchisor can avoid disclosure just because the case ended favorably. In fact, Item 3 specifically includes:
"Any pending charges or legal actions... even if ultimately resolved in favor of the individual."
The only narrow exceptions are for actions that were both:
Resolved in favor of the franchisor or principal; and
Clearly do not involve issues that would be material to a franchisee’s decision.
But in this case, the DOJ accused Giordanella of being part of a $15 million international bribery scheme. That’s not a parking ticket, it’s the type of background a reasonable investor would find important in deciding whether to trust this leadership team with their life savings.
Why This Matters Today
On its own, the 2010 arrest might seem irrelevant. After all, Giordanella was acquitted.
But when you take it together with everything we now know, his use of supply chain markups to enrich his affiliate company Giordanella Holdings LLC, the pattern of franchise failures, the IN Cease and Desist Order and resultant ongoing Administrative Complaint, and the CA Consent Order, it paints a troubling picture of intent and behavior.
The words of U.S. Attorney Laura Perkins, delivered in her opening statement during the trial, ring truer today than ever:
“White collar criminals are careful and they are discrete.”
And so are the documents they omit.
The Reality Check
Was Stephen Giordanella’s 2010 indictment required to be disclosed in the I Heart Mac & Cheese FDDs between 2017 and 2022?
Yes. It was.
Was it disclosed?
No.
Why not?
That’s the question every investor, regulator, and prospective franchisee should be asking.
The content provided in this blog post is for informational and educational purposes only and does not constitute legal advice. Franchise Reality Check™ makes every effort to ensure the accuracy of the information presented but does not guarantee its completeness or applicability to individual circumstances. Readers are strongly encouraged to consult with a qualified franchise attorney or regulatory professional before making any investment or legal decisions related to franchising. Any references to legal documents, individuals, or companies are based on publicly available information and are presented solely for the purpose of transparency and public awareness.
