Just 7 Days in Jail for Business Fraud? ‘No Way!’ Says Appeals Court
By David Stout | February 18, 2013 2:32 pm

Maybe Michael E. Peppel thought it was too good to be true when he was sentenced to a mere seven days in jail for a fraud that led to the collapse of an Ohio computer and audiovisual-equipment company. If so, he was right.

Carter Stewart

The United States Court of Appeals for the 6th Circuit agreed with Carter M. Stewart, the United States Attorney for the Southern District of Ohio, that the sentence — even though it was accompanied by a $5 million fine — was far, far too lenient. On Friday, it vacated the sentenced imposed by U.S. District Judge Sandra Beckwith and sent the case back to the district court for reconsideration.

In its 26-page opinion by Judge Karen Nelson Moore, a three-judge panel of the appeals court was not specific about what an appropriate sentence would be. But it will not be surprising if Peppel is ordered to prison for several years or more, considering the tone of the 6th Circuit’s opinion and the fact that federal sentencing guidelines indicated a term of 8 to 10 years for the felonies to which Peppel pleaded guilty.

Moreover, as the Dayton Daily News noted when Stewart decided to appeal the lenient sentence, Peppel, who was 44 when he pleaded guilty in August 2010, could have faced up to 50 years in prison if he had been convicted at trial. Peppel admitted false certification of a financial report by a corporate officer, money laundering and conspiracy to commit securities fraud. In addition to the seven-day sentence, he was fined $5 million.

Peppel was chief executive of MCSi Inc. of Kittering, Ohio, when it collapsed in 2003. He was accused, in the simplest terms, of cooking the books to make the company appear stronger than it was. The company’s collapse cost hundreds of employees their jobs and pensions and cost investors hundreds of millions of dollars.

“Notably,” the 6th Circuit said, “the district court never explained why the seven-day sentence was sufficient to reflect the seriousness of Peppel’s crimes.” The appeals panel said the sentencing judge had decided upon a sentence too light to deter other wrong-doers, and that the hardship brought upon Peppel’s family and the humiliation suffered by the defendant himself did not justify such leniency.

Perhaps the sentencing judge was swayed by dozens of sympathetic letters sent to her by Peppel’s relatives and friends. Beckwith does not have a history of imposing light sentences, as the Springfield, Ohio, News-Sun noted in an earlier article.

Read Stewart’s statement on the matter here.

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