United States v. Peppel

Michael Peppel (defendant) served as a corporate officer for MCSi, Incorporated. Peppel conspired with MCSi’s CFO to falsify the company’s accounting records and financial statements. The purpose was to conceal the actual earnings of MCSi from shareholders so that Peppel could sell 300,000 of his own shares of MCSi stock at a higher value than was actually warranted. Eventually, the SEC commenced an investigation of MCSi. When MCSi announced the investigation, the price of MCSi stock fell 87 cents per share. The SEC instituted a civil action against Peppel and barred him from ever serving as an officer of a public company again. The government (plaintiff) later issued a 26-count indictment against Peppel for his involvement in the fraud. The loss to shareholders was in the millions of dollars. For this reason, Peppel’s offense level was enhanced to an adjusted offense level of 30, which carried a recommended range of 97 to 121 months’ imprisonment per the sentencing guidelines. The district court held a sentencing hearing. Numerous witnesses testified on Peppel’s behalf. Ultimately, the court imposed a seven-day sentence, three years of supervised release, and a $5 million fine. The government appealed the sentence, arguing that it was substantively unreasonable due to the short shrift given to several of the sentencing factors and the length of the recommended sentence as indicated by the sentencing guidelines.