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February 15, 2013

Sixth Circuit reverses one-week jail sentence for CEO as substantively unreasonable

Reversals of federal sentences on appeal as substantively unreasonable are pretty rare, which itself makes notable the Sixth Circuit's ruling today in US v. Peppel, No. 11-4327 (6th Cir. Feb. 15, 2013) (available here).  Add in that this is a white-collar case, and this reasonableness review story becomes even more noteworthy.  Here is how the Peppel opinion gets started:

Defendant-Appellee Michael Peppel, former President, CEO, and Chairman of the Board of Directors of MCSi, Inc. (“MCSi”), conspired with CFO Ira Stanley to falsify MCSi accounting records and financial statements in order to conceal the actual earnings from shareholders, while at the same time laundering proceeds from the sale of his own shares in a public stock offering.  For this conduct, the sentencing guidelines provided a sentencing range of 97–121 months’ imprisonment.  The district court, based almost solely on its estimation of Peppel as “a remarkably good man,” varied downward drastically from this advisory range, imposing a custodial sentence of only seven days — a 99.9975% reduction.  R. 224 (Sentencing Tr. at 86:10) (Page ID #2433).  Plaintiff-Appellant the government appeals the substantive reasonableness of the seven-day sentence, arguing that a seven-day sentence does not adequately reflect the seriousness of the offense, serve the goal of general deterrence, or avoid national sentencing disparities, and that the district court placed disproportionate weight on disfavored factors.  Peppel contests the government’s arguments and proffers a conditional cross-appeal, contending that the district court erred in its amount-of-loss and number-of-victims calculations that formed the basis of two sentencing enhancements.

We conclude that the district court abused its discretion by imposing an unreasonably low seven-day sentence, but did not err in calculating the amount of loss or number of victims.  We therefore VACATE Peppel’s sentence and REMAND for resentencing consistent with this opinion.

February 15, 2013 at 06:11 PM | Permalink

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Comments

The 97 to 121 month range is a money laundering guideline for criminal history category 1. After I was sentenced under the then-mandatory guidelines in May 2000,I actually served the 97 months, plus 3 years of Supervised Release. My Judge gave me the bottom of the Guideline, after sua sponte getting me to that Guideline by finding that I qualified for the 2 point minor role adjustment. My attorney had not moved for it, the Judge did it sua sponte. All I got out of the so-called crimes was about $30,000 of attorney's fees and expense reimbursements, from a client who had lied to me and turned out to be a con man. See, U.S. v. Bollin, 264 F.3d 391 (4th Cir. 2001). Although I am a U.Va. Law School grad, Starbucks now won't hire me to poor coffee because of my felony convictions.

Posted by: Jim Gormley | Feb 15, 2013 7:16:09 PM

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