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.