DAYTON — U.S. District Judge Sandra S. Beckwith angered some former MCSi Inc. employees and investors when she imposed a seven-day prison sentence, rather than a potential 10 years, on the company’s ex-chief executive for his admission of crimes central to MCSi’s 2003 collapse.
But in nearly 20 years on the federal bench, the Cincinnati-based judge has also demonstrated a willingness to impose multiyear prison sentences on business executives, physicians and public officeholders found guilty of wrongdoing.
And, in light of a 2005 U.S. Supreme Court ruling that made federal sentencing guidelines advisory and not mandatory, Beckwith was within her authority to give former MCSi chief executive Michael E. Peppel a substantially lighter prison term than the eight-to-10 years that the sentencing guidelines suggested, said college law professors who have studied court practices and sentencing patterns.
The high court’s 2005 ruling gave federal trial judges more discretion in sentencing, with considerably more latitude to consider a defendant’s prior good works, charitable contributions, family support obligations and outside employment, said Ryan Scott, an Indiana University associate professor of law who has studied sentencing patterns around the country.
“Judges really welcomed that authority, because the guidelines were very rigid. They didn’t allow for special circumstances in cases,” Scott said.
Sentences will vary because different sets of facts in various cases may justify a more or less severe punishment than the guidelines suggest, in the opinion of a judge who has heard the evidence, said Ric Simmons, an Ohio State University law professor who was formerly a prosecutor in the Manhattan district attorney’s office in New York City.
“Every crime is unique, really,” Simmons said.
A top Justice Department official said he is troubled by what appear to be wide disparities from state to state in federal sentencings in financial fraud cases. Lanny A. Breuer, who heads the department’s criminal division that enforces federal criminal laws, noted that sentencing guidelines were intended to promote uniformity in sentences issued for similar offenses.
But, Breuer said last week that since the 2005 Supreme Court ruling that made sentencing guidelines advisory, where a defendant is sentenced — and by whom — can make a big difference.
“A defendant in one district may be sentenced to one or two years in prison for causing hundreds of millions of dollars in losses, while a defendant in another district is sentenced to 10 or 20 years in prison for causing much smaller losses,” Breuer said in a speech to the American Lawyer/National Law Journal summit in Washington, D.C.
Peppel, 44, pleaded guilty in 2010 to charges he intentionally reported false corporate revenues and earnings, led an accounting fraud and tried to hide fraud proceeds through a series of transfers of nearly $2.8 million from one personal investment account to another. He agreed to surrender real estate including his former Washington Twp. home and two nearby lots, bank accounts containing at least $888,535 and artwork. He was also fined $5 million.
The bankruptcy and liquidation of MCSi, an audiovisual equipment company, wiped out the jobs and benefits of about 1,300 employees and the investments of hundreds of shareholders.
At Peppel’s Oct. 24 sentencing, the judge disclosed she had received 113 letters from Peppel’s supporters. Friends and family testified that Peppel was a good family man and supports ailing relatives, had established scholarships at his alma mater, the University of Notre Dame, and is an adviser to a suburban Cincinnati online pharmacy company that is creating new jobs.
Former MCSi employees and investors said afterward that they were appalled by the seven-day sentence.
“What a slap in the face to all the employees,” said Libby Hayes, a former MCSi human resources director. “This is far from being equitable, based on what he was responsible for.”
Federal authorities said Peppel is likely to serve his seven days behind bars at a county jail in southwestern Ohio or northern Kentucky sometime in the upcoming weeks.
He must submit to random drug testing during his three years of federal probation supervision, do community service by speaking publicly about his crimes and the lessons he has learned, and agreed to a lifetime ban on ever serving again as a corporate chief executive.
Beckwith noted the testimony in Peppel’s support. The judge said she considered it unlikely that Peppel would repeat his crimes, and noted there was no evidence that he had stolen from the company.
On Nov. 9, Beckwith sentenced Ira H. Stanley Jr., MCSi’s former chief financial officer who pleaded guilty to charges similar to Peppel as a leader of the corporate accounting fraud, to one day in prison, a $12,500 fine and three years of supervised release. Stanley, 59, must serve the first year of supervised release on home confinement and will be allowed to go out only for medical visits, employment and community service, or other activities with the prior approval of his probation officer.
Stanley also agreed to a $100,000 forfeiture and was ordered to do 900 hours of community service. He pleaded guilty in 2007 to willful false certification of a financial report by a corporate officer, mail fraud, and conspiracy to commit mail, wire and securities fraud.
Stanley will not actually serve his day in prison, since he received credit for that day while federal marshals were processing him as a convict, according to the government.
In other high-profile cases over the years, Beckwith has demonstrated that she is willing to impose multi-year prison terms. In a Butler County public corruption and fraud case, she ordered a 15-year prison sentence for a business executive and two years for the former county auditor.
In other cases, Beckwith ordered a five-year prison term for a woman who operated a business that authorities said illegally distributed prescription drugs, and a two-year term for a physician convicted of trying to hide proceeds from his role in improperly prescribing drugs at “pain clinics” that investigators said simply distributed narcotics to addicts.
Defense lawyers who have often represented clients in Beckwith’s Cincinnati courtroom said they have found her to be conscientious and fair, giving reasons to support her decisions, with no discernible leaning toward either prosecutors or defense teams.
“I’ve gotten some pretty stiff sentences from her, and I’ve gotten some pretty reasonable sentences from her, and it’s all been on a case-by-case basis,” said H. Louis Sirkin, a prominent Cincinnati trial lawyer. “She’s not one you would call a ‘softie.’ You have to convince her.”
“I’ve seen her toward the high end and on the low end,” defense lawyer Martin S. Pinales said of Beckwith’s sentencing patterns. “I don’t think you can pigeonhole her into a position. She looks at it case by case.”
Through an aide, Beckwith said she would not talk with a reporter about Peppel’s case until after the appeals period has expired. She declined the Dayton Daily News’ request to see copies of the letters written in Peppel’s behalf, saying that her staff is doing research to determine whether those letters can be publicly released.
Federal prosecutors have declined to comment on Peppel’s sentencing. Government lawyers are considering whether to challenge the sentence given him. The government faces a deadline of Friday to file a notice of intent to appeal. Any appeal would go before the 6th U.S. Circuit Court of Appeals in Cincinnati.
Contact this reporter at (937) 225-2242 or jnolan@DaytonDailyNews.com.
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