Asked by a reporter after the hour-long hearing if Peppel had anything to say to former MCSi shareholders or employees who sustained losses from the company’s 2003 collapse, he declined and referred comment to his lawyer. Ralph Kohnen, his chief lawyer, read a statement saying that Peppel appreciated the support of his family and friends during a federal prosecution that began more than six years ago.
Peppel, clad in a gray business suit and flanked by his lawyers, answered “Yes, your honor,” to a series of questions from the judge, who accepted his guilty pleas. He was allowed to remain free on bond pending sentencing in about three months.
He admitted intentionally filing a false corporate 10-Q financial reporting form for MCSi with the U.S. Securities and Exchange Commission in August 2002. He also admitted trying to hide fraud proceeds through a series of transfers of nearly $2.8 million from one personal investment account to another.
Peppel agreed to pay full restitution to victims, prosecutors said.
Lawyers for both sides reached separate agreements to resolve related Securities and Exchange Commission civil charges against Peppel, his lawyer said.
Peppel and Ira H. Stanley Jr., 58, of Oakwood, MCSi’s former chief financial officer, led a massive fraud designed to inflate the company’s stock prices by reporting bogus earnings and recording sham revenues, the government alleged. Peppel had built MCSi by acquiring more than two dozen other companies.
Stanley, a guitarist who plays regular music gigs in the Dayton area, has already pleaded guilty to federal crimes in the MCSi case and is awaiting sentencing. He was to have testified against Peppel at trial, which Peppel avoided by pleading guilty on Wednesday.
“For him, it’s a wise decision. He didn’t really have much choice,” Larry Fairholm of Duocom Canada Inc., an audiovisual services company that the Peppel-led MCSi bought and dragged into bankruptcy before Fairholm’s family bought Duocom back, said of Peppel’s guilty pleas.
MCSi’s bankruptcy, and ultimate failure, left shareholders holding worthless stock and caused about 1,300 remaining employees to lose their jobs, stock and retirement income through MCSi. The company vacated a Kettering headquarters building that the Dayton-Montgomery County Port Authority had helped build for MCSi. Peppel had been the president, chairman and chief executive officer of MCSi, formerly Miami Computer Supply.
Under terms of the plea agreement, Peppel agreed to forfeit his home at 9520 Cutlers Trace, Washington Twp. — valued by the Montgomery County auditor at $766,170 — and two nearby lots in his subdivision. Under the agreement, he will be allowed to live in the Cutlers Trace house until as late as May 23, 2011, so that his children can complete their school year.
The government agreed not to confiscate about 140 acres of Peppel-owned property in Waynesville and residential units in Melbourne Beach and Cape Canaveral, Fla., because they are in foreclosure.
Peppel also agreed to surrender bank accounts containing at least $888,535.85, a $20,000 oil painting and a $9,000 bronze horse sculpture.
The government said it would not seize $425,000 in Peppel’s proceeds from sale of stock in a Dayton-area audiovisual equipment company called Vutex LLC, because the court had ordered that the money be used to pay part of Peppel’s attorney fees and federal income taxes he owed.
Court authorities will take 45 to 60 days to complete a pre-sentence report that both sides have the right to challenge. Stanley’s sentencing hasn’t been scheduled.
The SEC, Internal Revenue Service, FBI and Postal Service cooperated to build the case against Peppel, said Dwight Keller, an assistant U.S. attorney coordinating the prosecution.
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