The judge also reimposed a $5 million fine and earlier probation requirements and confiscated several U.S. and Swiss bank accounts in the name of Peppel and some of Peppel’s relatives.
MCSi collapsed into bankruptcy a decade ago. Investors lost $18 million and 1,300 employees lost their jobs. A grand jury indicted Peppel in late 2006, and he pleaded guilty to charges in 2010. (TIMELINE OF EVENTS)
Beckwith originally sentenced the former Washington Twp. resident in October 2011. A federal appeals court ruled earlier this year that the first sentence was too brief and remanded the sentence back to Beckwith.
Beckwith spent nearly two hours Tuesday explaining her reasoning for the first sentence, reading a 31-page ruling. She recalled how she was impressed with how Peppel’s friends and associates — including his ex-wife Natalie — spoke on his behalf, coming to the conclusion that Peppel was not just a good man, but a “remarkably good man.”
But Beckwith also noted that Peppel had been instructed in his original sentence that he was not to serve as a CEO, chief financial officer or board member of any company, public or private. The judge cited an audit report on another company in which Peppel had been involved, Kentucky-based online pharmaceutical firm HealthWarehouse.com, that found Peppel had exercised “undue influence” in that company’s leadership after his first sentence.
Beckwith also recounted testimony in a two-day sentencing hearing last month from a resigned HealthWarehouse.com director who contended that Peppel had charged $25,000 a month on a corporate credit card while the company also paid him $5,000 a month.
She also noted that Peppel lived in a rental home in Indian Hill, which she called an “affluent suburb” of Cincinnati.
“He continues to live far beyond his means and as I said, that’s very troubling to the court,” Beckwith said.
Ralph Kohnen, Peppel’s Cincinnati attorney, said his client shouldered those expenses while “entertaining” figures like Magic Johnson and Deion Sanders to serve as “spokespeople” for HealthWarehouse.com.
While Kohnen praised Beckwith’s original ruling, calling it “courageous,” and the “thoughtfulness” of Tuesday’s ruling, he insisted that he did not understand how Beckwith could impose additional prison time.
“Grown men have wept in your courtroom telling you how (Peppel) has helped them,” Kohnen told Beckwith.
Prosecutors had sought a sentence on the upper end of federal sentencing guidelines, 121 months. Beckwith noted that her two-year sentence was well below the bottom portion of that guideline range, and she credited Peppel with the seven days already served.
Beckwith said she “struggled” with how long a sentence could serve as a “deterrent” to others who might be tempted to commit similar white-collar crimes.
“The modest sentence in this case should be more than enough to serve that goal,” Beckwith said.
No date was given in open court for Peppel to report to prison. The judge asked that he serve his sentence at a facility as close to Cincinnati as possible.
Kohnen told Beckwith that his firm would take care of an appeal if there is one.
John Ellis, a 59-year-old Vandalia resident who once worked for Peppel, said Tuesday, “I’m not thrilled with the sentence but I’m certainly happier than I was with the previous sentence.”
PEPPEL CASE TIMELINE
June 2003: MCSi Inc. files for bankruptcy protection. Ultimately, the company is liquidated, affecting more than 1,300 employees.
December 2006: Peppel is indicted.
August 2010: Peppel pleads guilty in federal court to willful false certification of a financial report by a corporate officer, money laundering and conspiracy to commit securities, mail and wire fraud.
June 2011: MCSi’s debts to bank lenders amounted to $88.5 million, a prosecution witness testified at a hearing to determine Peppel’s sentence.
October 2011: Judge Sandra Beckwith sentences Peppel to seven days in jail as well probation and a $5 million fine.
November 2011: Prosecutors filed a notice as a first step toward challenging the seven-day sentence.
February 2013: The U.S. Court of Appeals for the Sixth Circuit rules that the sentence is too short and that Peppel should be resentenced.
May 14, 15, 2013: Witnesses testify in a resentencing hearing for and against Peppel. John Backus, a former director of HealthWarehouse.com, charges that Peppel was de-facto CEO of HealthWarehouse.com, in alleged violation of the terms of his sentence.
Tuesday: Beckwith sentences Peppel to two years in prison, preferably in a prison close to the Cincinnati area. He is permitted to voluntarily report to prison and is given credit for seven days already served.
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