DaytonDailyNews.com

DAYTON — Michael E. Peppel, former chief executive officer of the failed MCSi Inc., was arrested and appeared in court Thursday on charges he overstated the once fast-growing company's 2001 income by more than $43 million.

Federal authorities also charged that Peppel, 39, overstated the computer sales company's revenue by $28 million in the first quarter of 2002, and that he personally collected $6.8 million from a fraudulent sale of 300,000 MCSi stock shares in December 2001. The Dayton-area company — formerly Miami Computer Supply Corp. — went bankrupt in 2003, costing as many as 1,300 employees their jobs.

The company is in federal bankruptcy liquidation, rendering worthless the MCSi stock bought by investors who paid as much as $23 per share, said Assistant U.S. Attorney Dwight Keller.

The actual loss resulting from the alleged wrongdoing is expected to be in the "tens of millions," Keller said.

A federal indictment accuses Peppel of conspiracy to commit securities fraud, securities fraud, wire fraud, mail fraud, money laundering and filing false reports with the Securities and Exchange Commission.

The indictment unsealed after Peppel's arrest alleged that he directed a scheme to inflate MCSi's stock prices between 2000 and 2003 through sham transactions, fabricated accounting entries, phony purchase orders and invoices, and manipulation of external auditors and internal computerized accounting programs.

Peppel falsely reported MCSi's corporate net income in 2001 as an $18.7 million pretax profit from continuing operations, when the company actually lost $24.7 million, according to the 26-count indictment returned by a federal grand jury Wednesday.

The most serious charges carry a potential 25-year prison term. Peppel also could face millions of dollars in fines if convicted.

Federal agents arrested Peppel at about 7 a.m. Thursday at his home at 9520 Cutlers Trace in Washington Twp. At an initial appearance in U.S. District Court, Magistrate Sharon Ovington set bond at $250,000 in cash and ordered Peppel to appear Monday for arraignment before U.S. District Judge Walter H. Rice. Peppel could enter pleas at the arraignment. Peppel said in court Thursday that he did not have a lawyer, and a federal public defender was appointed to represent him.

Peppel was released on bond late Thursday afternoon after two checks totaling $250,000 were presented to federal authorities, said Bill Taylor, with the U.S. Marshals Service.