The federal indictment portrayed MCSi CEO Michael Peppel as the leader of a stock-inflating scam involving phony transactions, false filings with federal regulators and falsified reports to shareholders, and efforts to hide records of bogus transactions from outside auditors.
The 2006 indictment identified five unindicted co-conspirators only by their job responsibilities and initials, because they had not been charged. But various MCSi, government and court documents identify the five as Ira Stanley, a former MCSi vice president and chief financial officer who allegedly worked closely with Peppel to carry out the fraud; former MCSi vice presidents Mary Stewart and Sharmila Rao; former MCSi controller James R. Ahrns Jr., and David J. White, founder of Mercatum Ltd., a Leeds, England, audiovisual wholesale supply company, who allegedly cooperated with Peppel in sham business transactions recorded in a bogus attempt to improve MCSi’s financial results.
Stanley subsequently pleaded guilty to MCSi-related federal criminal charges in 2007. He is to be sentenced after his expected testimony against Peppel.
Peppel has pleaded not guilty to all 32 charges against him. He has declined to talk to a reporter about the case. A message was left Wednesday, Aug. 4, for his lawyer, Ralph Kohnen.
According to the indictment, Stanley directed Stewart or Ahrns at times to enter records of sham transactions, including the use of fabricated purchase order numbers for merchandise. Stanley removed records of sham transactions from files before outside auditors could see them, and instructed employees to never provide any documentation to outside auditors without first obtaining his personal authorization, the indictment charged.
Stanley’s lawyer, Lawrence Iason, declined to comment. Rao, Stewart and Ahrns did not return a reporter’s telephone calls. No telephone number was available for White.
Federal prosecutors handling the government’s case said they could not discuss matters that may come up at trial.
Contact this reporter at (937) 225-2242 or jnolan @DaytonDailyNews.com.
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