United States v. Paul Musgrave, 2014 U.S. App. LEXIS 14638

Paul Musgrave, a CPA, formed Dayton International Tire Recycling with Raymond Goldberg; Musgrave owned 81% and Goldberg controlled a 19% shell (ITBVI).
Dayton contracted to buy $2.3M of equipment from Goldberg’s Rubber Solutions; Musgrave obtained an SBA‑guaranteed loan and an international letter of credit for $1.7M.
Key alleged misrepresentations: concealment of Goldberg’s ownership of ITBVI; falsified invoices to show an ITBVI cash injection; selection of a "partial shipments not allowed" letter‑of‑credit term; and misstatements about the source of Musgrave’s cash injection.
Goldberg testified that Musgrave directed falsifications; the loan proceeds were disbursed and largely diverted by Goldberg, leaving Dayton without the shredder and Musgrave out $300,000.
Musgrave was convicted at trial of conspiracy, two counts of wire fraud, and one count of bank fraud; his Guidelines range was 57–71 months.
The district court varied downward to a one‑day sentence (credit for processing day), three years’ supervised release, and $1.7M restitution, citing Musgrave’s lack of prior convictions, substantial collateral consequences already suffered, health issues, and comparative culpability with Goldberg.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the one‑day sentence is substantively reasonable	Gov: The sentence is substantively unreasonable given the Guidelines and need for deterrence	Dist. Ct/Musgrave: Substantial collateral punishment, health, and relative culpability justify variance	Vacated: sentence substantively unreasonable; remand for resentencing
Whether district court relied on impermissible collateral consequences	Gov: Court improperly relied on consequences of prosecution (legal fees, loss of CPA license, humiliation)	Dist. Ct: Those facts show punishment already occurred and reduce need for incarceration	Court: Use of collateral consequences was impermissible and tainted the sentence; must not rely on them on remand
Whether sentence adequately accounted for general deterrence in white‑collar context	Gov: One day cannot provide general deterrence for calculated economic crimes	Dist. Ct: Prior consequences and low recidivism risk decrease deterrence need	Court: District court failed to explain how minimal custody served general deterrence; inadequate reasoning
Whether remand is required and scope of new sentencing	Gov: Remand needed to correct substantive unreasonableness	Dist. Ct: Asserted discretion to vary; emphasized comparative culpability with Goldberg	Court: Vacated and remanded for resentencing consistent with §3553(a), without reliance on impermissible factors

Gall v. United States, 552 U.S. 38 (2007) (sentences reviewed for abuse of discretion; larger variances require more compelling justification)
United States v. Conatser, 514 F.3d 508 (6th Cir. 2008) (outside‑Guidelines sentences not presumptively unreasonable)
United States v. Aleo, 681 F.3d 290 (6th Cir. 2012) (greater variances require stronger §3553(a) support)
United States v. Peppel, 707 F.3d 627 (6th Cir. 2013) (courts may not base variances on collateral consequences of prosecution)
United States v. Davis, 537 F.3d 611 (6th Cir. 2008) (one‑day sentence inadequate for general deterrence in white‑collar fraud)
United States v. Bistline, 665 F.3d 758 (6th Cir. 2012) (reliance on collateral consequences is impermissible for sentencing)
United States v. Camiscione, 591 F.3d 823 (6th Cir. 2010) (district court must consider need for general deterrence)
United States v. Martin, 455 F.3d 1227 (11th Cir. 2006) (economic crimes are prime candidates for general deterrence)
United States v. Vonner, 516 F.3d 382 (6th Cir. 2008) (appellate courts identify proper and improper sentencing considerations post‑Booker)