The U.S. Court of Appeals for the Sixth Circuit affirmed Tuesday a 97-month federal prison sentence for a Michigan contractor who defrauded investors through a fake government contract scheme involving his struggling construction business.
Matthew Mencarelli, who operated Matthew's Woodworking LLC in Kent County, Michigan, challenged his sentence on appeal, arguing the district court should have applied an acceptance-of-responsibility reduction to his offense level. The Sixth Circuit rejected his arguments in an unpublished opinion issued Jan. 21, 2026.
Mencarelli pled guilty to wire fraud after federal prosecutors charged him with running an investment fraud scheme that began in 2018. According to court documents, Mencarelli's construction and contracting business faced financial difficulties, prompting him to solicit investments from friends and acquaintances for nonexistent projects.
The scheme centered on false claims about lucrative government contracts. Mencarelli typically told potential investors that he had secured contracts with state or local governments relating to fiber-optic cable installation. He claimed these contracts required him to maintain a minimum balance in his company's bank account and promised investors returns of 10 to 30 percent on loans with terms ranging from several months to one year.
To make his scheme more convincing, Mencarelli assured investors their money carried no risk because the supposed government contracts required the funds to remain in his business account. This false assurance of security helped him attract new victims and maintain the confidence of existing investors.
When the scheme began to unravel, Mencarelli escalated his fraudulent activities. To attract new investors and placate existing ones who were demanding repayment, he created false documentation including fabricated contracts, wire transfers, bank statements, and other documents designed to support his claims about the government contracts and the financial health of his business.
The case proceeded through the U.S. District Court for the Western District of Michigan, where Mencarelli entered a guilty plea to wire fraud charges. During sentencing proceedings, the district court calculated Mencarelli's offense level under federal sentencing guidelines but declined to apply a reduction for acceptance of responsibility.
Under federal sentencing guidelines, defendants who clearly demonstrate acceptance of responsibility for their criminal conduct may receive a reduction in their offense level, which can result in a lower sentence. The reduction is intended to recognize defendants who acknowledge their wrongdoing and show genuine remorse.
Mencarelli appealed the 97-month sentence, specifically challenging the district court's decision not to grant him the acceptance-of-responsibility reduction. His appeal focused solely on this sentencing issue rather than challenging his underlying conviction.
The Sixth Circuit panel, consisting of Circuit Judges Kethledge, Bush, and Nalbandian, reviewed the district court's sentencing decision. Circuit Judge Kethledge authored the opinion rejecting Mencarelli's arguments.
The appeals court's decision to affirm the sentence indicates the panel found the district court did not abuse its discretion in refusing to apply the acceptance-of-responsibility reduction. Courts typically consider various factors when determining whether a defendant qualifies for this reduction, including the timing and nature of the guilty plea, the defendant's conduct during the investigation and prosecution, and whether the defendant provided substantial assistance to authorities.
The opinion was designated as "not recommended for publication," meaning it will have limited precedential value but reflects the court's resolution of Mencarelli's specific sentencing challenge.
Wire fraud carries significant federal penalties, including up to 20 years in prison and substantial fines. The offense involves using interstate communications, such as telephone calls, emails, or wire transfers, to further a scheme to defraud victims of money or property.
Investment fraud schemes like Mencarelli's often target individuals within the perpetrator's personal or professional network, taking advantage of existing relationships and trust. These cases frequently involve promises of unusually high returns with low risk, false documentation to support claims, and the use of new investor funds to pay earlier investors in a Ponzi-like structure.
The Sixth Circuit's affirmation of Mencarelli's sentence sends a message about the serious consequences facing individuals who exploit personal relationships to commit investment fraud. The nearly eight-year prison term reflects the federal courts' approach to deterring similar schemes that can devastate victims' financial security.
Mencarelli's case represents another example of federal prosecutors' continued focus on investment fraud cases, particularly those involving small business owners who abuse their positions to defraud investors through false promises about government contracts or other fabricated business opportunities.