A year ago, U.S. District Judge David Sam sentenced a man caught with more than $1 million in counterfeit bills to serve seven years in prison - the understanding being that if he cooperated with investigators, the term might be reduced.

Michael Carnicle, Salt Lake City, never offered any cooperation. Federal agents still don't know who supplied him with bogus $100 bills.But now Sam has reduced his sentence anyway, chopping off nearly half of the prison term.

Carnicle and Kristen Elwell, Taylorsville, were charged with conspiracy, attempting to sell fake money, and receiving, possessing and transferring the forgeries. Between April 26 and May 28, 1987, they met several times at a downtown Salt Lake parking lot to transfer the "money."

Two others were charged separately with possessing $10,200 in phony $100 bills.

Elwell pleaded guilty to a single count of conspiracy to defraud the government by receiving counterfeit money. He got four years' probation.

Carnicle contended he was innocent, but a jury found him guilty of possessing counterfeit money and transferring bogus bills. Sam sentenced him to seven years but indicated he might be let out early if he cooperated.

In December 1987, Carnicle appealed for release from prison pending his appeal. But Sam denied the request, citing "the nature and magnitude of the crime, without any credible explanation of the source."

Although so much fake money went through Carnicle's hands in one month, he remained in apparently poor financial shape, Sam wrote. He noted it was Carnicle's "propensity to be generous to a fault."

Joseph C. Fratto Jr., Carnicle's lawyer, requested a reduction in the sentence. He wrote in February that Carnicle lacked a previous prison rec-ord and mentioned the lesser "sentences imposed on others indicated and charged in connection with the matter."

Assistant U.S. Attorney C. William Ryan vigorously opposed the reduction. He responded that Sam could have sentenced Carnicle to consecutive terms of 15 and 10 years on the two charges.

Ryan wrote that Sam "chose to sentence him to seven years with the proviso that if he cooperated and assisted in locating the source of the counterfeit monies in question, and in giving an honest account of the true facts of the case, the court might in the future consider a reduction in sentence."

"However, defendant has not cooperated at all. He maintains the same story he recounted at trial and, according to Secret Service Agent Lynn Holliman, who interviewed him, has not given any assistance in locating the source . . . ."

But Sam ruled that he has reconsidered the sentence and concluded that "the sentence previously imposed may be harsh or disparate (unequal) in light of the Parole Commission's guidelines for first-time offenders."

With that, he reduced the term to four years.