A state’s chief deputy Attorney General supervising the work of charities was properly allowed to testify as an expert witness in a criminal prosecution of a charity CEO accused of fraudulent misuse of organizational funds, the Third Circuit Court of Appeals has held. It has affirmed the federal District Court’s opinion that the Attorney General’s testimony was limited to background topics, was relevant, and not unfairly prejudicial.
After a 19-day trial, Renee Tartaglione was convicted of 53 fraud-related counts for her role in defrauding a community health clinic in Philadelphia and for underreporting her resulting income. (See Nonprofit Issues®, Vol. XXVIII, No. 2) Chief Deputy Attorney General of Pennsylvania Mark Pacella testified at the trial for the prosecution as an expert witness. He explained the legal and regulatory framework for state nonprofit and charitable corporations, including the fiduciary duties imposed on board members and officers. The admissibility of his testimony was challenged as part of the CEO’s appeal.
The Court of Appeals recognized that expert testimony is not permitted on governing law because the articulation of governing law is within the sole province of the judge. But it said that “sometimes an understanding of non-governing law may help the trier of fact to understand the evidence.” It said that it had previously permitted testimony where it did not concern governing law and helped the jury.
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The Court said the AG testified about the organization’s articles of incorporation and state charitable corporations. He explained the fiduciary duties of care and loyalty, but did not address the law governing the case, the Court said, because the CEO was not charged with violating Pennsylvania law. He testified specifically that breach of fiduciary duty was not a crime and did not express an opinion on whether she had violated her fiduciary duties.
The Court said that Pacella’s testimony was offered to assist the jury in gauging whether, in light of the fiduciary duties, the CEO intended to commit fraud. It concluded that the District Court did not abuse its discretion by allowing testimony “on background non-governing legal standards to contextualize whether Tartaglione acted with an intent to defraud” the clinic.
The Court also affirmed the 82-month sentence, forfeiture of $2.4 million and restitution of $2.39 million split between the IRS ($263,567) and the Attorney General’s Office, as successor to the dissolved clinic, to hold in trust for a new charity to help the community. (U.S. v. Tartaglione, 3rd Cir., No. 18-2638, 6/9/20.)
YOU NEED TO KNOW
Asking the state’s chief charity lawyer to testify as an “expert” on things other than the controlling law in a criminal trial requires a real tight-rope walk. Not every court is likely to allow it.