United States v. Tartaglione

• Decision Date: 09 June 2020
• Docket Number: No. 18-3017,No. 18-2638,18-2638,18-3017
• Citation: United States v. Tartaglione, No. 18-2638, No. 18-3017 (3rd Cir. Jun 09, 2020)
• Parties: UNITED STATES OF AMERICA v. RENEE TARTAGLIONE, Appellant
• Court: U.S. Court of Appeals — Third Circuit

UNITED STATES OF AMERICA v. RENEE TARTAGLIONE, Appellant

No. 18-2638

No. 18-3017

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Submitted: March 11, 2020

June 9, 2020

NOT PRECEDENTIAL

On Appeal from the United States District Court for the Eastern District of Pennsylvania

(D.C.Criminal No. 2-15-cr-00491-001)

District Judge: Honorable Joel H. Slomsky

Submitted under Third Circuit LAR 34.1(a)

March 11, 2020

Before: McKEE, AMBRO, and PHIPPS, Circuit Judges.

OPINION^*

PHIPPS, Circuit Judge.

After a nineteen-day trial in federal court, a jury convicted Renee Tartaglione of 53 fraud-related counts for her role in defrauding a community health clinic and forunderreporting her resulting income.The jury heard evidence that Tartaglione, who was the President of the Board of the Juniata Community Mental Health Clinic(the "Clinic"), engaged in numerous instances of self-dealing and misappropriation.At trial, the Chief Deputy Attorney General of Pennsylvania, Mark Pacella, testified as an expert witness - over Tartaglione's objection.He explained the legal and regulatory framework for Pennsylvania charitable nonprofit corporations, including the fiduciary duties imposed on board members and directors of such organizations.After the jury returned its verdict, the District Court sentenced Tartaglione to 82 months' imprisonment, three years of supervised release, a special assessment of $5,300, and forfeiture of over $2.4 million.The sentence also compelled restitution of over $2.39 million, split between the Internal Revenue Service ($263,567) and the Pennsylvania Attorney General's Office($2,076,124), as a successor in interest to the Clinic, which by that time was in dissolution.The District Court had jurisdiction to impose that judgment and sentence, see18 U.S.C. § 3231, and Tartaglione now challenges the admissibility of Pacella's testimony, the forfeiture amount, and the restitution awards.In exercising appellate jurisdiction under 28 U.S.C. § 1291and18 U.S.C. § 3742(a)(1), we will affirm the judgment and sentence as modified.

A

Tartaglione first argues that permitting Pacella to testify as an expert about matters of law and the Clinic's charitable status was irrelevant, prejudicial, and/or confusing.By contrast, the District Court determined that Pacella's testimony was relevant and not unfairly prejudicial.And to prevent confusion, the District Court entered and enforced anorder limiting Pacella's testimony to background topics.The District Court did not abuse its discretion or otherwise err in those rulings.

Expert testimony is not permitted on governing law because the articulation of governing law is within the sole province of the judge.¹But sometimes an understanding of non-governing law may "help the trier of fact to understand the evidence."Fed. R. Evid. 702(a);see alsoFed. R. Crim. P. 26.1(requiring written notice of an issue of foreign law in a criminal case).Consistent with that exception, this Circuit has recognized that qualified experts may testify about not only business customs and practices² but also applicable legal duties, especially when those non-governing laws help explain fraudulent intent.SeeUnited States v. Fumo, 655 F.3d 288, 302-03(3d Cir.2011)(explaining that, to prove fraudulent intent, "expert testimony may also concern ethics rules and law related to public officials and government contractors").The experttestimony permitted by the District Court meets both requirements for that exception: it did not concern governing law, and it helped the jury.

First, Pacella's testimony did not concern governing law.He testified about the Clinic's articles of incorporation and its organization as a Pennsylvania charitable nonprofit corporation.He also explained the fiduciary duties of care and loyalty applicable to directors and officers of such organizations under Pennsylvania law.But those topics did not address the law governing this case because Tartaglione was not charged with violating Pennsylvania law.In fact, Pacella's testimony made clear that breach of those duties of care and loyalty was not a crime, and consistent with the District Court's order, he did not opine on whether she had violated those duties.

Second, Pacella's testimony was offered to assist the jury in gauging whether, in light of those duties, Tartaglione intended to commit fraud.Background testimony, for instance about scientific principles,³ is permissible to contextualize relevant facts.SeeFed. R. Evid. 702("A witness who is qualified . . . may testify in the form of an opinion or otherwise . . . ."(emphasis added)).Thus, 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.SeeFumo, 655 F.3d at 302-03(permitting testimony on ethics rules and non-governing law).

B

Tartaglione next challenges the amount of the civil forfeiture award.Civil forfeiture is permitted only for property derived from proceeds traceable to illegal conduct.See18 U.S.C. § 981(a)(1)(C)(allowing civil forfeiture of "[a]ny property, real or personal, which constitutes or is derived from proceeds traceable to a violation" of listed federal criminal offenses);see alsoLangbord v. U.S. Dep't of Treasury, 832 F.3d 170, 196(3d Cir.2017).And for the first time on appeal, Tartaglione argues that a portion of the forfeiture ($959,100) was illegal because she never possessed those funds.Instead, as she asserts, those funds passed directly from the Clinic to third-party contractors for improvements to a building that Tartaglione owned through a limited liability corporation.

But the District Court did not commit any error, much less plain error, in its forfeiture order.SeePuckett v. United States, 556 U.S. 129, 135(2009)(articulating the plain error standard (citingUnited States v. Olano, 507 U.S. 725, 732-36(1993)));United States v. Quinn, 728 F.3d 243, 261(3d Cir.2013)(same).Tartaglione premises her argument on recent cases involving the apportionment of forfeiture awards among co-conspirators, who are not subject to joint and several liability.SeeHoneycutt v. United States, 137 S. Ct. 1626, 1632-33(2017)(holding that the criminal forfeiture statute, 21 U.S.C. § 853, does not impose joint and several liability);see alsoUnited States v. Gjeli, 867 F.3d 418, 427-28(3d Cir.2017)(holding that the civil forfeiture statute, 18 U.S.C. § 981(a)(1)(C), does not impose joint and several liability).In that context, the Supreme Court held that co-conspirator liability for forfeiture extended only to propertyobtained "directly or indirectly" from criminal activity and that a key inquiry was whether the co-conspirator personally benefitted from the conspiracy.Honeycutt, 137 S. Ct. at 1635.But the issue here does not concern the apportionment of liability among co-conspirators, rather the fact of liability.

Even if applicable in this context, the co-conspirator liability cases cited by Tartaglione would provide her no assistance.At its apogee, Tartaglione's argument is a contention that she did not directly obtain property derived from proceeds.SeeAppellant's Br.at 28("Th[e District Court's forfeiture] ruling was error, because the funds were paid to third parties that did not deliver them to Ms. Tartaglione or the entity she solely owned.").But by routing the proceeds of fraud to third-party contractors to make improvements to property that she owned, Tartaglione indirectly obtained benefits from the crime, and that would still suffice to subject her to forfeiture liability under the standard for co-conspirators.SeeHoneycutt, 137 S. Ct. at 1635.

More fundamentally, the District Court ordered forfeiture under the civil forfeiture statute, 18 U.S.C. § 981(a)(1)(C), and not under the criminal forfeiture statute, 21 U.S.C. § 853.While those two statutes share similar text and structure,⁴ the civil forfeiture statute by its plain text, see18 U.S.C. § 981(a)(1)(C), does not condition forfeiture liability upon obtaining - either directly or indirectly - property from the proceeds of thecriminal activity.⁵(That property, could for instance, be shunted to other persons as gifts and still result in civil forfeiture liability).For that reason as well, no infirmity exists in the District Court's order compelling Tartaglione to forfeit the disputed sum.

C

Tartaglione also challenges the two components of the District Court's $2,339,691 restitution order: (1) the award of $263,567 to the Internal Revenue Service for tax deficiencies, and (2) the award of $2,076,124 to the Pennsylvania Attorney General's Office in trust as successor in interest to the Clinic.

1.The Restitution Ordered to the IRS

Tartaglione argues now, as she did at her sentencing, that the jury's general verdict could not sustain the amount of restitution to the IRS.But the jury's charge was to determine whether the evidence established the elements of her charged criminal offenses.SeeUnited States v. Grier, 475 F.3d 556, 567(3d Cir.2007)(en banc).⁶Andhere, the amount of restitution is not an element of any of the charges against Tartaglione.Thus, that issue was not within the province of the jury, and the District Court did not commit clear error by determining the amount of the restitution at the sentencing hearing.

On appeal, Tartaglione also disputes the calculation of the restitution award.She did not, however, raise that argument before the District Court, and she cannot clear the plain error standard on appeal.Several pieces of evidence support the amount of the award: the exhibits at sentencing, the un-objected-to presentence investigation report, as well as the background trial testimony about tax deficiency calculations by an IRS agent.On its own initiative, the Government points out that the restitution amount incorrectly included liability of $6,113 for tax year 2011, and it does not...