The U.S. Court of Appeals for the Third Circuit affirmed the district court’s grant of a motion brought by the U.S. Attorney’s Office prior to defendants’ criminal trial to exclude defendants’ expert testimony regarding the existence and elements of a mafia “bust-out scheme.”
Defendants were charged with, among other things, inflating the sales and misrepresenting the inventory of the company they managed (Company) through fraudulent accounting practices, and making false representations to the Securities and Exchange Commission in the annual and quarterly reports filed by the Company.
Defendants claimed that they, along with the Company, were victims of a mafia “bust-out scheme” by which criminals infiltrate into positions of authority in legitimate businesses to implement a fraudulent billing and invoicing scheme with the assistance of shell companies. The purpose of the scheme is to loot the assets of the company and drive it into bankruptcy. Defendants sought to introduce expert testimony that would outline such a scheme. The district court granted the government’s motion to exclude the expert testimony because there was no evidence of any infiltration by organized crime and because such testimony would be irrelevant to defendants’ knowledge of the scheme, and defendants were found guilty at trial. Defendants sought a new trial on the ground that, among other things, the exclusion was improper. The Third Circuit affirmed, holding that the testimony would have limited probative value and was unlikely to affect whether the jury believed that defendants were either guilty participants in the scheme or were innocent scapegoats. (United States v. Cocchiola, No. 08-1976, 2009 WL 5031367 (3rd Cir. Dec. 23, 2009))