Case 5:13-cr-00636-LHK Document 129 Filed 01/21/16 Page 1 of 4
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`Case No. 13-CR-00636-LHK
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`ORDER GRANTING IN PART AND
`DENYING IN PART GOVERNMENT’S
`OPPOSITION TO DEFENDANTS’
`EXPERTS
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`Re: Dkt. No. 112
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`UNITED STATES,
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`Plaintiff,
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`v.
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`ANTHONY BARREIRO and
`ERNEST RAY PARKER,
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`Defendants.
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`Defendants Anthony Barreiro and Ernest Ray Parker (collectively, “Defendants”) were
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`indicted on September 25, 2013 for mail fraud, wire fraud, and conspiracy to commit mail and
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`wire fraud, in violation of 18 U.S.C. §§ 1341, 1343, and 1349. ECF No. 1. The third pretrial
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`conference in this case will take place on January 22, 2016. Trial will begin on February 1, 2016.
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`In the interest of expeditiously providing the parties with rulings that may assist their trial
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`preparation, this Order addresses the government’s opposition to Defendants’ notice of expert
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`testimony. In ruling on this motion, the Court considered the submissions of the parties, the record in
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`this case, and the relevant law, and balanced the factors set forth in Federal Rule of Evidence 403.
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`The government’s motion to limit the testimony of Defendants’ experts is GRANTED in
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`Case No. 13-CR-00636-LHK
`ORDER GRANTING IN PART AND DENYING IN PART GOVERNMENT’S OPPOSITION TO DEFENDANTS’
`EXPERTS
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`Case 5:13-cr-00636-LHK Document 129 Filed 01/21/16 Page 2 of 4
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`part and DENIED in part. First, the government seeks to preclude Defendants’ experts from
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`testifying about ArtLoan’s “business model.” ECF No. 112. The Court agrees with the
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`government that Defendants’ notice of expert testimony does not reveal that Defendants’ experts
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`have any specialized knowledge or expertise in business management, starting a business, or art-
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`related business. Accordingly, Defendants’ experts may not provide expert testimony in these
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`areas. See Fed. R. Evid. 702 (an expert may provide opinion testimony if “the expert’s scientific,
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`technical, or other specialized knowledge will help the trier of fact to understand the evidence or
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`to determine a fact in issue”); Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589 (1993)
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`(holding that expert testimony is admissible if the testimony is both relevant and reliable). Insofar
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`as the motion objects to such expert testimony, the motion is GRANTED.
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`Nevertheless, Defendants’ experts may testify about ArtLoan’s business model to the
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`extent that the testimony derives from the experts’ specialized knowledge in accounting.
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`Defendants state that their experts will “not be describing or explaining” ArtLoan’s business
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`model, but will testify “from a financial accounting standpoint” about whether ArtLoan’s business
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`was consistent with a legitimate business model and whether the defendants’ financial activities
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`were consistent with that model. ECF No. 122, at 2. Such testimony is within the experts’
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`knowledge and expertise. See Fed. R. Evid. 702. Both of Defendants’ proposed experts are
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`Certified Public Accountants (“CPA”), with specialized knowledge in tracing money flow and
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`determining a business’s financial performance, including profits, losses, liabilities, and assets.
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`See ECF No. 110, Exs. B-C. The Court finds that the soundness of ArtLoan’s financial plan is
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`relevant to Defendants’ intent to defraud, and its probative value is not substantially outweighed
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`by the danger of unfair prejudice or misleading the jury. See Fed. R. Evid. 401, 403. Thus, to the
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`extent that the experts’ testimony about ArtLoan’s business plan and Defendants’ financial
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`activities derives from the experts’ specialized knowledge of accounting, that testimony is within
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`the scope of the experts’ expertise, and the government’s motion is DENIED. However, denial of
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`the government’s motion is without prejudice. The government may object to specific questions
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`Case No. 13-CR-00636-LHK
`ORDER GRANTING IN PART AND DENYING IN PART GOVERNMENT’S OPPOSITION TO DEFENDANTS’
`EXPERTS
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`2
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`Northern District of California
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`United States District Court
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`Case 5:13-cr-00636-LHK Document 129 Filed 01/21/16 Page 3 of 4
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`and testimony at trial.
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`Second, the government seeks to preclude Defendants’ expert Janet McHard (“McHard”)
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`from testifying about whether Defendants’ expenditures were “legitimate.”1 According to the
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`government, McHard has no knowledge about Defendants’ promises to the alleged victims and
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`thus cannot “help the trier of fact” to determine whether a particular expenditure complies with
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`that promise. See Fed. R. Evid. 702. This motion is DENIED without prejudice. Defendants state
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`that they have “no intention of asking [the] experts whether the defendants were truthful, or to
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`discuss what promises the defendants did or did not make.” ECF No. 122, at 3. Instead,
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`Defendants’ notice of expert testimony states that McHard may testify about “whether ArtLoan
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`funds were used for legitimate operational expenditures, and whether notes of expenditures have
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`the hallmarks of business or personal expenditures.” See ECF No. 110, at 3 (notice of expert
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`testimony). Such testimony would require McHard to trace Defendants’ expenditures and
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`determine for what the expenditures were used, including whether the expenditures were for bona
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`fide operational expenses. This is within McHard’s specialized knowledge and training as a CPA
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`and a certified fraud examiner. See Fed. R. Evid. 702.
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`Further, how Defendants used the alleged victims’ money is relevant to whether
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`Defendants used the money in the manner promised, and to Defendants’ intent to defraud. See
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`Fed. R. Evid. 702 (noting expert testimony should “help the trier of fact to understand the
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`evidence or to determine a fact in issue”); Fed. R. Evid. 401 (defining relevance); id. 402
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`(providing that irrelevant evidence is not admissible). Thus, McHard’s testimony on Defendants’
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`expenditures, and on whether those expenditures were for personal or business use, will be helpful
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`to the jury under Federal Rule of Evidence 402, and more probative than prejudicial under Federal
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`Rule of Evidence 403. Again, however, denial of the government’s motion is without prejudice.
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`The government may object to specific questions and testimony, for example, the use of the word
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`1 Defendants’ notice of expert testimony does not suggest that the other potential expert witness,
`Peter Friedman, may testify about this issue. See ECF No. 110, at 3.
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`Case No. 13-CR-00636-LHK
`ORDER GRANTING IN PART AND DENYING IN PART GOVERNMENT’S OPPOSITION TO DEFENDANTS’
`EXPERTS
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`Case 5:13-cr-00636-LHK Document 129 Filed 01/21/16 Page 4 of 4
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`“legitimate.” Cf. Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010) (noting that even shaky
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`evidence, if admissible, “is to be attacked by cross examination, contrary evidence, and attention
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`to the burden of proof, not exclusion”).
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`IT IS SO ORDERED.
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`Dated: January 21, 2016
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`______________________________________
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`LUCY H. KOH
`United States District Judge
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`Case No. 13-CR-00636-LHK
`ORDER GRANTING IN PART AND DENYING IN PART GOVERNMENT’S OPPOSITION TO DEFENDANTS’
`EXPERTS
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