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Nonprofit Board Fiduciary Duty of Loyalty

"She was their landlord and she raised the rent," he said. "There's nothing illegal about that."   This is the attorney's response for his client facing federal prosecution for stealing or misappropriating federal dollars.  Not illegal?  Not a violation of the fiduciary duty of care (self-dealing and conflict of interest)?  I beg to strongly differ that, the list of harm the accused has done against her health center is lengthy and for sure, illegal in my opinion.  But let's also recognize that the thefts or redirecting of grant funds is not her only violation.  Stacking the board with cronies who would effectively sign-off on misappropriations is a serious violation not to mention that shouldn't her cronies also be indicted?  

If a core principal of a nonprofit is "to do no harm", the core principal of governance should be leveled at an even higher bar where the "owners" not only do no harm but do everything in their might to ensure success.  Illegal and beyond is what happened at this institution.  I can only hope that the federal prosecutors are successful in demonstrating both intent and result and that this trial might be held-up to demonstrate to all who serve on nonprofit boards what is their duty and responsibility.

 Here's the Philadelphia Inquirer story. 

Tartaglione pleads not guilty to federal fraud charges.

by Jeremy Roebuck, Staff Writer.

Facing federal charges for allegedly bilking a nonprofit clinic out of hundreds of thousands of dollars, Renee Tartaglione - a member of one of the city's best-known political families - showed no sign Thursday that she was worried.

In federal court for a brief arraignment hearing, Tartaglione, 60, pleaded not guilty to 53 counts including conspiracy and fraud.

"I'm feeling good. I'm feeling confident," she said as she left the Market Street courthouse afterward with her husband, Democratic ward leader Carlos Matos.

Both have weathered past run-ins with controversy. Her forced smile seemed to say that this, too, her family would survive.

Read more at"We've reviewed the indictment microscopically," he said. "From what we've been able to initially determine, the allegations are tissue-thin."

Federal authorities believe they have pinned Tartaglione - daughter of former elections chief Margaret Tartaglione and sister of State Sen. Christine M. Tartaglione (D., Phila.) - at the heart of an elaborate fraud.

For years, she served as board president of the Juniata Community Mental Health Clinic, which held city contracts to provide mental-health and substance-abuse services to Medicaid recipients.

In an indictment unsealed last month, prosecutors alleged she treated the nonprofit as a personal slush fund, siphoning off its government funding to line her pockets at the expense of low-income patients.

Between 2007 and 2012, Tartaglione bought up buildings the nonprofit used in the poverty-stricken Fairhill neighborhood of North Philadelphia and allegedly raised the monthly rents nearly 1,500

According to the indictment, the Juniata clinic was paying $4,800 a month before Tartaglione took over. By 2012, prosecutors say, its monthly rent had shot to $75,000.

All the while, authorities allege, she stacked the clinic's board with cronies and yes-men, and was issuing Juniata checks to employees for services they never provided with the understanding they would cash them and return the money to her.


Tartaglione's tenure at the clinic's helm came at a tumultuous time for her family. She became board president in 2007, the same year her husband was sentenced to a three-year stint in federal prison for bribing three Atlantic City councilmen.

Three years later, Tartaglione was forced to resign as her mother's chief elections deputy, for breaking rules barring politicking by city employees. The allegation that drove her out was that she was managing Matos' Democratic 19th Ward in Kensington while he was behind bars.

After his release, Matos also had a role at the Juniata clinic, though he has not been charged in his wife's federal case. He worked as a counselor even as he received mental-health treatment there while on federal probation.

DiStefano, however, said Thursday that he didn't see much illegal in anything the government had alleged.

"She was their landlord and she raised the rent," he said. "There's nothing illegal about that."



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