Two former executives of a Vatican children's hospital were set for trial on charges of embezzlement after a Vatican court rejected dismissing the case on Tuesday
The pair are accused of using more than $500,000 in hospital donations to renovate a top cardinal's penthouse.
Lawyers for former hospital president Giuseppe Profiti and ex-treasurer Massimo Spina argued the Vatican court had no jurisdiction to prosecute activities of a hospital foundation that was located in Italy, not Vatican City.
However, tribunal president Judge Paolo Papanti-Pelletier rejected the motion as the trial opened and set a new round of hearings in September.
Profiti said the funds used from the Bambino Gesu hospital foundation were an investment because he planned to use Cardinal Tarcisio Bertone's apartment for future fundraising events for the hospital.
Bertone, Castelli Reconstruction and the company’s owner, Gianantonio Bandera, were not prosecuted.
If Profiti and Spina are found guilty of embezzlement by the Vatican court, they may face between three and five years in prison in addition to fines.
It's not clear if Italian authorities will launch their own investigation into the deal.
The Associated Press contributed to this report.