Sewickley Man Builds Mansion, Sentenced To Prison For Tax Fraud

PITTSBURGH, PA – A resident of Sewickley, Pennsylvania, was sentenced today to one year and  one day in prison for conspiring to defraud the United States. Nocito, former CEO and President of  Pittsburgh-based Automated Health Systems (AHS), will serve – in addition to his prison sentence  – 3 years of supervised release, which includes six months on home detention, and pay approximately  $15,824,056 in restitution to the Government. United States Attorney Eric G. Olshan announced  today.  

United States District Chief Judge Joy Flowers Conti imposed the sentence on Joseph Nocito,  age 81, of Sewickley, PA.  

Court documents and statements outline Nocito’s scheme between 2006 and 2012 to illegally  classify millions of dollars of personal expenses as deductible business expenses and finance  construction of a 51,000-square-foot mansion valued at approximately $30 million. Nocito named  the home “Villa Noci.” The falsified expenses included interior and exterior construction costs;  design and furnishings; an outdoor pool and pool house; tennis, basketball and bocce courts; and  landscaping for the grounds. Nocito also fraudulently expensed millions of dollars for other personal  expenses such as luxury vehicles, artwork, country club memberships, homes for his children and  private school tuition for grandchildren.  

In addition to filing false personal returns, Nocito underreported AHS’s profits by shuffling  millions of dollars of income through other entities in fraudulent transactions designed to conceal  AHS’s true income and tax liability. Among other things, Nocito made recurring, sham payments  from AHS to other entities he controlled, falsely characterizing the transactions as payments for  management, administrative or consulting expenses. He then deducted the expenses in AHS’s  corporate income tax returns.  

“The defendant diverted millions of dollars that should’ve gone to the IRS and used it to build  a 51,000 square foot mansion in the Pittsburgh suburbs, amounting to the largest tax fraud ever  perpetrated in our District,” said U.S. Attorney Olshan. “This crime is an affront to every  hardworking, tax-paying individual in this country. We commend our partners with IRS Criminal  Investigation and the U.S. Postal Inspection Service for their thorough and tireless efforts to hold  this defendant accountable for his egregious conduct.” 

“Today’s sentencing brings Mr. Nocito’s massive scheme to defraud the IRS to a  conclusion,” said Yury Kruty, Special Agent in Charge of IRS-Criminal Investigation. “Tax fraud  of this magnitude, never before seen in this Judicial District, deserves to be punished and today was  Mr. Nocito’s day of reckoning. Honest taxpayers suffer when self-admitted criminals like Mr.  Nocito swindle the government. The Special Agents of IRS-CI, our law enforcement partners, and  the Department of Justice remain steadfast in our dedication to prosecuting those who carry out  schemes that cheat the government and hurt those who pay their fair share.” 

United States Attorney Olshan commended the IRS-Criminal Investigation and the U.S.  Postal Inspection Service who investigated the case. 

Assistant U.S. Attorneys Gregory C. Melucci and Nicole A. Stockey for the Western District  of Pennsylvania and Department of Justice Trial Attorney Matthew L. Cofer of the Tax Division  prosecuted the case.