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.