Man­sion was built on tax fraud, IRS al­leges

Pittsburgh Post-Gazette - - Local news - By Torsten Ove

Joseph Noc­ito Sr. calls his ele­phan­tine Bell Acres man­sion, the largest pri­vate house in Penn­syl­va­nia and one of the big­gest in the coun­try, “Villa Noci.”

Lo­cals call it “the Cas­tle” — some­times with an eye roll.

Cer­tainly no one can miss this place.

Pas­sen­gers on some flights into Pitts­burgh In­ter­na­tional Air­port can eas­ily see the spread from afar, with its pool and foun­tain, gar­dens, and basketball and ten­nis courts.

But Mr. Noc­ito could some­day soon be ex­chang­ing this 39,000-square-foot ed­i­fice, val­ued by some real estate ex­perts at $20 mil­lion, for the more Spar­tan con­fines of a fed­eral prison cell.

The crim­i­nal di­vi­sion of the In­ter­nal Rev­enue Ser­vice, which has been ex­am­in­ing Mr. Noc­ito’s fi­nances for years, says the home was built on tax fraud.

A fed­eral grand jury on Tues­day handed up a long-awaited in­dict­ment of Mr. Noc­ito, who is in his mid-70s, on a charge of con­spir­acy and nine counts of fil­ing false in­come tax re­turns.

The case was ex­pected ever since his for­mer sec­re­tary, Ann Har­ris, pleaded guilty in 2015 and agreed to co­op­er­ate against

her boss. Her case is pend­ing.

Mr. Noc­ito, for­mer pres­i­dent and CEO of Au­to­mated Health Sys­tems, a health ser­vices man­age­ment com­pany in the North Hills, con­spired to con­ceal mil­lions of dol­lars in per­sonal in­come from the IRS, pros­e­cu­tors said.

With the help of Ms. Har­ris and his for­mer chief fi­nan­cial of­fi­cer, who is an un­named con­spir­a­tor in the in­dict­ment but has not been charged, Mr. Noc­ito caused the con­struc­tion costs for his man­sion to be recorded as busi­ness ex­penses for his com­pa­nies, agents said.

He also de­vised what U.S. At­tor­ney Scott Brady called “an elab­o­rate shell game” in which he trans­ferred money among his com­pa­nies for the pur­pose of evad­ing taxes.

As an ex­am­ple, agents say Mr. Noc­ito paid the builder of his home a monthly pay­ment that he and the other con­spir­a­tors called “con­sult­ing ser­vices” on Noc­ito com­pany books. He ar­ranged for the builder’s em­ploy­ees to be paid as though they were em­ploy­ees of an­other of his com­pa­nies, North­land Prop­er­ties, which Mr. Noc­ito then ex­pensed as busi­ness costs.

In ad­di­tion to us­ing var­i­ous cor­po­rate en­ti­ties to pay for his house, Mr. Noc­ito is also charged with falsely claim­ing as busi­ness ex­penses pay­ments for his Jaguar, Maserati and Rolls Royce, his but­ler and cook, pri­vate school tu­ition for his grand­chil­dren, mort­gage pay­ments for his rel­a­tives, in­sur­ance pre­mi­ums and coun­try club mem­ber­ships.

In com­pany ledgers, he ex­pensed those pur­chases var­i­ously as “travel,” “ad­ver­tis­ing” or “of­fice ex­pense.”

In ad­di­tion, he is ac­cused of un­der­stat­ing his in­come on his per­sonal tax re­turns by not re­port­ing the in­come he di­verted for the per­sonal ex­penses.

The in­dict­ment also says Mr. Noc­ito con­cealed mil­lions in tax­able prof­its of AHS by shuf­fling pay­ments be­tween the com­pany and other cor­po­rate en­ti­ties he owned — in­clud­ing North­land Prop­er­ties, Golden Tri­an­gle Leas­ing and Man­age­ment Fi­nan­cial Ser­vices — so he could re­duce the pay­ments as busi­ness ex­penses and lower AHS’s tax li­a­bil­i­ties.

He then used those un­taxed AHS prof­its to build his man­sion and pay for his lav­ish per­sonal ex­penses, pros­e­cu­tors said.

The max­i­mum prison term Mr. Noc­ito faces is 32 years, but de­fen­dants in fed­eral court cases al­most never get any­where near the max­i­mum, es­pe­cially in white-col­lar cases. But should Mr. Noc­ito be con­victed, it is likely he will face prison time be­cause of the scale of the fraud and the length of time it went on.

His lawyer, Phil DiLu­cente, said the govern­ment has been in­ves­ti­gat­ing his client in what he called a “tax dis­pute case” for nearly a decade.

“Since the in­ves­ti­ga­tion be­gan in 2010, Mr. Noc­ito has been co­op­er­a­tive with the IRS and the U.S. at­tor­ney’s of­fice,” he said. “Mr. Noc­ito looks for­ward to re­solv­ing this mat­ter in a court of law rather than in the me­dia and he will have no fur­ther re­sponse to the govern­ment’s al­le­ga­tions un­til the ap­pro­pri­ate time and place.”

Fed­eral au­thor­i­ties would not com­ment be­yond state­ments.

In one of them, Ed Wirth, act­ing agent in charge of the crim­i­nal di­vi­sion of the IRS in Pitts­burgh, said those who fraud­u­lently write off per­sonal ex­penses and un­der­re­port in­come cheat “the hon­est tax­pay­ers who pay their fair share for the govern­ment ser­vices and pro­tec­tions that we all en­joy.”

Mr. Noc­ito is not in cus­tody. He is set to be ar­raigned March 6 in fed­eral court.

Joseph Noc­ito’s home in Bell Acres.

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