Mansion was built on tax fraud, IRS alleges
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.