Owner of ‘The Castle’ set for trial
Accountant, prosecutors unable to agree on plea
The case of the giant house — one of the largest private homes in the United States — appears to be headed to a conclusion after years of legal sparring.
A federal judge Thursday set a trial date for Joseph Nocito Sr., the owner of a 39,000-square-foot Bell Acres mansion nicknamed “The Castle” that federal prosecutors say was built on tax fraud, for late summer after the parties reported that they had been unable to reach a plea deal.
U.S. District Judge Joy Flowers Conti set a date for Sept. 6. The trial is expected to take up to eight weeks.
Mr. Nocito, an accountant and former president and CEO of Automated Health Systems on McKnight Road in McCandless, was indicted in February 2018 at age 76 on conspiracy and tax evasion counts in connection to the palatial spread, which he calls “Villa Noci.”
A federal grand jury said he and his former chief financial officer, since identified as Dennis Sundo, caused the construction of
the house, by some estimates worth $20 million, to be recorded as business expenses for some of the many companies Mr. Nocito controlled.
Mr. Nocito’s lawyers have been battling for years with the U.S. attorney’s office over evidence and government tactics. The case has been delayed by sheer financial complexity, since Mr. Nocito had controlled 35 corporate entities, and by the COVID-19 pandemic.
But in the past few months, Judge Conti has ruled against the
defense in a series of opinions, including one in which Mr. Nocito’s lawyers argued that federal agents had violated his attorneyclient privilege and another that sought to throw out search warrants served nearly 10 years ago.
Much of the case was built by documents supplied to investigators in 2013 by Mr. Sundo, who cooperated with prosecutors and testified before a grand jury in 2017.
Among the documents was an undated letter in which Mr. Sundo asked his boss to look over expense categories in regard to an IRS audit and invoked the advice of three lawyers, “Lou, Stan and Bill.” The lawyers are Lou Prosperi, Stan Levenson and Bill Buck.
“Sundo is asking Nocito for approval to make a journal entry on the company books to charge off personal expenses,” the judge wrote, with Mr. Sundo saying the action was “consistent” with the advice of the lawyers.
Mr. Nocito’s criminal case lawyers have argued that the letter constituted legal advice to Mr. Nocito as an individual and that the government violated attorney-client privilege by relying on it to build its case because Mr. Levenson, a criminal defense attorney, represented Mr. Nocito.
But Judge Conti said the context of the letter shows that the advice was given in regard to the corporation, not Mr. Nocito himself.
The judge ruled that the letter “reflects legal advice given to the corporations, not individually to Mr. Nocito. Notably, the advice concerns deductions by the corporations for business expenses. In other words, Nocito does not possess an individual attorney-client privilege with respect to [the letter].”
Judge Conti said the letter was not a main focus of the grand jury proceedings and there was no evidence that federal agents had asked Mr. Sundo to obtain attorney-client privileged information. What’s more, the prosecution said it is not using the letter as evidence in its case.
“[The letter] was voluntarily provided by Sundo to the investigators in his initial proffer session in February 2013,” the judge said. “There is no indication that the government was aware that Nocito was asserting an individual attorney-client privilege with the AHS attorneys or affirmatively attempted to invade Nocito’s individual attorney-client privilege.”
The judge also noted that a defense argument for government misconduct applies “only in the most egregious circumstances” and that it requires proof that agents acted deliberately. Judge Conti said that didn’t happen in the Nocito case.
The judge said the record shows the corporate and individual legal advice was “intertwined” and that Mr. Nocito cannot show that the government was aware of a separate, personal attorneyclient privilege.
In a separate ruling, Judge Conti ruled that search warrants for Automated Health Systems records will stand.
AHS originally received an audit notice from the IRS in August 2010, and the investigation broadened over time to include other corporations and Mr. Nocito’s personal tax returns. In 2012, the case was referred from the civil side of the IRS to the agency’s criminal investigation division. A year later, the government applied for search warrants at AHS office spaces at 300 Arcadia Court on McKnight Road.
Mr. Nocito and his lawyers wanted the search warrants tossed, but Judge Conti said they were justified based on the investigation up to that point and properly approved by a U.S. magistrate judge.
“The long-time controller and secretary of the Nocitorelated businesses [Sundo] providedagents with detailed information about a complex tax evasion scheme and turned over supporting documents,” she said. “The IRS agents corroborated Sundo’s information through their owninvestigation.”
Federal court defendants typically plead guilty after losing pre-trial motions, especially regarding search warrants, but Mr. Nocito’s defense team and the U.S. attorney’s office have been unable to reach a plea bargain.
That could still happen as the case nears trial, but for now Mr. Nocito will take his chances with a jury.
One of the main exhibits is sure to be the house itself. Some sources list it as the largest single home in Pennsylvania and among the largest in America. Travelers heading into and out of Pittsburgh International Airport can easily spot the complex from the air, with its terraced gardens, basketball and tenniscourts, pool and fountain.
The basic charge is that Mr. Nocito paid the builder a monthly payment that he called “consulting services” on his company books. He arranged for the builder’s workers to be paid as though they were employees of another one of his many companies, Northland Properties, which Mr. Nocito then expensed as business costs.
He is also accused of claiming as business expenses payments for his luxury cars, including a Jaguar, Maserati and Rolls Royce, as well as his cook and butler, tuition for private schools for his grandchildren, mortgage payments for relatives, insurance premiums and country club memberships.
On the company books, according to agents, he recorded those purchases as travel, advertising and office expenses.