Bell Acres CEO of accounting firm pleads guilty to defrauding IRS of over $15M

When Joseph Nocito Sr. reviewed the invoices for the construction of his 34-room mansion in Bell Acres, federal prosecutors said, he’d place hand-written sticky notes on them, directing his bookkeeper to pay the costs from one of his 35 companies.

Among the expenses illegally paid, the government said Thursday, were $237,000 for installation of a pool; $36,000 for a down payment for a tennis and basketball court; $44,000 for statuary; and $76,000 for interior design and kitchen work.

According to federal prosecutors, Nocito unlawfully expensed $12.3 million in construction and personal expenditures between 2006 and 2011.

Following a yearslong, wide-ranging investigation in which agents interviewed dozens of witnesses, including building contractors, vendors and other employees, Nocito pleaded guilty in federal court on Thursday to a single count of conspiracy.

Nocito, 80, will be sentenced on March 23 by Senior U.S. District Judge Joy Flowers Conti.

The maximum penalty Nocito faces, according to the plea deal, is five years in prison, a fine of $250,000 and up to three years of supervised release.

The recommended guideline sentencing range is 37 to 46 months incarceration.

Nocito also agreed to pay restitution to the IRS totaling $15.8 million, which represents federal income tax owed for 2006 through 2012.

In addition, as part of the plea agreement, Nocito must provide all of his financial information to the government, and if requested, undergo a polygraph examination.

A message left with Nocito’s attorney was not immediately returned.

Nocito is the former CEO of Automated Health Systems Inc. and also controlled 35 related business entities. Automated Health Systems administered public health programs for state and local government.

Nocito was charged in a 21-page indictment in February 2018 with conspiracy to defraud the United States from July 2005 to April 2013, nine counts of filing false income tax returns; six counts of filing false corporate income tax returns and three counts of filing false individual tax returns.

The government alleged that Nocito, an accountant and a former CPA, concealed millions of dollars in personal income from the IRS by listing construction costs for the 39,000-square-foot mansion as business expenses for his companies.

Referred to by Nocito as “Villa Noci,” the home, which sits on 6.2 acres, has 12 bedrooms, 13 full and eight half bathrooms, 22 fireplaces, a slate roof and stone exterior, according to Allegheny County property records. Its owner is listed as Northland Properties, another of Nocito’s companies, and it has an assessed value of $4.25 million.

Northland also owns 8.4 acres adjoining the mansion.

Among the construction costs deducted as business expenses, the indictment said, were the design, excavation, electrical, plumbing, furnishing and amenities such as a pool, playground and tennis courts.

Nocito directed his personal assistant, Ann E. Harris, who was charged in September 2015 with a single count of conspiracy, to categorize construction expenses in the company ledgers as “consulting,” “repairs and maintenance” and other categories to disguise payments to contractors.

Harris pleaded guilty two months later, and her sentencing has been postponed repeatedly since then.

In addition, the indictment against Nocito said that he paid the builder of the Bell Acres property a monthly payment listed as “consulting services” and made it appear that the employees of the home builder were employees of Northland Properties.

Nocito also admitted to improperly deducting other personal expenses, including for a butler, cook and landscaper; several country club memberships; private school tuition for his grandchildren; loan payments for exotic cars including a Jaguar, Maserati and Rolls Royce; mortgage payments for his family and insurance premiums.

The expenses were often listed as advertising, travel or office expense, the government said.

According to court filings, Automated Health Systems received an audit notice from the IRS in August 2010. That investigation then broadened to include Nocito’s personal tax returns.

The case was referred to the IRS criminal investigation division in July 2012.

Investigators had received reliable information from AHS’ long-time controller Dennis Sundo, who said that the records being sought were at the McKnight Road address and the storage unit next door.

Nocito attempted to have that evidence suppressed, but Conti ruled against him in that and several other motions in a series of opinions in the fall of 2021.