Bell Acres businessman who admitted to $15M in tax fraud asks for house arrest or probation

A Bell Acres man who built what the federal government called the largest house in Pennsylvania with proceeds from a $15 million tax fraud thinks he should serve his sentence on either probation or house arrest.

Joseph Nocito, 81, filed the motion seeking alternatives to federal prison earlier this month. On Friday, government prosecutors objected, writing that such a penalty “belittles the sentencing factors,” and ignores the magnitude of the fraud and just punishment.

Nocito pleaded guilty to a single count of conspiracy to defraud in November and is scheduled to be sentenced by Senior U.S. District Judge Joy Flowers Conti on Sept. 14.

The case has been pending for more than five years.

The government said that Nocito, who was CEO and president of Automated Health Systems, wrote off millions of dollars in home construction costs for his 39,000-square-foot home, Villa Noci, as business expenses.

Included in those costs were construction, furnishings, an outdoor pool, landscaping, a playground and tennis and bocce courts.

Allegheny County real estate records show the palatial estate on 6.2 acres has 12 bedrooms, 13 full bathrooms, 8 half-bathrooms and 22 fireplaces.

The government said Nocito also wrote off personal expenses for luxury vehicles and private school tuition for his grandchildren.

He admitted to improperly concealing income from his company, which serves as a Medicaid enrollment brokering firm and employs more than 2,200 people, causing him to underreport company profits.

The tax loss from falsely claiming business expenses was approximately $4 million, while underreporting company profits resulted in a loss of about $11 million, prosecutors said. The fraud occurred from 2006 to 2012.

Advisory guidelines call for Nocito to face 37 to 46 months in prison. The amount of fraud involved would typically call for a punishment more than twice that long, but because the defendant agreed to pay $15 million in restitution prior to sentencing, the government agreed to the lower guidelines.

Now Nocito is asking the court to spare him any time in prison.

Reasons cited in court filings included Nocito’s age, need for two knee replacements, obesity, problems using stairs and poor health.

“Simply put, Mr. Nocito is not a person who can acclimate to prison,” the filing said.

In addition, the defense said, nine of Nocito’s children and grandchildren rely heavily on his financial support, including education expenses.

“If Mr. Nocito is not placed on probation or a term of electronic monitoring permitting him to continue to work and generate income from the entities in which he has an interest and which require his presence for continued operations, it is submitted that it will be challenging for him to provide for the financial support of his family, which will indeed result in a substantial degree of financial hardship to Mr. Nocito’s children and grandchildren,” the defense wrote.

Nocito also cited his charitable work, including serving on the boards of Homewood-Brushton Health Center, Ohio Valley Hospital, Brentwood Community Bank and Robert Morris University.

The filing said that Nocito has donated millions of dollars to charity, including money to help save the Pittsburgh Creche at Downtown’s Steel Plaza.

“Throughout his lifetime, Mr. Nocito has been and is a humble, compassionate, charitable, kind, respectful, thoughtful, encouraging, empathetic and faithful individual,” the defense wrote. “He willingly accepted responsibility for his actions and has suffered greatly over the last 10 years during the government’s investigation and the pendency of these proceedings.”

The defense wrote that Nocito is remorseful, has been cooperative and has been devastated by his actions.

“He is truly an unselfish person, unconcerned for his own well-being. He wants to continue to help others, even as a felon and shamed man. While broken, Mr. Nocito is not deterred and has the mental capacity and desire to help the community in any form and in any way the court might deem fit as part of a sentence.”

Prosecutors said Nocito deserves to be placed behind bars.

In their filing, they quoted from a typewritten document seized by the IRS from Nocito’s office at AHS. It was titled “Wisdom, Thoughts and Life’s Lessons from Joe Nocito,” and dated Sept. 2, 2000.

“7. Maintain the lifestyle of the ‘Millionaire next door’ (at least until you achieve the stage in life where have all the material things you want, your next generation is well taken care and it becomes a choice of giving it to the government or building a house of your dreams.)

“17. Admit some things we do aren’t the most financially sound, like building 50,000 SF houses, but do them anyway because you have made enough good decisions financially to do whatever you want to do.”

Nocito, the government continued, “concealed and underreported approximately $93 million of income from the IRS not reflected on his personal and business tax returns from 2006 to 2012.

“This is the largest personal tax fraud in the history of this district, causing criminal tax losses in excess of $26 million dollars,” prosecutors wrote. “It involved years of falsification of both personal and corporate tax returns and exposed two other AHS Inc. employees and conspirators to face criminal investigation.”

According to the government filing, Nocito has likely been a millionaire since 2000.

While the government acknowledged the defendant’s age and medical conditions, they said that federal prisons can manage them.

As for the defense’s claims that Nocito continues to financially support his children and grandchildren, the government said that is not a claim that warrants a lesser sentence.

“The sentencing evidence clearly will show that he is not his children’s nor his grandchildren’s immediate caretaker or primary source of financial support,” the prosecution wrote. “What (Nocito) provides to his offspring is given merely out of his excess beneficence and affection, not for their daily sustenance.”

The prosecution also said that Nocito’s charitable donations do not warrant a lighter punishment.

“Though laudable, they do not eviscerate the fraud and the necessity of imposing just punishment. Individuals blessed with vast means are expected to benefit the less fortunate,” the government wrote. “No defendant should be able to buy his or her way out of just punishment.”