Bell Acres man gets 1 year, 1 day in federal prison for $15M tax fraud

A federal judge called Joseph Nocito’s crime “almost inexplicable.”

Nocito grew from humble beginnings to become a wealthy businessman who supported a variety of charitable causes, from the Catholic Church and youth organizations to his alma mater.

The Bell Acres man was known to help his employees in times of need and used to play Santa Claus at a department store.

“It’s the American dream,” Senior U.S. District Judge Joy Flowers Conti said Monday.

Why then did Nocito commit what authorities called the largest tax fraud ever in Western Pennsylvania? The sophisticated scheme included taking in $15 million in unpaid taxes and using the money to build the largest house in Pennsylvania.

“It’s almost inexplicable, especially when you look at your history and characteristics,” Conti said. “A number of people said they would stand in your place. They don’t want you go to jail. You’ve done a lot of good.”

But she said the crime Nocito committed is a serious one.

“You knew exactly what you were doing,” the judge said. “This was a huge, huge tax loss. The government was right. We all depend on taxes being paid.”

On Monday, Conti ordered Nocito, 81, of Bell Acres, to serve one year and a day in federal prison.

That will be followed by a three-year period on supervised release, with the first six months on house arrest. Nocito won’t spent his time on house arrest in the lavish, 51,000-square-foot home that he built and named Villa Noci, but officials haven’t said where that time will be served.

Nocito must also pay a $250,000 fine. He has already paid $15 million in restitution for the unpaid taxes.

Conti permitted Nocito to self-report to prison on Jan. 22, more than four months from now. He is scheduled to undergo knee surgery in November.

Standing at the lectern before the court, Nocito spoke briefly.

“I’ve embarrassed myself, my family, my friends, my employees, my fellow parishioners,” he said Monday. “I did this myself. I apologize to this great country to which I owe so much.”

Nocito, whose sentencing hearing began late last week, had sought probation or house arrest as an alternative to prison time.

But on Monday, Conti said the scope of the crime required a term of prison, even if she gave him significantly less time than the 37 to 46 months called for by the advisory guideline range.

Earlier stories:

• Sentencing in $15 million tax fraud involving Bell Acres mansion will continue Monday
• Bell Acres businessman who admitted to $15M in tax fraud asks for house arrest or probation
• Bell Acres CEO of accounting firm pleads guilty to defrauding IRS of over $15M
• From 2015: Federal tax-fraud investigation appears to be closing in on North Hills businessman

The government said that Nocito, as president and CEO of Automated Health Systems, wrote off millions of dollars in construction costs for his palatial estate as business expenses.

Allegheny County real estate records show the property is situated 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.

The court case against Nocito has gone on for years, finally resulting in a guilty plea in November to one count of conspiracy to defraud the United States.

Nocito’s sentencing hearing began on Thursday, with nine people testifying on his behalf, including multiple members of the clergy, family members and co-workers.

They all described Nocito as generous and kind.

In addition to the testimony, Conti received dozens of letters on the defendant’s behalf, and the courtroom gallery was packed on both days of the sentencing hearing.

The judge said it was the most people she’d ever had for such a proceeding.

Conti, who noted Thursday that she knew at least one of the witnesses who spoke on Nocito’s behalf, remarked repeatedly on the outpouring of support he received.

The judge kept returning to Nocito’s good works.

“It wasn’t just paying money,” but also giving people time, she said.

Conti noted that being charitable is easier when you have money.

“You have more resources to help people,” she said.

The judge said she also based her sentence, in part, on Nocito’s age. He will be nearly 87 by the time he is out from under government supervision, Conti said.

“This is a very tough situation,” the judge said. “If you were younger, it would have been longer, quite frankly.”

Conti urged Nocito to help others in prison, whether through education or through his faith.

“You don’t have to waste your time,” Conti said. “You can give back to society.”