By Torsten Ove
Joseph Nocito Sr., the wealthy owner of the largest private house in Pennsylvania, has indicated he will plead guilty to federal charges that he built that mammoth house on fraud.
Nocito has been sparring with the IRS since 2010 and with the U.S. attorney’s office since 2018, when he was indicted on numerous tax counts.
But on Wednesday he and his lawyers filed notice that he will enter a guilty plea on Nov. 17 and become a federal felon.
Nocito, former CEO of Automated Health Systems in McCandless, calls his 39,000-square-foot Bell Acres palace “Villa Noci.” Neighbors, somewhat less impressed, call it “The Castle.”
Either way, the criminal division of the IRS says Nocito built it illegally.
Prosecutors say Nocito paid his builder a monthly payment he described as “consulting services” on the company books. But he had the workers paid as though they were employees of another company he controls, Northland Properties, and Nocito then expensed those payments as business costs.
In addition, the IRS said Nocito claimed as business expenses payments for his Jaguar, Maserati and Rolls Royce, the cost of his butler and cook, tuition for private schools for his grandchildren, mortgages for his family, insurance premiums and country club memberships.
He recorded all those purchases as various business expenses. In addition, the prosecutors said he cheated on his own taxes and concealed millions of dollars in profits of Automated Health Systems by shuffling payments among his many corporate entities.
Former U.S. Attorney Scott Brady, who brought the indictment four years ago, called Nocito’s crimes “an elaborate shell game.”
Because Nocito controlled some 35 corporations, it took agents and prosecutors years to piece together the investigation. Then the pandemic hit, causing even more delays.
The plea deal was not unexpected because Nocito in the past year had lost several critical pre-trial arguments over troves of evidence.
One of them was his contention that agents violated his attorney-client privilege.
Part of the case involves a letter that Nocito’s former controller, Dennis Sundo, sent to Nocito asking for approval to make a journal entry on the company books to charge off personal expenses. In the letter Sundo said the action was “consistent” with the advice of three lawyers, one of them attorney Stan Levenson.
Nocito’s criminal defense team argued that the letter constituted legal advice to Nocito and so is protected by attorney-client privilege because Levenson, a criminal defense lawyer, represented Nocito.
U.S. District Judge Joy Flowers Conti ruled that the context of the letter makes it clear that the advice was given in regard to the corporation, not Nocito as an individual.
Another key ruling concerned 2013 IRS search warrants for Automated Health Systems records at 300 Arcadia Court on McKnight Road.
Nocito wanted Judge Conti to toss the warrants, which had been signed by a magistrate judge, but she ruled that the searches were justified based on the IRS investigation up to that point, which was largely built on information that Sundo had provided.
Had the case gone to trial, a key government exhibit would have been the house itself.
It is one of the largest in the U.S., easily spotted from the air by travelers flying into Pittsburgh International Airport, and features terraced gardens, basketball and tennis courts, a pool and a fountain.
The case against Nocito has been dragging on for more than a decade but first became public in 2015 when his secretary, Ann Harris, pleaded guilty to a conspiracy count and agreed to cooperate against her boss.
Her case is pending in U.S. District Court.
Torsten covers the courts for the Pittsburgh Post-Gazette, but he's currently on strike. Reach him at jtorsteno@gmail.com.
