Former President and CEO of Pennsylvania Health Services Company Indicted for Conspiring to Defraud the IRS and Filing False Tax Returns

The former President and CEO of a Pennsylvania health services management company was indicted by a federal grand jury in Pittsburgh yesterday for conspiring to defraud the United States and filing fraudulent income tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman and U.S. Attorney Scott W. Brady for the Western District of Pennsylvania.

According to the indictment, Joseph W. Nocito was CEO and President of Automated Health Systems Inc. (AHS), a Pittsburgh-based company that administered public health programs for state and local governments.  The indictment alleges that Nocito conspired with others to defraud the Internal Revenue Service (IRS) by fraudulently claiming millions of dollars of personal expenses as corporate business expenses – including the construction of his 39,000 square-foot home in Sewickley, which Nocito referred to as “Villa Noci,” payments on a Jaguar, Maserati, and Rolls Royce, a personal butler and cook, and country club memberships.  Nocito is also charged with understating his income on his personal tax returns by not reporting the income he diverted for personal expenses. 

The indictment further alleges that Nocito concealed millions in taxable profits of AHS by shuffling millions in payments between AHS and other companies Nocito owned, such as Northland Properties, Golden Triangle Leasing, Management Financial Services, in order to fraudulently deduct the payments as business expenses and reduce the tax liability of AHS.  Nocito is accused of falsely characterizing these payments as management, administrative and consulting expenses, and in turn fraudulently deducting the payments on corporate tax returns filed with the IRS.

Nocito faces a statutory maximum sentence of five years in prison on the conspiracy charge and three years in prison on each count of filing a fraudulent tax return.  He also faces a period of supervised release, restitution and monetary penalties.  Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the criminal history, if any, of the defendant.

An indictment is an accusation.  A defendant is presumed innocent unless and until proven guilty.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Brady praised special agents of IRS Criminal Investigation, who conducted the investigation, and Assistant U. S. Attorneys Gregory C. Melucci, Mary M. Houghton and Nelson P. Cohen and Trial Attorney Jeffrey B. Bender of the Tax Division, who are prosecuting the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.