Former President and CEO of Pennsylvania Health Services Company Indicted for Conspiring to Defraud the IRS and Filing False Tax Returns
PITTSBURGH – The former President and Chief Executive Officer of a Pennsylvania health services management company has been indicted by a federal grand jury in Pittsburgh on charges of conspiracy to defraud the United States and filing fraudulent income tax returns, United States Attorney Scott W. Brady announced today.
The 10-count indictment, returned on February 13, named Joseph W. Nocito as the sole defendant.
"This indictment charges Joseph Nocito, the CEO and President of AHS, Inc., with defrauding the Internal Revenue Service through a multi-year, multi-million dollar tax fraud," stated U.S. Attorney Brady. "The indictment alleges that Nocito conspired to conceal millions of dollars in personal income from the IRS in two ways: first, by causing construction costs for his multi-million dollar personal residence to be recorded as business expenses of companies he controlled, and second, by devising an elaborate shell game where he transferred money among his companies for the purpose of evading taxes. My office is committed to protecting the taxpayers of western Pennsylvania from those who would defraud the United States government."
Ed Wirth, Acting Special Agent in Charge, IRS Criminal Investigation, added, "When dishonest individuals fraudulently write off their personal expenses and underreport their income, this cheats the honest taxpayers who pay their fair share for the government services and protections that we all enjoy. The Special Agents of IRS Criminal Investigation remain committed to investigating and recommending prosecution of these individuals."
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 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.
The law provides for a total sentence of 32 years in prison, a fine of $2,500,000, or both. 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.
Assistant United States Attorneys Gregory C. Melucci, Mary M. Houghton, and Nelson P. Cohen, as well as Department of Justice Tax Division Trial Attorney Jeffrey B. Bender, are prosecuting this case on behalf of the government.
The Internal Revenue Service-Criminal Investigation and the United States Postal Inspection Service conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.