BOSTON — A North Andover man convicted of money laundering and filing a false tax return received three years of probation instead of a federal prison sentence.

But Frank Magliochetti, 50, of 61 Mill Pond will serve the first six months of his probation in home confinement. U.S. District Court Judge Joseph Tauro also ordered him on Tuesday to forfeit $1,080,000, make restitution of $330,000 and pay a $50,000 fine.

Magliochetti, former president of the now-defunct Med Diversified Inc., a home health care company publicly traded on the American Stock Exchange, could have received up to 20 years in prison on the money-laundering charge. He could not be reached for comment.

During a plea agreement reached with the U.S. Attorney's Office last year, Magliochetti admitted that in 2002 he laundered $330,000 embezzled from his company and tried to conceal it by falsely reporting the money in his federal tax return as a capital gain from the sale of 33,000 shares of Polyderm stock.

Magliochetti improperly took the money as a commission from a $30 million financing transaction he negotiated with a financial institution with offices in Switzerland and the Bahamas. The money was intended to be working capital for Med Diversified, which once had an office at Brickstone Square in Andover.

Federal prosecutors said Magliochetti did not file a federal tax return in a timely fashion for 2002. He waited until March 10, 2005 — after the start of a federal investigation of the $330,000 deposit — to file a return. He claimed to have bought the stock in July 1999 and sold it in February 2002.

"In fact, Magliochetti used the sale of Polyderm stock as a means of disguising his conversion of $330,000 of proceeds from Med Diversified's financing transaction," Assistant U.S. Attorney Jeremy M. Steinberg concluded in a court document.

By reporting the false capital gain, Magliochetti also sought to save $61,380 in tax liability, the prosecutor noted. Under the tax rates effective in 2002, long-term capital gains were taxed at 20 percent compared to the 38.6 percent rate for people in Magliochetti's income bracket.

The case was investigated by the FBI and Internal Revenue Service.