CAMDEN — A pharmaceutical representative from Linwood said he knowingly defrauded a health care benefits program of $28 million using phony prescriptions through a network of recruiters, doctors and public employees.

Matthew Tedesco, 42, pleaded guilty Thursday to health care fraud charges before U.S. District Judge Robert B. Kugler for leading a conspiracy that netted him $11 million in profit in little more than a year.

In a plea deal with prosecutors, Tedesco and Robert Bessey, 43, of Philadelphia, described a massive prescription fraud scheme that involved recruiting public employees — teachers, firefighters, municipal police officers and state troopers — to obtain prescriptions for patients whom doctors never treated.

In exchange, the doctors would receive kickbacks from an out-of-state compounding pharmacy. Tedesco also recruited patients to request expensive, unneeded drugs, without having seen a doctor, according to his plea.

Thursday’s pleas occurred two months after federal subpoenas were issued to three Absecon Island communities seeking information about potential fraud targeting public employee prescription benefits. A separate investigation led by Atlantic County Prosecutor Damon G. Tyner also is focusing on public employee prescription fraud, including compounded medications.

Three more plea hearings are expected to take place Friday.

Prosecutors said the $28 million in fraudulent billing accounted for half the payouts by a state program over the course of 15 months, from January 2015 to April 2016.

Both men are scheduled to be sentenced Dec. 4 and could face as many as 10 years in prison.

Under questioning, Tedesco admitted he used some of the $11 million he made to pay co-conspirators. As part of his plea, he will forfeit that $11 million and pay restitution of at least $28.7 million.

Bessey agreed to forfeit $485,540 and pay restitution of at least $2.7 million.

No apparent family members were in the hearing for either man Thursday. Three men, who identified themselves as FBI agents, did watch, as did a woman who appeared to be there for Bessey.

“You knew what you were doing was wrong, didn’t you?” Kugler asked Tedesco.

“Yes,” Tedesco replied.

A volunteer coach in Somers Point, Tedesco also coached Charlie’s Chicks, part of the Jersey Shore Powder Puff League for women’s football.

Along Belhaven Avenue, where Tedesco has lived for the past four years, neighbors said they knew little about him or his family.

“It’s just a nice, quiet neighborhood,” Martini Absin, adding an optometrist, neurologist, orthopedic surgeon, nurse and lawyer all live within a few homes of each other.

“The only big thing I can remember that happened around here was when April Kauffman was killed.” Absin said.

Ellen Geiger, a 22-year resident of the neighborhood, said the area is quiet, with a lot of turnover and young families.

She didn’t know Tedesco, she said, nor had she seen any police activity at his home during the span of the investigation.

Bessey is the principal at Jack Devine Gym Floors, a gym floor restoration company in Voorhees, Camden County.

Using preprinted prescription forms, the two men targeted medications with the highest possible reimbursement, and often sought 12 months of refills “without regard for the medical necessity,” according to the criminal information.

“Using a network of recruiters, doctors and state and local government employees, the defendants defrauded the state of New Jersey and other health insurers out of millions of dollars by getting reimbursed for phony prescriptions on expensive and medically unnecessary compounded medications,” acting U.S. Attorney William E. Fitzpatrick said in a statement. “This conduct, which fraudulently exploited state health benefits programs and left New Jersey taxpayers on the hook for millions in losses, is especially brazen in an era when health insurance is a constant concern for many Americans.”

The U.S. Attorney’s Office said an unnamed “pharmacy benefits administrator” paid prescription drug claims and then billed the state for the amounts paid.

The records state the administrator reimbursed as much as $10,000 dollars for one person’s one-month supply of a compounded medication, including compounded pain creams, scar creams, antifungal creams, libido creams and certain vitamin combinations.

An unnamed compounding pharmacy paid one of Tedesco and Bessey’s conspirators a percentage of each prescription filled and paid by the administrator, which was then distributed to other members of the conspiracy.

Tedesco and others also gave money to doctors as rewards for signing the prescriptions, and individuals who agreed to receive the medications.

Of the more than $50 million paid to the compounding pharmacy by the administrator for compounded medications mailed to individuals in New Jersey in 2015 and 2016, more than $25 million was for prescriptions arranged by Tedesco and conspirators working for him, records show.

Tedesco is represented by attorney Michael Elliott, of Dallas, Texas. Elliott, of Elliott Sauter PLLC, is a former assistant U.S. Attorney in the Northern and Southern Districts of Texas. Elliott was the criminal health care fraud coordinator and lead attorney for the Medicare Fraud Strike Force in North Texas.

Bessey is represented by attorney Brian McMonagle, based in Philadelphia.

Neither attorney or defendant had a comment upon exiting the courtroom.

Assistant U.S. prosecutors were David Walk and Jacqueline Carle.

It’s unclear how Tedesco’s plea is related to an the ongoing federal investigation into alleged prescription drug fraud in three Absecon Island towns: Margate, Ventnor and Atlantic City.

Last month, officials in all three cities admitted receiving federal grand jury subpoenas requesting names, birth dates and home addresses of those who have Express Scripts, Medco or NJ Direct in their health insurance plans.

The Atlantic County Prosecutors Office also is investigating health benefits fraud in the island towns, and also subpoenaed the Margate school district.

Tyner has said the investigation could include doctors, pharmaceutical representatives and compounded drugs. His office had no comment on Thursday’s proceedings.

Drug compounding is a process where a pharmacist or doctor alters or mixes ingredients into a custom drug to fit the needs of a patient, according to the U.S. Food and Drug Administration.

The process of mixing drugs is legal, and compounded medications can be beneficial to patients unable to take another drug because of allergies or other issues.

Tyner previously has said the county investigation is partially related to the search of Dr. James Kauffman’s office in June.

Kauffman, 68, of Linwood, remains jailed and charged with weapons offenses following a standoff with police June 13 at his Egg Harbor Township practice.

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Contact: 609-272-7260 JDeRosier@pressofac.com

Twitter @ACPressDeRosier

Covering breaking news for The Press of Atlantic City since September 2016. Graduate of the University of Maryland, Central Jersey native.

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