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Craig Matthews / Staff Photographer  

Ocean City football practice. Oct. 3, 2019 Craig Matthews / Staff Photographer


Crime
2 doctors, 3 associates charged in ongoing health benefits fraud case

Five more people were implicated Thursday in a yearslong federal investigation into a multistate scheme to defraud New Jersey’s health benefit system for state employees that has seen the arrest of several local residents.

The latest charges implicate a second out-of-state compounding pharmacy located in Pennsylvania, as well as previously charged co-conspirators, for defrauding the New Jersey state health benefits programs and other insurers of $4.5 million by submitting fraudulent claims for medically unnecessary compounded prescriptions.

The defendants charged in a 33-count indictment with conspiracy to commit health care fraud and wire fraud are laboratory sales representative Steven Monaco, 37, of Sewell, who founded and operated SMJ Consultants LLC; Dr. Daniel Oswari, 48, of Bordentown, who operated a practice in Trenton; Dr. Michael Goldis, 63, of Mount Laurel, who operated a practice in Stratford; and Aaron Jones, 25, of Willingboro, who worked as a medical assistant for Goldis.

Monaco, Oswari and Goldis also were each charged with individual acts of health care fraud and wire fraud, and Jones was charged with 10 false statement counts. Monaco and Oswari were charged with a conspiracy involving kickbacks for referrals for laboratory work.

All four pleaded not guilty Thursday and were released on $100,000 bail. Oswari and Goldis were ordered to report the charges to the state Medical Board, a U.S. Attorney’s Office spokesman said.

The federal charges also named previously charged Richard Zappala, a pharmaceutical representative from Northfield who pleaded guilty in 2017 to fraud totaling $4.3 million, becoming the ninth person charged in the federal investigation. Zappala is named as a co-conspirator but not as a defendant in these latest charges. His sentencing is set for Nov. 13.

Thursday was the second day in a row the case was before a federal judge in Camden. On Wednesday, Jason Chacker, 36, of Feasterville, Pennsylvania, a physician’s assistant who practiced in Mercer County, pleaded guilty before Judge Robert Kugler to conspiracy to commit health care fraud in the scheme involving compounded medications.

The fraud deals with prescriptions for medically unnecessary compounded medications, which are medications mixed specially by a pharmacist to meet the specific needs of a patient. These types of medications often are very costly, resulting in compounding pharmacies receiving large reimbursements from insurance carriers, in this case thousands of dollars for a one-month supply. In this alleged fraud, the conspirators would receive kickbacks from the compounding pharmacies for having the prescriptions filled. Those kick-backs would then be distributed among the other co-conspirators, including the doctors, pharmaceutical representatives and state employees.

It is alleged in this case that from January 2014 through April 2016, the conspirators recruited individuals in New Jersey to obtain the medications from a Louisiana pharmacy and a Pennsylvania pharmacy for certain compound medication prescriptions, including pain, scar, antifungal and libido creams, as well as vitamin combinations.

The scheme targeted state employees, including teachers, firefighters, municipal police officers and state troopers, due to the generous benefits they receive through the state health benefits system.

Through the state plan, a “Pharmacy Benefits Administrator” would pay prescription drug claims and then bill the state or the other insurance plans for the amounts paid.

The charges state that Zappala worked with Monaco and other conspirators to find people who would agree to receive prescriptions for compounded medications. Monaco allegedly paid kickbacks to Oswari and another medical professional to reward them for signing prescriptions, and Zappala paid Goldis for signing prescriptions. Jones, who was a medical assistant in Goldis’ office, also forged Goldis’ signature on other prescriptions.

The indictment also charges Monaco, who worked for a blood and urine testing lab, and Oswari with a second conspiracy in which Monaco allegedly caused Oswari to receive kickbacks for referring laboratory work and signing prescriptions.

On Wednesday, Chacker admitted that at the request of a conspirator, he signed prescriptions for individuals without ever meeting or evaluating them. He also paid one individual to receive compounded medications. Chacker received $3,200 and other valuable items from a conspirator for his role. The Pharmacy Benefits Administrator paid $365,454 for prescriptions fraudulently obtained by Chacker and his conspirators.

Chacker faces 10 years in prison and a $250,000 fine. His sentencing is scheduled for Feb. 5.

The only other medical professional formally charged in this case is Margate-based Dr. John Gaffney, who pleaded guilty to conspiracy to commit health-benefits fraud before Kugler in 2017.

A timeline of prescription fraud in South Jersey

Local
Council President Marty Small to take over as mayor

ATLANTIC CITY — Council President Marty Small will be appointed to the city’s top political post Friday, an office he has chased for years.

“Right now, I’m the council president, and until further notice I’m gonna perform my duties as council president and we’ll see what happens,” Small said earlier Thursday afternoon, adding he was there to gather information and hadn’t yet consulted with his fellow council members.

He is scheduled to be sworn in at noon at City Hall.

Judge Joseph H. Rodriguez told Mayor Frank Gilliam on Thursday he lost certain privileges with his guilty plea on a wire fraud charge, among them public office. State Attorney General Gurbir Grewal filed papers later Thursday to have Gilliam removed from office.

Small, 45, will take over, at least for the immediate future, from his friend turned political rival. The city’s Democratic Committee will then begin a search for three nominees to bring to council for a vote, according to committee Chairwoman Gwen Callaway Lewis.

She expects Small to be among the three names, but said they are open to candidates outside of council.

“We’re gonna think hard about it,” Callaway Lewis said, “and we want someone that’s gonna bring some stability to the city and help build this city back up.”

Atlantic Club sold to New York firm

ATLANTIC CITY — The real estate company that has owned the former Atlantic Club Casino Hotel for the past five years said it has sold the property to a New York City-based investment and construction firm.

Council Vice President Aaron Randolph, who represents the 1st Ward, confirmed the precedent of the council president being sworn in as mayor when a person abruptly leaves office. In that scenario, he becomes acting council president.

“Our concerns are the citizens of Atlantic City, and that’s what we need to concentrate on, doing our jobs as (councilpersons) and doing the appropriate thing, and not making comments on things that we have no authority (over),” Randolph said.

The city has been here before. When then-Mayor Bob Levy resigned his post in 2007 on allegations he misrepresented his military history, then-Council President William Marsh became interim mayor.

Atlantic City Fire Chief Scott Evans became mayor the next month on a council vote of 6-2, serving the remainder of Levy’s term.

Small decided not to throw his hat in the ring at that time, in the hopes of getting a shot at a four-year term.

He was first elected to council in 2004, becoming the youngest member in the city’s history.

A member of the Callaway political machine in 2005, he worked on Levy’s successful mayoral campaign. He faced numerous charges stemming from that election work, including that he defrauded the Atlantic County clerk because he was not the designated messenger to return absentee ballots, and that he kept a voter from casting a ballot. He was exonerated of all charges.

He’s had his eye on the city’s top spot for much of his time in office.

In 2009, he mounted a challenge against then-Mayor Lorenzo Langford and lost. Small, and members of his campaign, were again indicted on election fraud, conspiracy and tampering charges, accused of destroying mail-in ballots supporting his opponents, forging signatures and more. Small was again acquitted.

In 2017, Small lost to Gilliam in a primary rife with mudslinging, cementing the bad blood between the two. A pro-Gilliam political action committee posted videos on Small’s arrest history, which includes a 1999 assault charge, a 2005 arson charge and a 2005 perjury charge. Small called his opponent a “Manchurian, special interests candidate.” Small won at the polls but was defeated when mail-in ballots were counted.

An Atlantic City native, Small played basketball for Atlantic City High School, and the former Richard Stockton College, where he first became friends with Gilliam, and then briefly with the Atlantic City Seagulls, a former professional basketball team with the United States Basketball League.

Now about to run his home city, Small chose his words carefully Thursday at City Hall. He looked to the future as the city waits to see the fallout of Gilliam’s plea deal and how it will impact the city’s politics.

“It’s not good for the city, but as a city that’s built on resiliency ... I’m sure Atlantic City will continue to head in the right direction,” Small said. “I just want to say God bless Mayor Gilliam and his family.”

GALLERY: Marty Small's 'My Happy Place' is Eagles Country

GALLERY: Marty Small's 'My Happy Place' is Eagles Country

VERNON OGRODNEK /

For The Press  

Governor Phil Murphy speaks at the NJ State Democratic Committee conference at Harrah’s Casino, in Atlantic City, Friday, Sept. 27, 2019. (VERNON OGRODNEK / For The Press)


Crime
Atlantic City Mayor Gilliam resigns after pleading guilty to defrauding charity

CAMDEN — Atlantic City Mayor Frank Gilliam Jr. resigned Thursday, just hours after he pleaded guilty in federal court to defrauding a local youth basketball program of more than $87,000 and using the money to fund a luxurious lifestyle.

Gilliam, 49, pleaded guilty to one count of wire fraud in U.S. District Court — a charge that carries a maximum sentence of 20 years in prison — and posted a $100,000 unsecured bond for his release. Judge Joseph H. Rodriguez scheduled his sentencing for Jan. 7.

"It is with a heavy heart that I tender my resignation as Mayor of the City of Atlantic City, effective immediately," Gilliam wrote in a letter filed with the city clerk Thursday. "I would like to apologize to the residents of the great City of Atlantic City who deserve stability and respect. My sincere apologies to each constituent that voted for me and had high hopes in my tenure."

Council President Marty Small Sr. will be sworn in as mayor at noon Friday at City Hall.

According to court documents, Gilliam collected $87,215 between 2013 and 2018 in donations for the AC Starz Basketball Program, a nonprofit he incorporated in 2011. Instead of using the money for the program, Gilliam bought designer clothing, expensive meals and personal trips, authorities said.

"When a scheme depletes charity for children, it's unconscionable. But when the fraud is perpetrated by someone the public trusts, it damages the community's confidence in their public servants. This defendant betrayed the trust of his community and of people who wanted to improve the lives of children," said FBI Special Agent in Charge Gregory W. Ehrie.

Gilliam

The wire fraud charge stems from multiple incidents, including a 2014 fax in which Gilliam solicited a donation from a victim in Philadelphia, a 2016 email to the principal of a corporate contributor and the use of a debit card Dec. 26, 2017 — days before he was sworn in as mayor — to make a $568.31 purchase at a clothing store in Tinton Falls, Monmouth County, that was processed through an out-of-state server.

Gilliam did not comment during the court proceeding other than answering "Yes, your honor" or "No, sir" to Rodriguez's questions and responding, "I plead guilty," when asked to enter his plea.

The mayor's wife, Shawna, a state judiciary employee, sat in the first row of the court room by herself while her husband addressed the judge.

State Attorney General Gurbir Grewal filed an application Thursday afternoon in state Superior Court under New Jersey's Forfeiture of Public Office Statute to remove Gilliam.

Gov. Phil Murphy, during a news conference Thursday afternoon, said Gilliam's actions were "despicable" and called on the mayor to resign. The state has been in control of Atlantic City since 2016.

"He has squandered the trust and confidence of his community and of his administration to lead that community," Murphy said. "Atlantic City is a strong and resilient community that is on the rise after years of stagnation ... but this progress can only continue with leadership whose sole focus is on what he or she can do for the betterment of all residents of Atlantic City and not for themselves."

Harry Rimm, Gilliam's attorney, said his client "is accepting responsibility for his actions and is genuinely remorseful," but that Gilliam's guilty plea related "only to his conduct as a private citizen, not conduct in his official capacity." Rimm said the mayor has started paying restitution and, "in advance of sentencing, Mr. Gilliam has paid back almost half of the restitution amount that the parties have agreed is owed."

The FBI and IRS Criminal Division raided Gilliam's Ohio Avenue home Dec. 3, 2018, and recovered $41,335 in cash. Terms of the plea agreement stipulated the seized money be used toward restitution.

Thursday's events were the latest in a tumultuous mayoral tenure for Gilliam.

Even before being sworn in as mayor in January 2018, Gilliam was accused of stealing a $10,000 check from his own political party, which he claimed was a mistake and later returned. An Atlantic County judge dismissed a criminal complaint in April 2018 for lack of probable cause.

In November 2018, Gilliam and Councilman-at-large Jeffree Fauntleroy II were captured on security cameras outside Golden Nugget Atlantic City engaged in a melee with three employees of Haven Nightclub. Complaints of simple assault and harassment against the two officials were dismissed in a Cape May County municipal court. Fauntleroy pleaded guilty to an obscure local ordinance and paid a $500 fine.

A female entertainment manager at Haven — described as having a "close personal relationship" with the mayor — filed a civil suit against Gilliam in March, claiming she lent him $5,000 and was never repaid. The parties settled out of court before the matter went to trial.

Staff Writers Molly Bilinski, Michelle Brunetti-Post and Colt Shaw contributed to this report.

A look back at Frank Gilliam's political career

A look back at Frank Gilliam's political career