Federal Court in Camden

Mitchell H. Cohen Building and U.S. Courthouse in Camden

CAMDEN — The federal sentencing of the first 12 defendants who pleaded guilty in the state health benefits fraud case has again been delayed until July.

Since August, 18 people have entered guilty pleas in connection with the ongoing federal investigation into abuse of the State Health Benefits program. The sentencing dates for the 12 people who pleaded guilty from August to December are now scheduled for sentencing on July 17 and 18.

In December, the sentencing dates were rescheduled for March 26 to 28, according to U.S. Attorney’s Office officials. They had originally been scheduled between December and February.

Among the first 12 to plead guilty in this case include Atlantic City firefighter Michael Pepper, Margate doctor James Gaffney, pharmaceutical representatives Matthew Tedesco, Steven Urbanski, Thomas Hodnett, Judd Holt and George Gavras, and Robert Bessey, a gym floor installer from Philadelphia. Their sentencing dates are scheduled for July 17.

Pharmaceutical sales representatives Richard Zappala, Michael Neopolitan and Andrew Gerstel, along with commercial construction estimator Timothy Frazier, are scheduled for sentencing on July 18.

Since December, six others have pleaded guilty in this case, including Michael Pilate, Shawn Sypherd, Nicholas Tedesco and Michael Sher. Most recently, Richard “Erick” McAllister and William Hunter pleaded guilty on Monday in the case.

Their sentencing dates have not been changed. Pilate’s sentencing is scheduled for May 11, Sypherd and Nicholas Tedesco for June 1 and Sher for June 8.

McAllister and Hunter are scheduled for sentencing on July 18.

U.S. District Judge Robert B. Kugler is scheduled to preside over the sentencing.

The case is centered around a massive prescription fraud scheme from January 2015 to April 2016 that involved the recruitment of public employees, including teachers, firefighters, municipal police officers and State Police troopers, to obtain medically unnecessary prescriptions for patients whom doctors never treated, according to federal court documents.

The prescriptions were for compounded pain creams, scar creams, antifungal creams, libido creams and certain vitamin combinations, all of which paid reimbursements to the pharmacy from the health insurance plan.

In exchange for the prescriptions, recruiters and doctors received payments from the pharmacy and paid co-conspirators, according to court documents.

Contact: 609-272-7239


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