Medical fraud pleas

U.S. District Court in Camden

Four local firefighters who pleaded guilty in the federal investigation into state health benefits fraud have withdrawn their pension contributions, state records show.

Ventnor’s Corey and Edward Sutor, Margate’s Michael Sher and Atlantic City’s Michael Pepper have all withdrawn the contributions they made to the Police and Firefighters Retirement System, a spokesman from the state Department of Treasury confirmed.

The withdrawals mean the PFRS Board of Trustees, which typically decides whether a member must forfeit any portion of their pension due to a criminal conviction, would not review their cases, the spokesman said.

The former firefighters, who all resigned from their public employment upon pleading guilty in the past two years, face up to 10 years in prison for their roles in the multimillion-dollar prescription kickback scheme that took advantage of generous state-provided health benefits. Although the first charges were brought more than two years ago, and only one of the 25 who pleaded guilty has been sentenced, public interest in the fate of the public employees’ pensions remains high.

“I think there is a sensitivity about public employees because, to many people, they see public employees have a better salary and benefit package than they do,” said Marc Pfeiffer, assistant director of the Bloustein Local Government Research Center at Rutgers University, adding it’s much different than 20 or 30 years ago. “Now, they’re seeing the benefits that public employees get are abused, and those members of the public are the ones paying for the benefits. They’re taking it personally that those employees stole from them.”

Pfeiffer said anger about the fraud is not limited to those who work in the private sector: Even current public employees who get similar benefits would be really mad about this type of crime.

“It hurts the public sector because they don’t have the confidences of the people who are paying the bills,” Pfeiffer said. “The aggressive approach that the prosecutors take is very appropriate and welcome.”

Public employee pensions are funded in part by a contribution by the employee and, a larger share, by state taxpayers. According to a Treasury fact sheet on pensions, “New Jersey law stipulates that the receipt of retirement benefits is expressly conditioned upon the rendering of honorable service by the member.”

The fact sheet says a member may be subject to a reduction or forfeiture of benefits “if suspension, dismissal or termination of employment is due to misconduct, or if convicted of a crime that is in any way related to his or her employment or involves a crime of moral turpitude.”

The remaining public employees who have pleaded guilty to the fraud — Pleasantville teacher Richard “Erick” McAllister, Pleasantville guidance counselor Michael Pilate, Middle Township teacher Shawn Sypherd and Ocean City custodian James Wildman — have not filed for retirement and there would be no board review until the member does so, the Treasury spokesman said.

Both McAllister and Sypherd have been ordered to forfeit their teaching licenses by the state Board of Examiners.

Island towns moving on as case lingers

Rumors about the fraud scheme circulated for weeks before the first charges were announced. In July 2017, Margate Mayor Mike Becker found himself in the spotlight when an NBC10 report revealed the city had been federally subpoenaed for employee benefit information, and that prescription drug payouts in the city ballooned from $713,935 in 2014 to $3.351 million in 2015.

Some speculated more than 200 public employees would be arrested in the scheme, and investigations by reporters revealed the government had also subpoenaed Ventnor, Atlantic City, the Margate School District and Mainland Regional High School.

Becker said interest in the case remains high on Absecon Island, but most people are simply waiting for a resolution.

“The conversation seems to be when’s this thing going to end, why is it taking so long?” Becker said.

Ventnor Mayor Beth Holtzman said residents’ speculation has died down since the charges were first brought.

“Once in a while somebody might say something, but I think when it first came out, it was like a shock wave,” Holtzman said.

She said the employees in question are no longer receiving salaries or health benefits from the city, so the last remaining concern is the outcome of the pensions.

“People are looking at them as public servants, so you’ve got to remember that their pay is taxpayer money, their health benefits is taxpayer money, as well as the pension — they contribute their portion and then the match is coming from the city, aka taxpayers,” Holtzman said.

She said she tells residents who ask that she is privy to the same level of information as the rest of the public in the federal investigation, and that the city does not control the pension payouts. It’s up to the state pension boards and judges to make determinations in those matters.

Holtzman said that since the fraud was revealed, Ventnor began to look at its prescription payouts through a report available from the state every two years.

“You would see that there was a spike in benefits, so instead of somebody’s prescription benefits costing $100, all the sudden it’s costing $100,000, and that would be a major red flag,” she said.

She said other than monitoring benefits, there is not much else the city can do, and added both Ventnor firefighters have reached out to her to apologize for their crimes.

“It’s disheartening, but it is what it is, and you can’t turn the clock back,” Holtzman said.

Contact: 609-272-7251

Twitter @clairelowe

Staff Writer

I began covering South Jersey in 2008 after graduating from Rowan University with a degree in journalism. I joined The Press in 2015. In 2013, I was awarded a NJPA award for feature writing as a reporter for The Current of Hamilton Township.

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