drug-ring pleas

U.S. District Court for the District of New Jersey in Camden, where 22 people charged in a drug-trafficking case were scheduled to appear before U.S. Magistrate Judge Ann Marie Donio on Thursday.

Four of the 21 defendants in a multimillion-dollar state health benefits fraud case still have their state-issued licenses a year after pleading guilty. If and when any action will be taken is up in the air as their sentencing dates have been pushed to March.

Dr. John Gaffney, 56, teachers Shawn Sypherd, 47, and Richard “Erick” McAllister, 43, and guidance counselor Michael Pilate, 40, all pleaded guilty in Camden federal court beginning in September 2017 in the scheme that involved filling medically unnecessary compounded cream medications. They were due to be sentenced Nov. 13 and 14, but the dates are now set for March 11 and 12, 2019.

Attorneys for the four men were unavailable Friday for comment. A spokesman for the U.S. Attorney’s Office, which is prosecuting the cases, declined to comment.

State officials said they are awaiting sentencing before any action is taken on licenses.

“The Board of Medical Examiners is aware of this matter and will follow with an action after sentencing,” said Lisa Coryell, a spokeswoman from the Office of the Attorney General, regarding Gaffney’s medical license.

A woman who answered the phone at Gaffney’s Margate office Friday said the doctor was at the office but was not available to speak. It is unclear whether he is still accepting patients.

Sypherd, who worked in the Middle Township School District, and Pilate and McAllister, who both worked in the Pleasantville School District, are no longer employed by those schools.

According to Department of Education spokesman Michael Yaple, the State Board of Examiners issued McAllister an Order to Show Cause at its June meeting. Yaple said the order essentially asks the certificate holder to say why the board should not revoke or suspend his license.

Yaple said there was no confirmed action taken against Sypherd.

“It is our understanding that Mr. Pilate is scheduled to be sentenced on criminal charges in November, so the State Board of Examiners will wait to process him until after sentencing,” he said.

Since August 2017, 21 people have entered guilty pleas in the scheme, but not one person has been sentenced. This is the fifth time since the first guilty plea in August 2017 that the sentencing dates have been moved. Each time the dates were pushed back, more defendants came forward with guilty pleas.

The last plea came in October when pharmaceutical representative Kristie Masucci, 26, of Stafford Township, admitted to receiving $388,608 for her role in the conspiracy.

The U.S. Attorney’s Office has named several of the conspirators except for the out-of-state pharmacy that was providing kickbacks in exchange for the prescriptions.

According to the information in the case, during 2015 and 2016, the conspirators were recruiting public employees, including teachers, police officers, firefighters and state troopers, to fill prescriptions for compounded medication sometimes without even seeing a doctor.

The prescriptions were sent to an out-of-state pharmacy, which would fill the prescriptions and bill the insurance company, which was usually New Jersey’s State Health Benefits Plan or its School Employees Health Benefits Plan.

Compounded medications, which are medications specially mixed by a pharmacist to meet the needs of an individual patient, are reimbursed by health insurance providers at very high rates. In this case, the creams included pain, scar, antifungal and libido creams, as well as vitamin combinations, and were reimbursed for thousands of dollars for a one-month supply.

The prescriptions were signed off on by a doctor, one of whom was Gaffney, who had never evaluated whether the patient had a need for the cream.

The scheme was tiered, and all participants would receive some level of kickback from the compounding pharmacy.

According to the plea agreements in the case, the compounding pharmacy was paid more than $50 million for medications mailed to individuals in New Jersey.

In August 2017, Linwood pharmaceutical representative Matthew Tedesco, 42, became the first person to plead guilty in the scheme, which netted him $11 million in profit in little more than a year.

According to court records available online, 18 of the 21 defendants have sentencing hearings scheduled for March 11 and 12. Two more have dates scheduled in February. A third defendant, Michael Sher, had a telephone conference in September and court records show no sentencing date scheduled.

Sher’s attorney Bill Hughes did not respond to a request for comment.

Contact: 609-272-7251 CLowe@pressofac.com 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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