Federal Court in Camden

Mitchell H. Cohen Building and U.S. Courthouse in Camden, where the compounding cases have been heard. 

CAMDEN — Recently retired Margate firefighter Michael J. Sher pleaded guilty in federal court Thursday to conspiring to commit health insurance fraud as part of a multimillion-dollar scheme involving public employees around the region.

Sher, 40, of Northfield, retired unexpectedly from the Margate Fire Department last week. City officials said there was no indication in Sher’s resignation letter that he was involved in the scheme.

He worked at the department since November 2005 and earned a salary of $97,959, according to state records.

Sher pleaded guilty before U.S. District Judge Robert B. Kugler to his role in the $50 million conspiracy that targeted the lucrative State Health Benefits Plan. His attorney, Bill Hughes Jr. of Porzio, Bromberg and Newman, said after the hearing Sher would have no comment about the appearance.

Hughes said Sher has accepted responsibility and regrets the mistakes he made. He added Sher has a “long history of making significant contributions to his community,” citing his involvement with the department and volunteering with youth.

“Nobody wakes up and says, ‘Today I am going to violate federal law.’ Mike Sher is no exception. Done correctly, there is no law that prohibits an individual from receiving a commission from a compounding pharmacy for marketing products to other individuals. Mike Sher, however, did not do everything correctly, and for this, he is going to pay a significant price,” Hughes said in a written statement.

Sher became the first Margate municipal employee and the 16th person to sign a plea agreement in this case, which was brought to light over the summer when Margate and other Absecon Island towns received federal subpoenas regarding employee health benefits.

At that time, it was revealed Margate’s employee health benefits plan had experienced an exponential increase in prescription drug costs, from $713,935 in 2014 to $3.351 million in 2015, with only a small increase in the number of prescriptions filled.

Margate city officials have said they are not privy to any information from federal investigators as to which employees were being investigated.

Since then, 16 people, including Sher, agreed to federal plea deals in the prescription drug ring that involved recruiters faxing fraudulent prescriptions for expensive, unneeded compounded drugs to an unnamed out-of-state compounding pharmacy. Other defendants include former Atlantic City firefighter Michael Pepper, Pleasantville guidance counselor Michael Pilate, Middle Township teacher Shawn Sypherd, and Margate doctor John Gaffney, as well as several local pharmaceutical representatives.

U.S. Attorney Craig Carpenito said the employment of the defendants convicted so far speaks to the “extensive network employed by this conspiracy.”

“It is unconscionable for a public servant to defraud the very public he swore to protect, yet that is exactly what Michael Sher did,” Carpenito said.

Prosecutors described the scheme in which Sher, among others, recruited others to take part in the conspiracy and paid kickbacks to patients fraudulently filling prescriptions for compounded pain creams, scar creams, anti-fungal creams, libido creams and certain vitamin combinations. The recruiters were compensated by the pharmacy, which would receive large payouts from the State Health Benefits Plan.

The scheme targeted teachers, firefighters, police officers and State Police troopers, authorities said.

Sher also admitted to giving an envelope of cash to a co-conspirator, an unnamed medical doctor, who was behind the fraudulent prescriptions.

According to the plea agreement, Sher received $1.7 million for submitting fraudulent claims for compounded medications. He agreed to forfeit that money and pay restitution of $7 million.

Sher is disputiing the amount of money investigators say he received for his role in the scheme.

Kugler said during Sher’s court appearance the amount of money involved in this case, across all participants, is “staggering.” Kugler said the amount of money people received often does not match the amounts listed on financial disclosure forms and he expects to hear how those involved received the money, what they did with it and where it is now.

When Kugler said Sher should have no contact with others involved in the case, Hughes said that might be difficult. Pressed by Kugler if relatives of Sher were involved, Hughes said he did not want to put names on the record.

Sher faces as many as 10 years in prison and has a sentencing date of June 8.

Sher previously served as the vice president of the Margate Firefighters Mutual Benevolent Association Local 41. He is also the brother of firefighter Thomas Sher, the former fire union president.

Firefighter Brian Duffey became president of the FMBA in January. He declined further comment.

This is not the only prescription drug ring that implicated local public employees. Last summer, one active and one former Margate firefighter were charged in a separate drug ring that illegally distributed tens of thousands of oxycodone pills and prescription drugs in Atlantic County.

Theodore Gogol, 37, of Margate, and Ashton Funk, 35, of Northfield, were both charged in the scheme, along with 14 others.

Gogol was suspended without pay from the fire department. Funk is a former Margate firefighter, who lost his job in 2015 after a shoplifting charge.

Never miss breaking news as it happens! Sign up now to receive alerts delivered to your inbox.

Contact: 609-272-7046

nhuba@pressofac.com

Twitter @acpresshuba​

Started working in newsrooms when I was 17 years old. Spent 15 years working for Gannett New Jersey before coming to The Press of Atlantic City in April 2015.

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

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.

Recommended for you

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.

PLEASE BE ADVISED: On June 26, 2018, we will no longer integrate with Facebook for story comments. The commenting option is not going away, however, readers will need to register for a FREE site account to continue sharing their thoughts and feedback on stories. If you already have an account (i.e. current subscribers, posting in obituary guestbooks, for submitting community events), you may use that login, otherwise, you will be prompted to create a new account beginning June 26, 2018.