Margate Firefighter Quickly Retires, Pleads Guilty to Prescription Fraud

Margate Prescription Fraud

Margate firefighter Michael Sher, a 13 year veteran of the department, pleaded guilty to health insurance fraud. Days before his court appearance, Sher, a resident of Northfield, abruptly retired from the Margate Fire Department.

As a Margate firefighter, Sher earned a salary of $97,959. Sher, 40, is the first Margate municipal employee to be snagged in this health benefits scandal. So far, 16 have been fingered, with more expected from Margate, Atlantic City and Ventnor.

Sher is one of three brothers who are Margate firefighters.

Margate Firefighter Quickly Retires, Pleads Guilty to Prescription Fraud.

The scam was brought to light by some accounting clues: Margate’s employee health benefits plan saw a massive increase in prescription drug costs. In 2014, Margate drug costs totaled $713,935. By 2015, that number grew to over $3 million.

The prescription drug scam involved municipal employees with very attractive state health benefits. Teachers with school insurance were also tapped, as their particular plans cover expensive drugs and compounded creams.

So called ‘recruiters’ targeted public employees with premium health insurance plans, like teachers and public safety employees.

Sher, former VP of Margate Firefighters Mutual Benevolent Association Local 41, enjoyed $1.7 million in kickbacks. 

Mr. Sher is also the brother of Margate firefighter, Tom Sher, former President of the union.

Sher will be sentenced on June 8 and hopes to still receive his pension.

According to the U.S. Attorney’s Office, Sher defrauded New Jersey state health benefits programs and other insurers out of millions of dollars by submitting fraudulent claims for medically unnecessary prescriptions.

“Michael Sher paid kickbacks to patients, gave an envelope of cash to a medical doctor who caused thousands of fraudulent compounded medication prescriptions to be filled, and actively recruited others below him as part of the conspiracy to defraud New Jersey state health benefits programs,” U.S. Attorney Carpenito said. “It is unconscionable for a public servant to defraud the very public he swore to protect, yet that is exactly what Michael Sher did. The defendants convicted in this case include two firefighters, a guidance counselor, a teacher, a medical doctor, and several pharmaceutical employees, which speaks to the extensive network employed by this conspiracy and the efforts of federal and state law enforcement partners to bring this wasteful and brazen scheme to an end.”

“Firemen take an oath to uphold the law. The FBI works to ensure that they are held accountable when they violate that pledge and break the law,” Special Agent in Charge Timothy Gallagher of the Newark FBI Field Office said.

Michael Sher acted as a recruiter in this conspiracy by persuading individuals in New Jersey to obtain medically unnecessary and very expensive compounded medications from an out-of-state pharmacy. Sher’s co-conspirators paid him to engage in this criminal conduct.

According to documents filed in this case and statements made in court:

From January 2015 through April 2016, Sher and others recruited individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the information as the “Compounding Pharmacy.”

The conspirators knew that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply. They also knew that some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had insurance coverage for these particular medications.

An entity referred to in the information as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services for the State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid.

Sher and conspirators working under him recruited public employees and other individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications. Sher and others often used pre-printed prescription forms in which they selected medications with the highest possible reimbursement, without any consideration for medical necessity. The prescriptions were faxed to the Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.

The pharmacy paid one of Sher’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to Sher and other members of the conspiracy. Sher admitted paying one of the doctors to reward the doctor for signing prescriptions. Sher also paid individuals covered by the Pharmacy Benefits Administrator, as well as the other recruiters who worked under him during the conspiracy.

According to the information, the Pharmacy Benefits Administrator paid Compounding Pharmacy more than $50 million for compounded medications mailed to individuals in New Jersey, including $7,065,303.00 for prescriptions submitted by Sher and his cohorts. Sher received approximately $1,728,372.29 for his role in the scheme.

Sher faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. As part of his plea agreement, Sher must forfeit his criminal proceeds and pay restitution in an amount to be determined at sentencing. Sentencing is scheduled for June 8, 2018.

Fifteen other conspirators – Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, Timothy Frazier, Michael Pilate, Shawn Sypherd, and Nicholas Tedesco – pleaded guilty from August through February 2018 and await sentencing.

U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark, IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and the U.S. Department of Labor, Office of Inspector General, under the direction of Acting Special Agent in Charge Peter Nozka in New York, with the investigation leading to the guilty plea. He also thanked the Pensions and Financial Transactions Section of the Division of Law, within the Attorney General’s Office, under the direction of Attorney General Gurbir Grewal and Division Chief Eileen Schlindwein Den Bleyker, for its assistance in the investigation.

The government is represented by Assistant U.S. Attorneys Jacqueline M. Carle and R. David Walk Jr. of the U.S. Attorney’s Office in Camden.

According to John Tumelty Law:

Prescription drugs obtained through fraud can lead to charges. Certain prescription drugs have become very popular in recent years for recreational use. This has drawn the attention of law enforcement leading to an increase in investigations and prosecutions for prescription fraud. These cases are taken seriously by the police and prosecutors.

Any prescription drug that is obtained through fraud can lead to drug charges. Some of the more common prescription drugs that are the basis for these charges include:

  • OxyContin, Oxycodone
  • Hydrocodone
  • Vicodin
  • Percocet
  • Xanax

Some of the activities associated with these drugs that can lead to prosecution include:

  • Forging prescriptions
  • Altering prescriptions
  • Doctor shopping


8 thoughts on “Margate Firefighter Quickly Retires, Pleads Guilty to Prescription Fraud”

  1. Severe penalties urged for those in drug scam

    Community service is nowhere near enough for the civil servants tied up in the prescription drug scandal. Not only should they loses jobs, but get felony convictions and be banned from public employment.

    If they want to avoid jail time, they should also forfeit their pension contributions to a charity close to their heart. Since they have specialized training such as EMT, firefighter, police and teacher, every time a natural disaster or tragedy occurs they should be rounded up in packs of 12 and made to serve the public. After five years of no pay for their “community service,” they then could be allowed to re-enter society with whatever job they could get as a convicted felon.

    Michael K. Dale


  2. Christine Allen
    “Nice” people that volunteer in their community does not exempt a person from a crime. Most serial killers are highly intelligent members of society, so are most involved in this case. Jail and restitution are needed. You know darn well smart people have hidden that money for later.
    Christine Allen

  3. Natalie Gaming
    The amounts stolen are really incredible. They’re getting the ring leaders now but how about the hundreds of others? I have to give great credit to the FBI for their methodical approach to the case. I can imagine that after they get all the ring leaders, the hundreds of other public employees we’re hearing about will probably turn themselves in (maybe by the summer as not to disrupt the 2018 school year). The ring leaders are probably telling the Feds everything so when they’re ready they’ll have everyone left to right – they’ll all plead. The only thing I can say is – lose your job, your pension, pay it all back and spend some time in state prison. I can’t believe the greed of public employees who are paid well with great benefits but its not enough. What, do you feel entitled? The private sector isn’t too great guys, we have to live within our means and balance the books. I guess you guys felt you didn’t have to do that. Well, now you pay the price.

    Natalie Gaming

  4. Laraine Cheafsky, margate resident

    They certianly thought they were entitled, but simply put, they are just common thieves. They deserve the largest penalty that can be given, but what they do not deserve is their pension, or any benefit that goes along with that. They stole from their friends and neighbors, where they live and work who pay their municipal and county taxes, and their actions were despicable.

  5. He hopes to retain his pension. I should hope not. It hardly seems possible that a convicted felon could still retain any rights to a pension. Tell me it isn’t so!!

  6. Robert McNally

    What is the bigger crime is that right now, policemen, firefighters and teachers, guilty of the same crime, are still working and on the taxpayer rolls. The leaders of our cities know who the people are who will be charged and they should all be suspended immediately and if they survive trial, give them their job back with back pay. Imagine a police officer giving you a speeding ticket when he is a felon. Or the commissioners should force their resignations right now. And if the State has to step in for security so be it.

  7. While Atlantic County residents were losing their jobs and or homes from casino closings these public employees were Stealing from the hardworking taxpayers! (They actually rubbed “salt” on their misfortune.)Greedy public servants who feel “entitled ” to everything expect to retain their pension? REALLY?

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