Margate firefighter pleads guilty to $7 million role in health benefits scheme

Margate, N.J., Firefighter Michael Sher pleaded guilty in federal court Thursday to a $7 million role in an unraveling state health benefits scheme that has snared 16 people  and, according to prosecutors, involved many more Shore-area firefighters, teachers, and public employees.

Sher, 40, of Northfield, submitted his retirement papers to the Margate Fire Department last week, according to his attorney, William J. Hughes Jr. Sher worked at the department for 12 years, according to his LinkedIn page. On Thursday, he pleaded guilty to conspiring to defraud the state health benefits program.

Prosecutors described Sher as a "manager and supervisor" in the scheme, a higher-level role that his attorneys said he would dispute at sentencing. Prosecutors said he marketed various compounded pharmaceuticals, including scar, libido, and vitamin creams, to people with benefits and recruited others to find more people with state health and insurance plans that paid for the expensive treatments.

Sher's attorneys said they would dispute at sentencing that he had personally received that much money, saying he had passed a portion of that on to others and should not be liable for it in restitution.

U.S. District Judge Robert J. Kugler, who has taken all 16 guilty pleas in the wide-ranging case that has included pharmaceutical salesman, an Atlantic City firefighter, a guidance counselor and others, said financial disclosure forms submitted by defendants in the case are not accounting for the amount of money the defendants are admitting receiving.

He issued a warning to all those facing sentencing in the case.

"I"m putting everyone on notice," Kugler said. "I expect to hear how they received it, what they did with it, and where it is now."

The judge told Sher he should not have any contact with anyone else involved in the case, but his attorneys said in his situation, that was unrealistic.

"Relatives are involved?" the judge asked. Yes, he was told.

Hughes, the attorney, said after the hearing that Sher "regrets deeply" his conduct, but said that "done correctly," it is not illegal to market compounded pharmaceuticals and receive commissions.

"He didn't personally pocket $1.7 million," he said. "There were other sub-marketers beneath him." He said Sher hopes his years of service as a firefighter, youth volunteer and other work in the community will be considered in his sentencing, which the judge set for June 8. Hughes said Sher would still seek to receive his pension.

As described in the plea agreement the judge cited in court, Sher worked with other co-conspirators to market the various creams, some of which cost tens of thousands of dollars a month, and recruited others to submit their health insurance using preprinted prescriptions that were later signed by doctors who did not examine the patients. Municipal employees with state health benefits and teachers with school health insurance were recruited because the plans cover the expensive creams, prosecutors have said.

The prescriptions were then faxed to a still-unidentified out-of-state compounding pharmacy, which doled out percentages of the reimbursements from the health plans to various people in the scheme, including Matthew Tedesco, described as the ringleader, who was involved in $28 million worth of drug prescriptions. His sentencing is set for this month.

Sher declined comment after the hearing.

His father, Dennis, sat in the back row and said, "Just a good boy. It's hard to believe. I don't believe all their figures."