11th man pleads guilty in Shore pharmaceutical fraud ring, but other shoe has yet to drop

The U.S. District Courthouse in Camden.

A Galloway, N.J., man who worked as a pharmaceutical sales representative became the 11th person Monday to plead guilty in federal court to defrauding the New Jersey state health benefits program in a wide-ranging prescription drug scheme that authorities say pulled in hundreds of public employees in Jersey Shore towns, including firefighters, police officers and teachers.

Aside from one Atlantic City firefighter, and despite federal subpoenas issued to several Jersey Shore towns and school districts, no other public employees have been charged in the case.

On Monday, Andrew Gerstel, 39, pleaded guilty to conspiring to defraud the state health plan out of nearly $500,000 in a morning hearing before U.S. District Judge Robert B. Kugler in Camden, according to the U.S. Attorney’s Office.

Authorities said that between January 2015 and April 2016, Gerstel recruited people in New Jersey to obtain “very expensive and medically unnecessary compounded medications from an out-of-state pharmacy,” including pain, scar, antifungal and libido creams, as well as vitamin combinations. These compound medication prescriptions were reimbursed for thousands of dollars for a one-month supply, the government said.

The pharmacy, though referred to in each of the preceding plea agreements, has not been identified.

The insurance policies held by local government workers, including teachers, firefighters, police officers and state troopers, covered these compound medications.

Gerstel recruited the  public employees and faxed prescriptions to the pharmacy, which filled the prescriptions and billed the state health plan. The pharmacy paid a percentage to a co-conspirator, the government said, who then paid Gerstel and other co-conspirators. Gerstel, in turn, paid recruiters under him as well as those with the insurance coverage “to reward them for obtaining the prescriptions.”

The scheme is said to involve about $28 million in kickbacks, the government said.

As part of his plea agreement, Gerstel must forfeit $184,389.05 in criminal proceeds and pay restitution of at least $483,946.72. He faces a maximum penalty of 10 years in prison and a $250,000 fine. His sentencing is scheduled for Feb. 26.

Ten others, including six pharmaceutical representatives, one firefighter, one doctor and a gym floor installer, have previously pleaded guilty. Both the U.S. attorney and the Atlantic County prosecutor have said they are investigating the case. 

The man described as the ringleader, Matthew Tedesco, a Linwood pharmaceutical representative, is scheduled to be sentenced Dec. 4.