CAMDEN, N.J. — A Middle Township teacher has admitted to orchestrating a multi-million-dollar health care fraud conspiracy that ripped off New Jersey state benefits programs and insurers. Shawn Sypherd, 46, of Marmora, New Jersey, pleaded guilty in federal court to conspiracy to commit health care fraud, admitting he helped funnel over $2,000,000 in false claims through a network of recruiters, pharmacists, and willing patients.
Sypherd served as a recruiter from January 2015 through April 2016, convincing individuals — including public employees — to obtain expensive, medically unnecessary compounded medications from an out-of-state pharmacy referred to in court documents as the ‘Compounding Pharmacy.’ These drugs, including pain, scar, antifungal, and libido creams, along with vitamin combinations, were reimbursed at thousands of dollars per one-month supply, despite lacking FDA approval and clinical justification.
The scheme exploited coverage under the State Health Benefits Program and the School Employees’ Health Benefits Program, both managed by a Pharmacy Benefits Administrator that paid claims and then billed the State of New Jersey. Sypherd and his co-conspirators specifically targeted teachers, firefighters, municipal police officers, and state troopers who had access to this coverage, offering them cash kickbacks to obtain prescriptions they didn’t need.
Prescriptions were faxed to the Compounding Pharmacy, which filled and billed the Pharmacy Benefits Administrator. For each paid claim, the pharmacy kicked back a percentage to one of Sypherd’s co-conspirators, which was then distributed throughout the network. Sypherd personally received $354,264.06 for his role. The Pharmacy Benefits Administrator paid over $50 million to the pharmacy for medications shipped to New Jersey residents.
As part of his plea agreement, Sypherd must forfeit $354,264.06 in criminal proceeds and pay restitution of at least $2,439,548.32. He faces up to 10 years in federal prison and a fine of $250,000 or double the gross gain from the offense, whichever is greater. Sentencing is scheduled for June 1, 2018, before U.S. District Judge Robert B. Kugler in Camden.
Thirteen others have already pleaded guilty in connection with the scheme: Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, Timothy Frazier, and Michael Pilate. All await sentencing. U.S. Attorney Craig Carpenito, who announced the guilty plea alongside New Jersey Attorney General Gurbir S. Grewal, credited the ongoing investigation to FBI agents and federal health fraud task forces.
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Key Facts
- State: New Jersey
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes
- Source: Official Source ↗
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