Nicholas Tedesco, Health Care Fraud Conspiracy, NJ 2024

Nicholas Tedesco, 44, of Linwood, New Jersey, stood in federal court in Camden and admitted to orchestrating a multimillion-dollar health care fraud conspiracy that bled state benefit programs dry. The retail director for a local candy company turned crooked ringleader, Tedesco pleaded guilty to one count of conspiracy to commit health care fraud, copping to a scheme that exploited public employees and insurers for over $2 million in fraudulent claims.

From January 2015 through April 2016, Tedesco and a network of co-conspirators recruited New Jersey residents — including teachers, firefighters, police officers, and state troopers — to obtain medically unnecessary compounded medications from an out-of-state pharmacy referred to in court documents as the ‘Compounding Pharmacy.’ These prescriptions, often for pain, scar, antifungal, and libido creams, as well as vitamin combinations, came with a staggering price tag: thousands of dollars per month, all billed to the State Health Benefits Program and the School Employees’ Health Benefits Program.

The fraud was powered by the Pharmacy Benefits Administrator, the entity responsible for managing prescription claims for public employees and retirees. Tedesco and his crew knew exactly which drugs triggered massive reimbursements. They paid cash to insured individuals to obtain prescriptions they didn’t need, then funneled those scripts to the Compounding Pharmacy. The pharmacy filled the orders, submitted the bills, and kicked back a cut to Tedesco’s network — a pipeline of profit built on lies.

Matthew Tedesco, Nicholas’s brother and a key player in the operation, pleaded guilty on August 17, 2017. Fourteen others have since followed, including 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 others — all awaiting sentencing after admitting their roles in the scam.

The numbers are staggering: the Pharmacy Benefits Administrator paid the Compounding Pharmacy over $50 million for medications shipped to New Jersey residents. As part of his plea deal, Nicholas Tedesco must forfeit $782,766.56 in criminal proceeds and pay restitution of at least $2,069,847.42. He faces up to 10 years in federal prison and a fine of $250,000 or double the loss — whichever is greater. Sentencing is set for June 1, 2018.

The investigation was led by the FBI’s Atlantic City Resident Agency, IRS Criminal Investigation, and the U.S. Department of Labor’s Office of Inspector General. U.S. Attorney Craig Carpenito and New Jersey Attorney General Gurbir S. Grewal hailed the takedown as a win against systemic fraud targeting public trust and taxpayer dollars — but the damage, and the greed, ran deep.