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CAMDEN. – A federal grand jury has returned a 50-count indictment charging seven people with allegedly defrauding New Jersey state health benefits programs and other insurers out of more than $50 million by submitting fraudulent claims for medically unnecessary prescriptions, U.S. Attorney Craig Carpenito announced today. Two of the people indicted today are longtime Margate City firefighters and one is a Ventnor City police officer.

William Hickman, 42, Sara Hickman, 42, Thomas Schallus, 42, and Thomas Sher, 46, all of Northfield, Brian Pugh, 41, of Absecon, John Sher, 37, of Margate City, and Christopher Broccoli, 47, of West Deptford were all charged with conspiracy to commit health care fraud and wire fraud and with individual acts of health care fraud and wire fraud.

Tom and John Sher are both Margate City firefighters, and Thomas Schallus is a Ventnor City police officer. Pugh is co-owner of Tony’s Baltimore Grill.

William and Sara Hickman and Brian Pugh also were charged with conspiracy to commit money laundering and individual acts of money laundering. The defendants are expected to appear later today before U.S. Magistrate Judge Ann Marie Donio in Camden federal court. The case is assigned to U.S. District Judge Robert B. Kugler in Camden.

According to the indictment, from July 2014 through April 2016, the conspirators recruited teachers, firefighters, police officers and state troopers enrolled in the state health benefits program to obtain very expensive and medically unnecessary compounded medications, including pain, scar, anti-fungal, and libido creams, as well as vitamin combinations from a Louisiana pharmacy. The pharmacy benefits administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid.

The pharmacy agreed to pay Boardwalk Medical, LLC, a company run by the Hickmans, a percentage of the amount it received for the prescriptions. The Hickmans then had Pugh and other conspirators recruit individuals who had coverage for compounded medications, and those conspirators found additional recruiters, including Schallus, the Sher brothers and  Broccoli, who recruited other public employees covered by the plan to order expensive compounded medications. The conspirators would have prescriptions signed by a doctor who did not examine the patients.

William Hickman paid Dr. John Gaffney to reward him for signing prescriptions.  Gaffney previously pleaded guilty to conspiracy to commit health care fraud and admitted taking payments and signing prescriptions for patients he did not see.

The compounding pharmacy was paid $50 million for the medications, and then paid the Hickmans more than $26 million for prescriptions. The Hickmans paid a portion of that amount to Pugh, Schallus, the Sher brothers, Broccoli, and other conspirators.

The health care fraud and wire fraud conspiracy count with which all defendants are charged carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. Each wire fraud count carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. Each health care fraud count carries a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The money laundering conspiracy charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the value of the property involved in the transaction. Each charge of monetary transactions in criminally derived property worth more than $10,000 carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the value of the property involved in the transaction.

The government is represented by Assistant U.S. Attorneys R. David Walk Jr. and Alyson M. Oswald of the U.S. Attorney’s Office in Camden and Assistant U.S. Attorney Barbara Ward, Senior Trial Counsel of the Asset Recovery and Money Laundering Unit in Newark.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Read the indictment: hickman.indictment_0