Federal Court in Camden

Mitchell H. Cohen Building and U.S. Courthouse in Camden. Photo by Erin Grugan. 


CAMDEN — A Middle Township social studies teacher Friday became the 14th person and the second educator to plead guilty in federal court to his role in a $50 million fraud scheme targeting the state health benefits system.

Shawn Sypherd, 46, of Upper Township, a middle school teacher, admitted to conspiracy to commit fraud of the State Health Benefits Plan. Prosecutors say Sypherd and other co-conspirators targeted teachers, firefighters, police officers and State Police troopers between January 2015 and April 2016 to submit unneeded prescriptions in order to receive thousands of dollars in kickbacks from an unnamed compounding pharmacy.

Sypherd’s actions resulted in more than $2.4 million in fraudulent reimbursements from the State Health Benefits Plan. He received more than $354,264 for his role as a recruiter, according to court documents.

Sypherd is a 1989 graduate of Ocean City High School. He started teaching in New Jersey in 2001, according to state data. As of September 2017, the state reported Sypherd earned a salary of $60,999. Middle Township School Superintendent David Salvo said the district wasn’t aware until late Thursday night of Sypherd’s decision to plead guilty.

“The district had no prior knowledge of Mr. Sypherd’s actions, any related investigation or possible charges. The district does not condone or tolerate any type of unprofessional or unbecoming conduct from its employees and I will be recommending the (school) board take appropriate action pursuant to the law regarding Mr. Sypherd’s employment,” Salvo said in response to an email requesting comment.

According to federal court documents, the prescription drug ring worked by recruiters faxing fraudulent prescriptions for expensive, unneeded compounded drugs to an out-of-state compounding pharmacy.

The prescriptions were for compounded pain creams, scar creams, anti-fungal creams, libido creams and certain vitamin combinations, according to court documents.

The health benefits plan paid generous reimbursements to the pharmacy.

Through an agreement with a co-conspirator, the pharmacy paid out portions of the reimbursement to doctors, recruiters and participants in the ring, which also included several pharmaceutical representatives.

Sypherd entered his plea before U.S. District Judge Robert B. Kugler. His sentencing is scheduled for June 1 and he faces as many as 10 years in prison. He is represented by attorney Marc Neff of Philadelphia.

The government is represented by Assistant U.S. Attorneys Jacqueline M. Carle and R. David Walk Jr. of the U.S. Attorney’s Office in Camden.

Most recently, Pleasantville High School guidance counselor Michael Pilate, 39, of Williamstown, became the 13th person and the first school employee to plead guilty.

Pilate’s guilty plea came as a surprise to the Pleasantville School District. The school board there accepted his resignation as of Feb. 2 during its Feb. 13 meeting.

Other conspirators who have pleaded guilty since August include: Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel and Timothy Frazier.

Tedesco, 42, of Linwood, was first to plead guilty in the scheme for leading the conspiracy, which netted him $11 million.

In December, Frazier, 42, of Galloway Township, pleaded guilty Dec. 1 to defrauding the State Health Benefits Plan and other insurers of $800,000.

Sentencing for those involved is scheduled to begin in March.

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Contact: 609-272-7046 NHuba@pressofac.com Twitter @acpresshuba

Contact: 609-272-7251 CLowe@pressofac.com Twitter @clairelowe