South Jersey teacher, salesman, plead guilty in Shore health benefits scam

A Pleasantville High School teacher and a Sewell salesman on Monday became the 17th and 18th men to plead guilty in U.S. District Court in Camden to participating in a multimillion-dollar New Jersey state health benefits fraud that authorities allege ensnared hundreds of police, firefighters, teachers and other public employees in Shore communities.

William Hunter, 43, who works for an industrial equipment company, and Richard McAllister, 42, a teacher who resides in Ocean City, both pleaded guilty to "submitting fraudulent claims for medically unnecessary prescriptions," according to a joint news release from U.S. Attorney Craig Carpenito and state Attorney General Gurbir S. Grewal.

The guilty pleas took place Monday morning before U.S. District Judge Robert B. Kugler. As with the 16 previous guilty pleas, both men were charged with conspiracy to commit health care fraud.

The pleas are part of a wide-ranging conspiracy that authorities say resulted in as much as $50 million in improper insurance payments from the New Jersey Health Benefits Program, which covers state and local government employees, retirees, and eligible dependents, and the School Employees' Health Benefits Program, which covers teachers, school employees, retirees, and eligible dependents.

"The amounts paid for the prescription drug claims were billed to the State of New Jersey," the release noted.

Authorities have said that numerous Shore communities could be impacted by the unraveling conspiracy before authorities are finished with their investigation and prosecutions.

Both Hunter and McAllister were described as "recruiters" in the scheme, one level down the chain from the people who directly received kickbacks from the still-unidentified out-of-state pharmacy that filled the prescriptions for the expensive compounded medicines, including scar, pain, antifungal and libido creams, and passed along a percentage of the reimbursements.

Hunter and McAllister admitted receiving a percentage of those kickbacks in exchange for referring people with the right insurance plans, and also to passing along a percentage of what they collected to those they recruited, according to the criminal information filed along with the guilty pleas.

Hunter received $245,020.08 in criminal proceeds that he has agreed to forfeit, and was ordered to pay restitution of at least $1.3 million. McAllister's proceeds were calculated at $456,806.23, also subject to forfeiture. The judge ordered him to pay restitution of at least $3.4 million.

McAllister  is an English teacher at Pleasantville and also served as head baseball coach, according to school board records posted online. "He hasn't resigned and he hasn't received any formal notice from the district," his attorney, Edward Borden, said. He declined to comment further.

A Pleasantville guidance counselor previously pleaded guilty in the scheme.

At a previous plea hearing, the judge issued a warning to those awaiting sentencing to fully account for the money they received in financial disclosure forms.

"I"m putting everyone on notice," Kugler said at the hearing earlier this month. "I expect to hear how they received it, what they did with it, and where it is now."

Sixteen other men, including ringleader Matthew Tedesco, Atlantic City Firefighter Michael Pepper, and Margate Firefighter Michael Sher, have pleaded guilty. Tedesco and Pepper will be sentenced July 17. Those defendants still face a maximum penalty of 10 years in prison and a $250,000 fine.