Leader of $53 million Jersey Shore prescription drug scam pleads guilty in federal court hearing

William Hickman pleaded guilty Tuesday before U.S. District Judge Robert Kugler to being the organizer of a prescription drug conspiracy that involved firefighters, police officers, and teachers at the New Jersey Shore and cost state health benefit plans more than $53 million.

Hickman, 43, of Northfield, agreed to more than $26 million in forfeitures of investment accounts and other property, according to Kugler, who accepted the plea in a Zoom remote hearing from Camden.

In exchange, charges against Hickman’s wife, Sara, will be dismissed. William Hickman said his wife was unaware of the criminal nature of the company he set up in her name.

Hickman, appearing remotely with his lawyer, Charlie McKenna, pleaded guilty to one count of wire and health care fraud and one count of money laundering, which together carry a maximum sentence of 30 years in prison. He is scheduled to be sentenced Nov. 6.

“You’re going to give up everything you have, and get to keep the family home,” Kugler said. Hickman has to pay the government $77,161 to keep the home, the judge said.

Hickman was indicted in March 2019 along with six other people, including his wife and an owner of Tony’s Baltimore Grill in Atlantic City, and charged in the prescription-drug health-benefits scheme that has snagged more than 30 police officers, firefighters, teachers, and pharmaceutical representatives at the Shore.

At Tuesday’s hearing, Hickman admitted getting a 40% commission from a compounding pharmacy in Louisiana that billed for public health benefits for expensive compounded medications, including vitamins and libido medication and anti-fungal creams.

Hickman became a “master distributor” and oversaw several top recruiters, including Brian Pugh, 41, the co-owner of the Baltimore Grill, who has pleaded not guilty; Matthew Tedesco, a pharmaceutical salesman awaiting sentencing; and Margate firefighter Michael Sher, who also pleaded guilty.

Hickman wrote checks to Pugh totaling more than $364,800, the judge said.

“I knew what I was doing was wrong, and I knew it was against the law,” Hickman told the judge.

Hickman was named in a search warrant executed in June 2017 at the office of James Kauffman, an endocrinologist who later killed himself while in prison awaiting trial in the murder of his wife, April.

The search warrant, obtained by The Inquirer, identified Hickman as a ringleader in the scheme. The warrant alleges that Hickman is alleged to have used a shell company, Boardwalk Medical LLC, to solicit the services of Kauffman and other doctors for fraudulent prescriptions for expensive creams, vitamins, and libido medication, and scar ointments.

At Tuesday’s hearing, another doctor, John Gaffney, was named as someone who agreed to sign prescriptions for patients he had never treated. Gaffney, of Margate, pleaded guilty in the case and is awaiting sentencing.

Shore towns have been aware for several years that many of their public employees had been involved in some way with the scheme, and the towns complied with demands for health insurance records. Atlantic County Prosecutor Damon Tyner has said that he expects to bring charges against numerous lower-level participants in the scheme but has not yet done so.

Just one person, a pharmaceutical representative, has been sentenced so far. Kristie Masucci of Ocean County is serving 24 months in prison. She was also ordered to pay restitution of $1.8 million and forfeit $338,000 to compensate for what prosecutors say she personally earned. The sentencing of Tedesco, the first to plead guilty, has been repeatedly delayed and is now scheduled for October.