7 People From New Jersey Charged For Allegedly Defrauding State Health Programs Out Of $50 Million

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CAMDEN, N.J. (CBS) -- On Friday, federal prosecutors charged seven people from New Jersey for allegedly defrauding state programs and insurers out of $50 million. The alleged scheme involved taking advantage of public health programs.

Of the seven people in court Friday, one is a police officer and three are firefighters. One by one, they turned themselves in Friday morning, before heading off for arraignments in federal court.

Shore Area Pharmaceutical representative William Hickman and his wife, Sara, are accused of receiving large kick backs in a prescription drug scheme that tried to rip off public employee health plans.

According to a federal indictment, they enlisted Atlantic City businessman Brian Pugh, Ventnor police officer Thomas Schallus, Margate firefighters John and Thomas Sher and Camden firefighter Christopher Broccoli to help recruit public employees whose state health plans cover expensive compound prescription drugs mean for public employees with allergies and other medical complications.

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Authorities say an unnamed pharmaceutical company filled the scripts, which were medically unnecessary, receiving thousands of dollars per script. They then paid the Hickmans, who greased the others' palms in total ripping of state and private insurers for about $50 million.

"It wasn't a scam to rip off drug companies, it was merely an agreement to do what we believe was perfectly within the law," Jerry Ballarotto, attorney for firefighter John Sher, said.

Attorneys for the Sher brothers, who are firefighters in Margate, say not everyone charged Friday knew the prescriptions were illegitimate.

These new health care and wire fraud charges are part of a larger prescription fraud investigation that's already resulted in almost two dozen guilty pleas, including a doctor who admitted falsifying scripts.

"This case will come down to the evidence of who knew whether or not doctors were getting paid or not to write the prescriptions," Joe Grimes, attorney for firefighter Thomas Sher, said.

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But as the cases move toward trial, there are those who will chalk this up to abuse by public employees of New Jersey's platinum health plans; and in this case, a police officer and three firefighters sworn to serve and protect.

"What it's done to him personally and his profession, is that Monday morning he's going to get suspended, he's out of a job. He's been there for decades," Ballarotto said of John Sher.

All seven defendants entered not guilty pleas and were granted bond at $100,000.