Absecon recruiter in health benefits scheme sentenced to three years

Well-known Absecon businessman Brian Pugh will serve 37 months in federal prison for his role as a recruiter in the sprawling compound drug scheme that gripped the region for years.

Before imposing the term, the judge ruled that Pugh initially attempted to impede the investigation.

Pugh, who pleaded guilty in July, could have gotten as much as 10 years. But realistically, the sentencing guideline was for either 30 to 37 months or 37 to 46 months.

A 45-year-old serial entrepreneur who once was a co-owner of Tony’s Baltimore Grill in Atlantic City, Pugh will also serve three years of probation once released.

He must also pay more than $1.4 million in restitution, according to Federal Judge Robert B. Kugler. He also forfeited $437,604.

Pugh made his first restitution payment Monday, with a check for $175,000.

While some of those sentenced made no initial restitution payment, another admitted recruiter, Matthew Tedesco, paid $1 million the same day he entered a plea.

Pugh’s prison term begins Feb. 1, pushed back a month due to follow-up medical care for a neck issue.

Ten of the 49 charged in the scheme have been sentenced so far, Assistant U.S. Attorney Christina Hud told the court. The scheme began in 2014 and was active through part of 2016.

The medical fraud is often referred to as the cream scheme because the compounded meds blend into a topical cream. The name cream scheme shows up in other jurisdictions where similar medical fraud occurred across America.

In several jurisdictions, the supplier was Central Rexall in Hammond, La., but the only targeted Central and its owners in New Jersey.

The creams are medically unnecessary and are concocted to boost insurance reimbursements, not for health reasons.

Northfield’s William Hickman, his wife, Sara, and five others including Pugh were indicted In March of 2019, with a “perp-walk” out of the FBI field officer in Northfield.

Charges against Sara Hickman got dropped in a cooperation agreement.

The Hickmans now live in Linwood.

Brothers John and Thomas Sher, Thomas Schallus and Christopher Broccoli were also in that group.

Schallus, a former Ventnor police officer, got six months home confinement in a sentencing last week.

Former Margate Firefighter Thomas Sher, of Northfield, was convicted in September and awaits punishment.

The others had their sentencings pushed to next year.

Hickman, the ringleader, is expected to be among the last to get sentenced next year. He testified in the Thomas Sher trial. As the New Jersey ringleader, he could again testify.

Before sentencing Pugh, Kugler considered if the businessman had tried to deflect the investigations of the FBI and IRS.

To explore that, the court heard from Andrew Wosnak, a former friend and employee of Pugh’s at an Atlantic City bar, Wet Willie’s.

Payments to Wosnak were disguised as personal loans.

Wosnak got scripts from Pugh but, unlike others, he got paid in cash to avoid taxes, alimony and child support, all crimes in themselves.

Despite all that, testimony showed Assistant U.S. Attorney R. David Walk Jr. told Wosnak he would not be prosecuted, although that understanding was never memorialized in a written agreement.

Hud conceded there is no plan to pursue charges against Wosnak.

Pugh’s lawyer, Michael A. Baldassare of Newark, belittled the actions of the U.S. Attorney’s Office.

“He got a pass, the ultimate pass, the papal blessing,” the lawyer said.

Kugler agreed Wosnak’s character was questionable, but he also decided Pugh had tried to impede the investigation.