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The owner of pharmacies in Jersey City and East Orange pleaded guilty Thursday for his role in a scheme in which two pharmacies billed Medicaid for HIV/AIDS drugs that were never dispensed.

According to state Insurance Fraud Prosecutor Greta Gooden Brown, Shahid Mahmood, 49, of Jersey City, a co-owner of MLK Pharmacy on M.L.K. Drive, pleaded guilty before Superior Court Judge Kevin Callahan in Jersey City to an accusation that charged him with health care claims fraud.

An investigation led by the Medicaid Fraud Control Unit of the state Office of Insurance Fraud revealed that MLK Pharmacy and Ampere Pharmacy on 4th Avenue in East Orange fraudulently billed Medicaid for hundreds of thousands of dollars in prescription drugs. Two men who owned Ampere and were co-owners with Mahmood of MLK Pharmacy previously pleaded guilty.

The state will recommend that Mahmood be sentenced to three years in state prison and be ordered to pay $216,220 in restitution and fines. He is scheduled to be sentenced on July 23.

In pleading guilty, Mahmood admitted that between January 2005 and October 2007, he submitted fictitious bills to the Medicaid program claiming MLK Pharmacy dispensed HIV/AIDS medicines and other prescription drugs to customers, when in reality the drugs were never dispensed.

Previously, John Borges, 45, and Abdul Bari, 54, co-owners of MLK Pharmacy and Ampere Pharmacy, each pleaded guilty to health care claims fraud and filing a false or fraudulent New Jersey income tax return. In pleading guilty, they admitted they bought prescriptions for HIV/AIDS drugs from Medicaid participants for a small fraction of the cost of the drugs, and in turn billed Medicaid thousands of dollars without dispensing the drugs.

Bari was sentenced to three years in prison and ordered him to pay $500,000 in fines and restitution. Borges is scheduled for sentencing Wednesday. The state will recommend that he also receive a sentence of three years and be ordered to pay $750,000 in restitution, fines and forfeited assets.

"By defrauding the Medicaid program, this defendant not only stole tax dollars, he stole from a program dedicated to providing health care coverage for persons who otherwise could not afford it,'' Brown said.

Detectives Kevin Gannon and Joseph Jaruszewski and Deputy Attorney General Erik W. Daab conducted the investigation. Deputy Attorney General Daab prosecuted the case.