William "Kris" Hathaway, the former CEO of Baltimore Behavioral Health, was sentenced in federal court today to 24 months incarceration and six months home detention. He also agreed to repay about $2.4 million the federal government says he misappropriated from the non-profit drug treatment center he operated with family members.
"As part of his plea agreement, Mr. Hathaway agreed to personally assume the entire corporate tax liability of Baltimore Behavioral Health," Hathaway's lawyer, Douglas Miller, told City Paper in an email in response to questions. "This is a debt that will impoverish him for the rest of his life."
Miller says Hathaway does not have the money, and has never had "personal assets anywhere near that amount."
Miller mustered several character witnesses on Hathaway's behalf and spent about two hours putting on testimony before the sentence was rendered by Judge Richard D. Bennett. Miller sent a press release afterward, which said, in part, "Mr. Hathaway deeply regrets his conduct in this matter. He believed intensely in the services BBH provided. His crime was a misguided attempt to preserve those services after the state slashed funding. It was wrong. But today Kris Hathaway erased the government's caricature of a man motivated by greed. Two hours of testimony and over 50 letters to the Court made clear Mr. Hathaway has lived a life of generosity, service, and humility.
"Mr. Hathaway is grateful to the Court for recognizing the unique circumstances of this case and imposing a sentence which reflects that understanding."
Hathaway, his wife, his stepfather and his mother operated the clinic, paying themselves hundreds of thousands of dollars annually to oversee the treatment of up to 800 patients per day at the clinic's peak.
They billed Medicaid and state programs to pay for drug and other mental health treatment, and for lodging hundreds of patients who might have otherwise been homeless. The so-called "recovery houses" that dotted Pigtown and the Hollins Market neighborhoods of West Baltimore around the clinic were managed by recovering addicts. They were owned by drug salesmen from Johnson and Johnson, and by a D.C.-area man who declared bankruptcy despite a stated income in excess of $20,000 per month.
Millions were spent to house the patients, though it is unclear where the money actually ended up. The housing payments began to taper off when the state reduced payments to BBH around 2008.
Hathaway was charged in a criminal information in March with embezzlement and pled guilty. The IRS can now attach his assets, though apparently not the assets he owns in common with his wife, who has not been charged with wrongdoing.