Former drug treatment executive charged with embezzlement

Drug Treatment Executive Charged With Embezzlement

Federal prosecutors have filed a criminal information charging former Baltimore Behavioral Health CEO William Hathaway with theft from an employee benefit plan and failure to pay payroll taxes totaling nearly $2.5 million.

Beginning in March of 2009 and through 2011, Hathaway deducted payroll taxes, including FICA, from his employees' paychecks but did not forward that money to the IRS as required by law, the document, which is typically filed in lieu of an indictment when the defendant agrees to plead guilty to the charges, says.

The total amount of unpaid tax is $2,495,779, according to the information, which Hathaway used for "company expenses, including Hathaway's and other BBH officers' salaries."

BBH officers earned hundreds of thousands of dollars annually for operating the nonprofit west-side drug treatment center, which drew regular complaints from neighbors during the 2000s. City Paper examined BBH's housing policies in a 2010 story that was part of a series on drug treatment in Baltimore. The Sun followed with an even deeper look at BBH in particular, finding drug use in the organization's housing, close ties among the executives and board members, and questionable diagnoses. 

Federal and state authorities opened an investigation into BBH's retirement plan soon after. The criminal information says Hathaway "knowingly and willfully failed to transfer" more than $53,000 deducted from employees' pay into their retirement fund.*

BBH filed for bankruptcy protection in 2012 and was bought by investors in late 2013


Click here for more from Edward Ericson Jr. or email Edward at eericson@citypaper.com

*UPDATE: Mr. Hathaway's attorney contacted City Paper after this story was published to stress that the charging document does not allege that his client personally pocketed the money that was intended for the pension fund, but rather that he directed it to "company expenses."

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