Over the past five years, BBH has increasingly put patients into houses owned or co-owned by three sales representatives for Johnson & Johnson. In response to questions about the salesmen's business dealings with BBH, Kara Russell, a spokeswoman for the pharmaceutical giant, said the rental arrangements "do not pose a conflict of interest, per our business conduct policies."

From 2007 to the end of 2009, BBH paid the men more than $700,000, according to its tax filings. One drug rep, Stephen Andrews, said in an interview this year that the sum "sounds about right." But after mortgage payments and other expenses, he said, they netted around $150,000.

Andrews said the housing venture sprang from a 2005 conversation between Terry Brown and Dan Walker, a drug rep who used to call on BBH as a salesman for a schizophrenia drug. According to Andrews, Brown said BBH was looking for good housing at reasonable rents.

When Brown asked Walker if he knew anyone who could help, Walker said he might be interested, Andrews recalled. Around that time, Andrews said, Walker's drug rep territory was switched to Towson and points north. That meant Walker stopped calling on BBH as a drug salesman.

Walker, who did not return phone messages, partnered with fellow drug reps Andrews and Matt Piron and other investors. In 2005, they bought their first two houses, one in the 200 block of S. Gilmor St. for $47,500 and a larger one in the 300 block for $78,000.

While Joy Smith said BBH pays $200 per month per patient, Andrews called that figure an average. He said the owners and BBH negotiate rent for each house without applying a per-patient formula.

"We don't want to be in the business of counting patients," said Andrews, who lives in Middletown, Del.

The purchase of each new house would start with a request from BBH, Andrews said: "They tell us, 'We need a house,' [and] we purchase one." They would then settle on rent and a "comfortable number" of residents, he said.

The BBH houses have been well-tended, Andrews said: "These patients take care of our houses better than any tenant you could ever possibly want."

Housing violations

Last year, the City of Baltimore sued Andrews, Walker and another part-owner, Brian Clark, over alleged violations at one house, the three-story house on South Calhoun Street. The case was dropped after repairs were made and kitchens were installed on the two upper floors.

Besides failing to register BBH houses as rentals, some of the owners neglected to seek approval to exceed occupancy caps that limit four unrelated people to a single dwelling, city housing officials said. A few houses, like the one on Calhoun Street, contain multiple units that can each hold four residents, but most were modest rowhouses consisting of one unit.

Federal law allows more than four recovering addicts or mentally ill people to share a home, but the owner is supposed to apply for a "reasonable accommodation." Even then, a house must meet space requirements. A bedroom with one occupant needs 70 square feet, and 50 more square feet for each additional occupant.

"You're not protected by anything from putting 12 people into a building that can only fit six," said Michael Braverman, Baltimore's deputy housing commissioner.

For Andrews and his fellow investors, the housing venture was purely a real estate deal, he told The Sun. Their plan was to keep BBH as a tenant as long as possible, with the hope of turning a profit when they sold the houses. But that was before the real estate market crashed and Southwest Baltimore's resurgence stalled.

Meanwhile, BBH demanded a one-third rent reduction earlier this year as several multiyear leases ended. That means that their 10 houses are suddenly far less profitable and will likely generate combined gross profits this year of just $50,000, he said.

"At one point, when this thing was lucrative, we were trying to get as many [houses] as we could," Andrews said. "We've kind of stopped."

scott.calvert@baltsun.com

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