A former Hagerstown-based stockbroker for Ferris, Baker Watts Inc. was sentenced yesterday to a 21-month term for embezzling more than $780,000 from his clients, including his stepmother.
Before his sentencing on one count of mail fraud in U.S. District Court in Baltimore, the broker, William S. Hatcher, 40, apologized to Chief Judge J. Frederick Motz in an emotional speech.
"I want you to know how terribly sorry I am for what I did and for the terrible consequences that have been suffered by many," said Hatcher, who pleaded guilty to the single count in September.
Hatcher's attorney, Martin H. Schreiber II, asked Motz to sentence Hatcher to probation, saying that the stockbroker had voluntarily disclosed his crimes and that he had shown responsibility in attempting to repay victims. But Assistant U.S. Attorney Dale P. Kelberman asked for the 21-month term, saying that recommendation had taken into account Hatcher's voluntary disclosure.
Siding with the government, Motz sentenced Hatcher to 21 months and ordered him to pay $900,000 in restitution to other clients, from whom he borrowed money to repay his stepmother. "This was a serious offense involving a lot of money," Motz told Hatcher.
According to court documents filed by the U.S. attorney's office, Hatcher, a broker with Ferris, Baker Watts since 1983, took $787,919 from clients between 1991 and 1998.
Hatcher bought a new house in December 1991, used illegal income to pay off his old mortgage, make improvements to his new house, take vacations and buy jewelry for his wife, according to the U.S. attorney's office. "He essentially lived as if he were making much more than he actually was in his job at FBW," the court documents say.
Hatcher, a member of a prominent family in Hagerstown, misappropriated most of the money -- about $682,919 -- from his stepmother, Christine Hatcher, 69, according to court documents.
Christine Hatcher, who inherited 21,000 shares of Texaco, had her stepson sell all but 1,000 of those shares in the mid-1980s and invest the proceeds in mutual funds, according to court documents. Through several transactions, William Hatcher misappropriated almost all the money from her mutual funds and the remaining 1,000 Texaco shares, the court documents say.
In 1991 and 1992, for instance, William Hatcher wrote letters to four mutual funds, forging the signatures of his stepmother and a Ferris, Baker Watts employee. In the letters, he changed his stepmother's account address to his own post office box. He also instructed the funds to issue checks payable to him, to be delivered to the post office box. Changing the address made it possible for William Hatcher to conceal his actions from his stepmother, the court documents say.
The broker also fraudulently instructed Ferris, Baker Watts to issue loans against his stepmother's 1,000 Texaco shares and endorsed those checks to himself. In the spring of 1994, he ordered the sale of those shares, using some of the proceeds to pay off the loans and misappropriating the rest, the court documents say.
The broker also misappropriated about $5,000 from his father, George A. Hatcher Sr., and $100,000 from another client, Betty Burger.
William Hatcher confessed his actions to his stepmother in April 1998. He then made "virtually complete restitution," borrowing money from clients -- some of whom have not been repaid, according to the U.S. attorney. Hatcher told Ferris, Baker Watts of his actions in December, when he also resigned.
Last week, Christine Hatcher filed a suit in Washington County Circuit Court against her stepson, saying he had defrauded her of hundreds of thousands of dollars and that Ferris, Baker Watts should have discovered the fraud.
Ferris, Baker Watts general counsel Theodore Urban said the firm would contest the suit. "We knew nothing of any problem with Mr. Hatcher until the day he resigned," Urban said.
He also said the company "had exercised appropriate supervision" of William Hatcher and cooperated with the U.S. attorney in the investigation. "No brokerage firm can stand as a guarantor against the infidelity of an employee," Urban said.
William Hatcher would not comment yesterday after his sentencing hearing.
In asking for the 21-month sentence, Kelberman told Motz that, without voluntary disclosure, William Hatcher would face between 24 and 30 months in jail under federal sentencing guidelines.