The U.S. attorney's office has filed criminal charges against the former CEO of a West Pratt Street mental health clinic that allege that he embezzled $50,000 meant for employee pensions and withheld hundreds of thousands of dollars in payroll taxes that were diverted to company executives' salaries.
William "Kris" Hathaway, the former CEO of Baltimore Behavioral Health, was charged with failure to account for and pay taxes, and theft from an employee benefit plan.
The charges stem from accusations from former employees who sued Hathaway, alleging that he diverted retirement contributions from their pay as well as a 25 percent employer match.
Baltimore Behavioral Health never responded to the lawsuit, and a federal judge ordered in 2013 that the funds be repaid. Later that year, the U.S. Labor Department sued Hathaway in an effort to restore the employee retirement plan contributions, and in an unusual move another judge ordered that the ruling be satisfied by paying money from Hathaway's retirement fund. Hathaway never responded.
The criminal charges also allege that Hathaway deducted payroll taxes from employees' wages without forwarding the money to the Internal Revenue Service, instead spending it on company expenses, including his salary and those of other company officers.
Prosecutors say Hathaway "willfully failed to truthfully account for and pay over to the IRS" approximately $344,000 in withheld payroll taxes.
Attempts to reach Hathaway for comment were unsuccessful.
Assistant Federal Public Defender Douglas R. Miller said, "While I can’t comment on the specifics of a pending case, I can correct the misleading suggestion that Mr. Hathaway is alleged to have 'embezzled' retirement plan funds. The ... charging document clearly alleges that Mr. Hathaway diverted plan withholdings to pay other company expenses, not that he took the plan money for his personal use."
The Baltimore Sun first reported on the questions about the retirement contributions in late 2010. Earlier, The Sun published an investigation of BBH that revealed unusually high Medicaid billings and six-figure salaries paid to Hathaway and several family members who controlled the nonprofit.
BBH filed for bankruptcy protection in 2012 and Hathaway was laid off. Its addiction center was sold to a health care company and continues to operate.