Management shake-up at Baltimore Behavioral Health leads to bankruptcy, recriminations.
Published: January 9, 2013
With revenues down 75 percent and new management scrambling to respond to claims of debt delinquency, Baltimore Behavioral Health, the sometimes-controversial west side drug and mental-health treatment center, filed a bankruptcy petition on Dec. 28.
“We did this because it was the only way I could see to kind of weed though all this,” says Terry Brown, Baltimore Behavioral’s CEO since May. “We’re also cooperating with state and federal agencies, and also with the community. We’ll have transparency. The last thing we need is a bunch of smoke and mirrors.”
BBH, as it’s known, provides drug treatment and housing to hundreds of recovering addicts, most of whom have been diagnosed with co-occurring mental illnesses. Neighbors around Hollins Market and Pigtown in the past have criticized the nonprofit for the condition of its contract recovery houses and the behavior of its patients, who often must walk from their group homes to therapy sessions and sometimes to meals served in different buildings around the neighborhood. Trash, noise, and relapse have reduced the quality of life (and property values) of other residents, they say.
Under scrutiny by state regulators and the news media, including City Paper (“We Are Not in the Housing Business,” Feature, Sept. 29, 2010), BBH has been losing patients for years. Revenue fell from more than $20 million in 2008 to just over $5 million in 2011, according to its tax filings, and last year, the nonprofit sold its large buildings to the Abel Foundation to pay bills. There was even less income in 2012, Brown says.
State regulators forced a shake-up of BBH’s insular board of directors in 2010, though the changes appear to be cosmetic: Founders Morris and Sandra Hill left in 2010 and established a consulting contract with BBH through Sandy Hill Associates, a North Carolina company they had established in 1989. As BBH employees the couple was paid more than $500,000 in 2009, according to tax records. In 2010, through Sandy Hill Associates, the Hills were paid $430,000 and in 2011 received about $630,000.
In a civil suit filed in August, the Hills claim they are owed more than $840,000 in consulting fees and for a 2010 loan they made to BBH. “Sandy Hill Associates rendered valuable consulting services between January 3, 2011 and May 31, 2012, worth not less than $415,102, for which it was uncompensated,” their complaint states. Calls to the Hills’ Fell Street residence and their lawyer were not returned.
“I’m not sure if those numbers were accurate for those salaries,” Brown says, noting that BBH’s accounts were never audited before he took over. “Hard to believe that we paid you that kind of money and you’re still owed money.”
The balance the Hills claim is due them is from a promissory note dated June 30, 2010 in which the couple lent BBH $425,000, at no interest, to be repaid by that year’s end. The signatures on the exhibit in the case file—by the Hills and former BBH CEO William K. Hathaway (Sandra Hill’s son)—are dated May 10, 2012. The note itself is copyrighted by rocketlawyer.com, a website that offers “free legal documents.”
Brown says he doesn’t believe that loan is valid. “The date of that signature was in 2012,” he says. “I had to point that out to the board. I was like, ‘Come on, man.’”
Brown says BBH’s financial documents were in disarray when he took over, which didn’t happen until June of 2012.
Longtime CEO Hathaway stepped aside last spring. “In end of April the board made a decision to make me CEO,” says Brown. “But the family was here until the end of May. . . so I didn’t have full control because they were still here.”
BBH’s costs for things like housing had again ballooned; payments to a pair of Delaware-based companies controlled by Stephen R. Andrews increased from $300,000 in 2010 to about $533,000 in 2011, for instance. Brown says he can’t explain that but that he terminated both contracts and a lot of others. One of the companies, DFMSI, is listed in the bankruptcy filing as a creditor, its $20,000 claim “disputed.”
“Since I started, I haven’t been able to find formal contracts with these people,” Brown says. “Any one I couldn’t find or did not agree with or renegotiate, I’m not paying them. . . . So far, a lot of them have not been able to support their claims. When the family left, I think a lot of [the vendors] thought they could come to me and just keep going.”
Transparency, says Brown, is coming to BBH. “We have a community member on our board now,” he says.
“I think basically Terry Brown is trying to reorganize everything and get it back on stable ground, given how the family left the business—if you can call it a business,” says Jane Buccheri, president of the Hollins Roundhouse Neighborhood Association and the board member to which Brown refers. She confirms that she meets with Brown and his underlings monthly, but “it’s not a top-level board,” she says—she’s not on the board of directors, nor has she attended all the board meetings. “There has been a disconnect of me getting the meeting notices.” She says she’s going to give Brown the benefit of the doubt.
Brown says he wants it known that BBH is still a going concern. “I just want the patients to know we are open,” says Brown. “We’re going to be open during this [bankruptcy] process. We still give treatment on demand.”
> Email Edward Ericson Jr.