A suburban Boynton Beach man who built a phony drug treatment empire despite having a felony record and just an 11th-grade education may soon face possible life sentences for overdose deaths that occurred at sober homes he operated throughout Palm Beach County, a federal prosecutor said Thursday.
A day after Kenneth “Kenny” Chatman, the subject of an investigaton by The Palm Beach Post, was arrested on charges of conspiracy to commit health-care fraud and making false statements, Assistant U.S. Attorney Marie Villafana told a federal magistrate that those charges are only the beginning.
“There were a series of overdose deaths and non-fatal overdoses at sober houses related to his facility,” she told U.S. Magistrate William Matthewman.
While it may take a while to build a case against Chatman for the overdose deaths, a federal grand jury next month will be asked to indict him on various charges, including human trafficking, prostitution, operating a house for illicit drug use and illegal weapon possession, she said.
Villafana used the looming indictment to persuade Matthewman to reject Chatman’s request for bond. While defense attorney Saam Zangeneh argued that Matthewman shouldn’t consider charges Chatman may face in the future, the magistrate disagreed.
“The conduct alleged is really reprehensible,” Matthewman said, ordering that Chatman be held without bond at the Palm Beach County Jail. Luring recovering addicts to Reflections Treatment Center, Journey to Recovery and other sober homes with the promise of help, Chatman instead abused them, Matthewman said, reciting evidence Villafana offered during the roughly three-hour hearing.
“There is a serious drug and heroin abuse problem in our community. It’s ruining the lives of many young people,” he said. “Under the guise of helping drug addicts get better, he used them to engage in fraud and other nefarious activities.”
While Zangeneh described the charges Chatman faces as routine “white collar crime,” Villafana countered that there was nothing routine about his activities.
Chatman billed insurance companies for non-existent treatment and for hundreds of fake urine tests by paying kickbacks to laboratories, she said. He plied patients will drugs. He physically abused them. He turned women into prostitutes, she said.
Chatman and his wife, Laura, 44, were among six people arrested Wednesday as part of a multi-agency crackdown on the county’s burgeoning sober home industry. Laura Chatman and some of the others were released on bond. Many of the abuses outlined in the criminal complaints were reported by The Palm Beach Post in a series of stories beginning in August 2015.
Zangeneh tried to use The Post coverage to prove Chatman was not a flight risk. Despite a December 2015 newspaper story that “portrayed him as a pimp” and said he was under investigation, Chatman stayed put, Zangeneh said. He also said that women who told The Post and police they were forced to work as sex slaves later recanted.
But Villafana countered that they did so only because they were threatened. “You’ve got to sign this or Kenny is going to kill you,” she said, quoting a woman who said she was ordered to sign a notarized statement denying her previous reports to police that Chatman forced her to work as a prostitute.
When police raided Chatman’s home on Wednesday, they found a safe that contained statements women had signed, denying their allegations, she said. Filling more than 140 boxes with evidence, police also found 34 cell phones that Chatman confiscated from patients and baggies of drugs.
“Mr. Chatman would give them drugs and got them high so he could continue to bill their insurance companies,” she said.
But, Zengeneh pointed out, agents didn’t find any weapons. Villafana claimed Chatman used guns to intimidate patients. Further, a 2009 felony conviction for skimming credit cards makes it illegal for him to possess a firearm.
Zengeneh described Chatman as an upstanding member of the community who has an 18-year marriage and four children, is a regular church-goer and is a leader of a group that helps teen mothers. He offered scholarships to patients in recovery, the lawyer said.
But Villafana said Chatman’s largess, if true, and his lofty lifestyle weren’t fueled by normal income-making pursuits. While he reported making $100,000 a year, the monthly mortgage on his $1 million house is $5,000, he has $250,000 in the bank and owns another home that is worth $400,000, she said.
Further, when agents searched his home and businesses, they uncovered an email from his wife to a real estate agency in the Bahamas, seeking information about buying a $700,000 home.
His real estate riches corroborate statements from those who told agents they regularly saw Chatman carrying bags of cash. “He likes to deal in cash because it doesn’t leave a trail,” the federal prosecutor said, quoting witnesses who told agents Chatman got bags containing $150,000 from labs on a monthly basis.
Further, she said, he has recently traveled to the Bahamas, Panama and Mexico. She said she suspects he has moved money off-shore.
While Zangeneh described those trips as family vacations, Villafana said Chatman’s family life is equally suspect. Both his wife and his 19-year-old daughter worked at the so-called drug rehabilitation centers, she said.
“To be honest, I think he showed his lack of devotion to them by getting them involved in this criminal operation because he wanted to get the money,” she said.