A drug treatment center operator exposed by The Palm Beach Post for his ties to prostitution was among six people arrested and charged Wednesday in a wide-ranging health-care fraud scheme that reveals the sordid underbelly of the drug treatment industry.
Kenneth “Kenny” Chatman, 46, and his wife, Laura, 44, were among six people named in a federal complaint alleging a variety of insurance fraud schemes, including taking employees’ urine and pretending it was from patients, federal officials said.
But Chatman went well beyond insurance fraud, authorities allege.
He pimped out female clients, keeping them under close watch in an old home in Mangonia Park, where the windows where screwed shut, the complaint written by FBI Special Agent John Gerrity said.
And he kept his patients’ phones and car keys in his office, so they couldn’t call family to help them escape, Gerrity wrote.
The arrests were the first by federal agents who have spent more than two years investigating Palm Beach County’s fraud-riddled drug treatment industry.
Chatman was considered one of South Florida’s most notorious operators, and news of his arrest was cheered when announced Wednesday at a Sober Home Task Force meeting.
Also arrested were two of the doctors who treated people at Chatman’s treatment centers: Dr. Joaquin Mendez, 52, of Miramar; and Dr. Donald Willems, 40, of Weston.
Two of Chatman’s other associates, Fransesia “Francine” Davis, 44, of Lake Worth; and Michael Bonds, 45, of Delray Beach, were arrested.
All six appeared before U.S. Magistrate Judge William Matthewman Wednesday in West Palm Beach, appearing to have had little notice: Bonds wore slippers and Kenny Chatman appeared in sandals.
Kenny Chatman and Davis were ordered held without bond. Laura Chatman and Willems will be held until they can post $100,000 bond. Bonds was released under the promise to pay $100,000 if he flees while Mendez was released but must post 10 percent of a $100,000 bond by 4 p.m. Thursday.
Assistant U.S. Attorney Marie Villafana asked that Kenny Chatman to be held in the Palm Beach County Jail until a detention hearing, scheduled for 10 a.m. today. He is a flight risk, she argued, and a danger to the community.
They face up to 10 years in prison for conspiracy to commit health care fraud. The Chatmans also face an additional five years for a charge of making false statements related to a health care matter.
Chatman’s arrest was called “a Christmas miracle” by Tina Pekar, whose son, Ryan, overdosed and died in one of Chatman’s Boynton Beach homes in 2014.
After Ryan died, she said Chatman shipped her son’s belongings to her, including his used syringes. Then he pretended to have never heard of her son.
“I’ve got goosebumps all over,” Pekar said. “I am just so relieved that he cannot hurt another soul.”
Women locked in,
phones taken away
Chatman is the poster child for South Florida’s broken and unregulated addiction treatment industry.
He has no background in addiction or treatment. He’s a felon, having served seven months in federal prison in 2009 for stealing people’s credit card numbers.
Yet he had no problems entering the lucrative drug treatment industry and getting rich. He started off running sober homes in 2012, which patients and employees said quickly turned into “flop houses” where people could do drugs, according to Post interviews and the FBI complaint. Bonds and Davis both knew people were using drugs in the homes, the complaint states.
When interviewed by The Post in 2015, however, Kenny Chatman denied any involvement, even though his name appears in 17 police reports relating to incidents at sober homes.
“If you know anything about this industry, people say a lot of stories and make up things along the way,” he said, shrugging off evidence of improprieties.
There was evidence, however, that Chatman might have been engaging in human trafficking.
At one of his homes, at 1130 48th St. in Mangonia Park, “females were not allowed out of the house, as the doors were locked and the windows were screwed down,” the FBI complaint states. They didn’t have phones and they were only allowed to talk to family with Davis or Chatman present.
One woman told FBI agents that Chatman allowed her to stay there, do drugs and skip drug testing as long as she engaged in prostitution and let Chatman bill her insurance.
Chatman moved the women out of the house last year, after a woman disappeared from the home and her parents made a plea for help on WPTV NewsChannel 5. Sheriff’s deputies were told she was being listed as an escort on Backpage.com.
Chatman later told the mother he found her wandering at a Pompano Beach park, deputies reported.
and false tests
In 2015, Chatman opened Reflections Treatment Center in a central Broward County strip mall. There, he could bill insurance companies for drug testing and treating his patients.
Multiple confidential patients and employees told the FBI that Chatman and his doctors participated in widespread fraud at Reflections, according to the FBI complaint.
They said they and other employees took their own urine samples and mouth swabs and submitted them on behalf of patients. Showing the fraud was simple: one patient was in court the day Reflections said he was being tested.
That same patient also said Chatman told him to file a dirty sample, so it could appear that the patient relapsed and Chatman could bill his insurance for a higher level of care.
One employee said they were ordered by Chatman to bill insurance even after the patient had left.
The FBI complaint contains many details about industry abuses first reported by The Post in August 2015, culminating in a Nov. 20 special section on the rapid rise in heroin-related deaths in Palm Beach County.
The doctors were complicit in the fraud, the complaint states, and both had run-ins with authorities.
Mendez has a history of liens from the Internal Revenue Service, including one worth $232,000 filed in September. Willems has been dealing with a claims he was working at a pill mill since 2012, when the pain clinic was raided. He was accused of writing big volumes of serious medication, such as Dilaudid and Percocet, for patients he hadn’t screened and wasn’t monitoring.
Only doctors at a treatment center can order drug tests and bill it to insurance as a “medical necessity.” But at Reflections, they weren’t treating the tests as “medical necessities,” according to the complaint.
The doctors didn’t review test results until weeks or months afterward, records showed. Mendez reviewed some tests so quickly — hundreds at a time — “that it would be impossible for a substantive review to have taken place,” the FBI complaint states.
In one case, records show Mendez ordered a drug test five months after the test had taken place, the complaint said.
The patient had left Reflections four months earlier.
Bags of cash
from testing labs
While drug treatment services generated “significant proceeds” for Chatman, the complaint states, drug testing patients “generated far more money.”
The tests were so lucrative that one lab employee told the FBI he bribed Chatman to send him tests. The employee said that yet another lab was paying Chatman $100,000 per month, and Chatman showed the employee a bag full of $100,000 in cash to prove it.
A fourth lab, the employee said, was paying Chatman $10,000 to $30,000 in cash every week for sending the lab his patients’ specimens.
Chatman “liked dealing in cash because it didn’t leave a paper trail” and kept the money in a safe at his home, the FBI complaint states.
In addition, Chatman paid “kickbacks and bribes” to get and keep patients, the FBI complaint alleges.
Both Kenny and Laura Chatman, Davis and Bonds gave patients cigarettes, hair and nail services and gift cards to keep going to Reflections, the complaint said. And they paid sober home operators kickbacks of $500 to $525 per week for each insured patient they sent him.
In total, bank records showed Reflections paid out more than $640,000 to sober home owners, the complaint states.
Until Wednesday’s arrest, Chatman was allowed to expand in the drug treatment industry.
As a felon, he wasn’t allowed to open a drug treatment center, so he put Reflections in his wife’s name. The Department of Children and Family Services approved it, despite the fact that Laura’s name was nowhere on the website and Chatman prominently called himself the “founder” of the treatment center.
He then opened Journey to Recovery in Lake Worth in October, again placing it in his wife’s name. DCF approved that, too.
In a statement, DCF called such allegations “shameful and sickening” and said “DCF will immediately notify the provider that their probationary license for substance abuse treatment is suspended.”
The complaint states the applications, done with the help of Dr. Barry Gregory, were fraudulent. Laura Chatman was a stay-at-home mom to their four children whose only involvement in Reflections was during DCF tours, informants told the FBI. Chatman was the real owner, the FBI declared.
In court Wednesday, Laura Chatman, wearing a pink-striped T-shirt with “Angel” on the front, told a judge between tears that she had been married to her husband for 18 years. Lawyers said she had no prior criminal history.
During Wednesday’s task force meeting, Beth Ann Middlebrook, an attorney for The Watershed treatment center, praised the arrest.
“We are gratified for the safety of our patients and all patients in the recovery community,” she said. “I can say that it is our understanding that drug use was permitted at his so-called sober homes and that there has been negative consequences on lives.”
One woman died and another nearly died of overdoses at a Broward County sober home linked to Chatman in October, The Post reported.
Middlebrook added that Chatman has stolen patients from The Watershed.
“Kenny Chatman has trespassed on our property, stolen our patients and endangered our patients,” Middlebrook said.
Emily Isaac, a recovering addict in Delray Beach, said some people attending 12-step programs had been praying for Chatman’s arrest.
She said it is well-known among recovering addicts that Chatman punishes patients withdrawing from opiates by withholding their medication. She said she knows personally of people who ended up relapsing on Chatman’s watch.
“He is everything people with a conscience shudder at in regards to this industry,” Isaac said.
Staff writers Olivia Hitchcock, Mike Stucka and Hannah Winston and researcher Melanie Mena contributed to this story.
Kenny Chatman couldn’t receive state certification to own a treatment center because of a felony conviction. So, Chatman listed his wife, Laura, and his associates as owners, even though he behaved as the owner, FBI Special Agent John Gerrity wrote in a criminal complaint released Wednesday. Gerrity noted that some locations were rented and Chatman changed locations often.
Journey to Recovery, a treatment center, 7451 S. Military Trail, Lake Worth; Laura Chatman, owner.
Reflections Treatment Center, 5100 Coconut Creek Parkway, Margate; Laura Chatman, owner.
Stay’n Alive sober home, 10102 Patience Lane, Royal Palm Beach; Laura Chatman, owner.
Total Recovery Sober Living, 3401 Westview Ave., West Palm Beach; Fransesia Davis, owner.
Redemption Sober House, at 243 NE 13th St., Delray Beach; Michael Bonds, owner.
1130 48th Street, Mangonia Park, sober home where a confidential informant told FBI agents female residents were not allowed out of the house, as the doors were locked and the windows were screwed down. No longer affiliated with Chatman.
Sober homes, with no ownership listed, at 1501 N. Federal Hwy., Lake Worth; 962 W. 43rd St., West Palm Beach; 315 SW 7th Ave., Boynton Beach; and 5611 Pinetree Road, Parkland.