Notorious drug treatment center owner Kenneth “Kenny” Chatman pleaded guilty Wednesday to conspiracies to commit money laundering, health care fraud and sex trafficking, charges that could land him in prison for life.
Handcuffed and shackled, Chatman listened as a federal prosecutor told how he turned patients into prostitutes: He gave them drugs to induce them. He pimped them on the websites craigslist.org and Backpage.com. And to prevent them from leaving, he threatened to kick them out of his sober homes, leaving them homeless.
“Did you do those things?” U.S. District Judge Donald Middlebrooks asked him.
“Yes,” Chatman said.
For Chatman, 46, the plea ended his rise in just three years from Brooklyn felon with a GED to the multimillionaire owner of two drug treatment centers and a million-dollar home outside of Boynton Beach. Spurred by his notoriety in the local sober home industry, The Palm Beach Post first exposed his behavior in 2015 and linked it to the overdose death of Ryan Pekar, a 27-year-old who came to Florida from Ohio to overcome addiction.
Rising and falling with Chatman was his wife, Laura, 44, who pleaded guilty Wednesday to two felonies for pretending on state paperwork that she was the owner of the treatment centers, Reflections in Margate and Journey to Recovery in Lake Worth. She could spend up to 10 years in prison.
The two are scheduled for sentencing on May 17 in West Palm Beach.
Chatman admitted Wednesday to a host of other allegations.
He admitted he controlled his patients by taking their car keys, phones, medication and food stamps. He conceded that he allowed his patients to do drugs in his sober homes, as long as they let him bill their insurance for treatment they never received.
As many as 90 percent of his patients were doing drugs, according to his clinical treatment director, Barry Gregory. Gregory, one of six other people associated with Chatman to face charges, pleaded guilty to two felonies and faces 15 years in prison and $5 million in restitution.
Chatman also paid kickbacks and bribes to other sober home operators for sending patients to his treatment centers. They met with him weekly, collecting payments that were disguised as “case management fees” and “marketing fees.”
He also accepted bribes from labs for sending them work. Testing the urine of recovering addicts became big business because insurance companies could be billed excessive amounts for multiple tests.
The treatment he was providing was fraudulent, too: He admitted to forging patients’ signatures on treatment sign-in sheets, to ordering testing on patients before they’d seen a doctor, and to ordering allergy tests for patients regardless of whether they had allergies.
At least two patients identified by The Post died in sober homes linked to him.
After Ryan Pekar overdosed and died in one of Chatman’s homes near Boynton Beach, his mother, Tina, vowed to Chatman: “I am not going to stop until I find out what you’re doing and shut you down.”
But it took a federal crackdown, led by the FBI after investigating for at least a year, to bring the charges that led to the plea deal.
Chatman’s rise coincided with the rise in heroin abuse nationally and a corresponding explosion in the for-profit drug treatment industry, which has grown into one of Palm Beach County’s largest industries.
Chatman had no experience with drug addiction or treatment when he started operating sober homes here as early as 2012. He was just a felon, having served seven months in a federal prison in 2009 for skimming credit cards.
But he found success quickly. In 2013, he opened Reflections Treatment Center in Margate. Three years later, he opened Journey to Recovery in Lake Worth.
The businesses were licenses to print money: he bought a million-dollar home in a gated community west of Boynton Beach, and insurance companies paid his treatment centers and labs up to $25 million, according to the plea.
When confronted by The Post in December 2015, he denied owning sober homes and called the allegations against him gossip. “If you know anything about this industry, people say a lot of stories and make up things along the way,” he said.
But along the way, he was unwittingly picking up co-defendants. In addition to his wife and medical director, five other people tied to his schemes have been charged. Four have pleaded guilty and are awaiting sentencing. Two doctors are the only holdouts.
As part of his plea, Chatman would become a registered sex offender for the rest of his life.
When Middlebrooks asked if he understood that, Chatman choked out a “Yes.”
Until he’s sentenced, Chatman will be kept in a Miami jail. His lawyer, Saam Zangeneh, said Chatman wasn’t safe in the Palm Beach County: A seizure at the jail caused him to fall out of a top bunk bed, and when he was moved to a different part of the facility, he was confronted by inmates who had seen media coverage of his case.
What The Post reported
Citing police reports, The Post exposed Kenneth “Kenny” Chatman as a sober home owner who kept women “in a state of impairment in order to ‘pimp’ them out.” The December 2015 story also detailed the drug overdose death of a 27-year-old man in a Chatman sober home. Read the story at MyPalmBeachPost.com