Case Document 1 Filed 03/03/15 Page us. Drifting] [59%th 1r I MJC2013R00013 DiSTFii??i 5" A) 3- IN THE UNITED COURT 5 FOR BIBEFRAIEEW) CL '3 UNITED STATES OF AMERICA 93? 3A1 ill li?iURE quriminal No. 05?? Q0) v. at . (Failure to Account for and Pay Over WILLIAM KRISTEN HATHAWAY, Taxes, 26 U.S.C. 7202; Theft from . an Employee Bene?t Plan, 1.8 U.S.C. Defendant. 664) INFORMATION COUNT (Failure to Account for and I?ayOver Taxes) The United States Attorney for the District of Maryland charges that: . Introduction At all times relevant to this Information: 1. Baltimore Behavioral Health, Inc. was a tax exempt organization under 26 U.S.C. 501(c)(3) with its principal place of business located at 200 South Arlington Avenue, Baltimore, Maryland. BBH was engaged in the business of providing treatment to people with drug addictions and mental disorders. To carry out its business, BBH hired dozens of employees, including doctors, nurses, social workers, counselors, administrative staff and maintenance workers. 2. WILLIAM KRISTBN HATHAWAY the defendant, was the Chief Executive Of?cer of BBH. As the CEO for HATHAWAY exercised signi?cant control over many aspects of business affairs, including managing the company?s ?nancial accounts; supervising the human resources department; and overseeing the employee payroll process, which included calculating the withholding of taxes, contributing to Case Document 1 Filed 03/03/15- Page 2 of 5 and maintaining employee bene?t plans, and issuing payroll checks. HATHAWAY was an authorized signatory on the company?s bank accounts. 3. The Internal Revenue Service is an agency of the United States Department of Treasury responsible for administering and enforcing the tax laws of the United States, and collecting the taxes that are due and owing to the Treasury of the United States by its citizens and businesses. 4. Pursuant to federal law, including the Federal Insurance Contributions Act employers are required to deduct and collect certain taxes from their employees? wages, including income tax, social security tax and health insurance tax. (Medicare), hereinafter collectively referred to as ?payroll taxes,? and to hold those payroll taxes in trust for the United States. The payroll taxes that are withheld from employees? wages are for the exclusive use of the federal government, and thelemployer is required to forward them to the IRS at prescribed intervals. 5. As the CEO for BBH, HATHAWAY had the duty and responsibility to collect, truthfully account for, and pay over to the IRS the payroll taxes of the company?s employees. In furtherance of that duty, HATHAWAY was required to forward those payroll taxes to the IRS every two weeks and to ?le with the IRS each calendar quarter a Form 941 Employer?s Federal Quarterly Tax Return, summarizing the amount of payroll taxes withheld. 6. Beginning in or about March 2009, and-continuing thereafter until December 2011, HATHAWAY caused BBH to regularly deduct payroll taxes from all employees? wages totaling $2,495,779 without forwarding the withheld money to the IRS, choosing instead to spend it on company expenses, including and other BBH of?cers? salaries. Case Document 1 Filed 03/03/15 Page 3 of 5 The Charge 7. On or about June 30, 2009, in the District of Maryland, WILLIAM KRISTEN HATHAWAY, the defendant, did willfully fail to truthfully account for and pay over to the Internal Revenue Service on behalf of BBH employees approximately $344,l12.26 in withheld payroll taxes due and owing to the United States of America for the second quarter of 2009. 26 U.S.C. 7202 Case Document 1 Filed 03/03/15 Page 4 of 5 COUNT TWO (Theft from Employee Bene?t Plan) 1. Introductory paragraphs 1 through 6 of Count One are realleged and incorporated herein by reference. . 2. On or about January 2005, BBH established for its eligible employees a 403(b) retirement plan (the ?Plan?), which was an employee pension benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001 et seq The Plan permitted employees, through payroll deductions, to contribute a portion of their wages to the Plan as elective salary deferrals (?employee contributions?) on a pre-tax basis to fund their retirement bene?ts. entered into an agreement with Lincoln Financial Group to serve as the custodian of assets for the Plan. 3. HATHAWAY served as a ?duciary for the Plan and assumed the responsibility to withhold employee contributions from paychecks and forward those contributions to Lincoln Financial Group, along with any matching employer contributions from BBH. 4. Between September 2009 and April 2010, HATHAWAY caused employee withholdings of $53,530.07 to be withheld as employee contributions from BBH employee paychecks, and such funds were to be transferred to the Plan account at Lincoln Financial Group. However, HATHAWAY knowingly and willfully failed to transfer those funds, choosing instead to divert those funds to pay company expenses without the employees? knowledge or consent. Case Document 1 Filed 03/03/15 Page 5 of 5 The Charge 5. Beginning in or about September 2009 and continuing until in or about April 2010, in the District of Maryland, WILLIAM KRISTEN HATHAWAY, the defendant, did knowingly embezzle, steal, and unlawfully and willfully abstract and convertBBH the approximate sum of $53,530.07 in funds of an employee pension bene?t plan subject to Title I of ERISA. 18 U.S.C. 664 '3 /3 Bi Date I Rod J. RosWstein United States Attorney District of Maryland