Amanda Vlakos had been living for years in rat-infested abandoned buildings in Baltimore, fighting an addiction to opioids, when she learned of a possible escape: a drug-treatment program that offered patients free housing.

Sober when they arrived, Vlakos and her boyfriend were placed in a barely furnished two-bedroom apartment with a succession of strangers who often used drugs. She relapsed after a month. Roommates kicked in doors, flooded the bathroom and sold drugs out of their unit. Even some of the house managers got high, residents said.

On Sept. 5, after nearly two years in the program and with nowhere else to go, she sent a desperate text message to a former counselor. “I feel so helpless and alone,” wrote Vlakos, 34. Two weeks later, she died of an overdose.

PHA Healthcare, the company whose program Vlakos entered, collects millions of dollars a year to treat hundreds of people struggling with addiction. But many of its patients have not gotten better. Instead, placed by the company in what are effectively government-funded drug houses, they have relapsed, fallen deeper into addiction and sometimes died, an investigation by The New York Times and The Baltimore Banner has found.

Baltimore’s drug epidemic is the deadliest ever seen in a major American city. A Times/Banner examination in May showed that top city officials reacted with little urgency as the death rate mounted, letting key public health efforts stall.

But state health authorities have also made missteps. Trying to entice more providers into the drug treatment field, they poured money into recovery programs, barely vetted a flood of new operators and halted most in-person inspections. Providers who used unscrupulous practices joined the treatment system, diverting patients from longstanding companies.

The operators of PHA Healthcare had no significant experience providing drug treatment. But they built a multimillion-dollar business that appears to rely on a practice health officials described as both illegal and increasingly common in Baltimore: trading housing for treatment money.

The company rents apartment buildings, then offers free rooms to people — many of them homeless — if they attend its group counseling sessions. By taking no government money for housing, the business avoids the state’s strict rules for regulated recovery facilities. But Medicaid pays more than $3,000 per patient for counseling each month. That has amounted to $15 million since PHA Healthcare opened in 2020, including $8.5 million last fiscal year alone.

Its counseling sessions, however, are offered only online and often involve watching irrelevant videos and answering repetitive questions for hours, some patients said. In recent months, they said, many sessions have been led by unlicensed counselors who logged in from Nigeria. Participants sometimes connect while visibly high.

Many of the apartment complexes are poorly maintained and ridden with drugs and crime. Residents are often overseen by untrained house managers, who have regularly ignored positive drug tests and overdoses. One even sold drugs to the patients, residents said.

PHA Healthcare’s founder, Stephen Thomas, said not all the people it housed were also in the company’s treatment. But 16 current or former patients said they understood the program to entail a clear exchange when they enrolled: To get a free place to live, they needed to attend the counseling.

The Times/Banner investigation — drawing on interviews with dozens of current or former clients, employees and state officials, as well as reviews of public records — showed that checking in to the company’s care did not protect some of its patients from dire consequences.

Reporters traced the deaths of at least 13 people to PHA Healthcare since 2022 — more than some other treatment providers said was typical. The dead include Vlakos; a 47-year-old house manager; a 45-year-old grandfather of six; and a 43-year-old former federal procurement contractor who had struggled with alcoholism before starting to use opioids.

The contractor, Fernando Rivera-Estrada, called his mother in January 2023 after less than a month in the program. “If I don’t get out of Baltimore,” he said, “I’m going to die.” He fatally overdosed on fentanyl the next day.

In one especially grim case, a 32-year-old mother, Ashley Shaw, and her 13-month-old son, August, were found next to each other in a PHA Healthcare-run apartment. The woman, a patient in the treatment program, had died of cardiovascular disease worsened by chronic drug use. Her baby starved to death.

They were discovered by a maintenance man in February only after neighbors urged him to look in on the apartment. No one from the program had seen the family for two weeks, according to a medical examiner’s report.

More than a year earlier, state regulators learned that PHA Healthcare had been operating with an expired license for almost two years and told the company to stop treating patients. But the state then allowed it to obtain a new license, using a different address, and kept paying it, a Health Department spokesman said. Since then, the company has had its most profitable, and deadliest, years.

Told some of these details in an interview, Maryland’s health secretary, Dr. Laura Herrera Scott, said conditions at PHA Healthcare sounded “just horrifying.”

“That’s not the care that we want to provide for anyone,” she said.

The state does not disclose information about serious incidents — including overdoses and deaths — at drug treatment programs, and Dr. Herrera Scott declined to say whether the Maryland Health Department had ever investigated the company. The state halted new license applications this year and stepped up inspections for the types of outpatient treatment programs that are most often associated with unregulated housing.

After repeated requests for comment on the findings of the article, a spokeswoman for Thomas responded on Thursday that many of the statements about the company were “completely false” or “taken out of context.” But she said she would need a couple of weeks to answer questions about the company.

In an October interview, Thomas said that stable housing was important to recovery, and that people struggling with addiction deserved to be encouraged — not forced — to get sober. While some clients may have exploited the autonomy the program gives them, many more have used it to lead productive lives, he asserted.

He said that group counseling sessions were led by interns from other countries who had extensive experience in addiction treatment and advanced degrees, and were working to get licensed in Maryland.

“I believe we’re the best of the best,” he said. “Do we have shortcomings? Can someone come in with a fine-toothed comb and try to find something that isn’t perfect? I’m sure they can. I stand by what we do here every day.”

Troubling Conditions

Faith Schauber and her boyfriend enrolled at PHA Healthcare in fall 2023 and were placed in the same complex where Vlakos would later die. Multiple times a day, Schauber walked down the block to buy drugs, she said. She and her boyfriend sometimes got high during group counseling.

“If our cameras were on, we would, like, step in the hallway, hit our crack pipes or shoot up and then go back to group,” Schauber, 37, recalled.

Schauber, a former Sunday school teacher from Maryland’s rural Eastern Shore, said she had been getting out of a bad relationship in 2015 when she first took a pain pill. That marked the beginning of her addiction to opioids and cocaine. She moved to Baltimore six years ago for treatment but has struggled with frequent relapses.

Schauber and her boyfriend arrived at PHA Healthcare while taking Suboxone, a medication to treat their opioid addiction. When they ran out, their house manager, instead of helping them refill their prescriptions, told her to buy the medication off the street, she said. Unable to afford the black-market price, the couple began using fentanyl offered by roommates.

Over one 10-day period, Schauber said, she overdosed six times. Her boyfriend and other patients administered Narcan and called 911. She told the house manager about the overdoses, but no one gave her extra help, she said. She later left the program.

All 16 patients of PHA Healthcare interviewed by reporters described using drugs in the treatment program or being placed in housing with people who did.

Three patients said they liked PHA Healthcare and were grateful for a place to live that did not have the same restrictions as other treatment programs, which often enforce strict schedules and require patients to temporarily cut off contact with their family and partners. They attributed any problems to residents they said were only interested in getting high. Another patient, while critical of the business, recounted generous gestures by its leaders, such as helping some patients with moving costs and organizing a free trip to the National Zoo in Washington, D.C., for families with children.

But all the patients pointed to troubling conditions in the buildings. Police reports, 311 complaints and patients’ text messages detailed thefts, assaults, pests, mildew, power outages, leaks and plumbing problems that forced people to urinate in buckets.

Thomas said that any housing complaints were quickly addressed and that he sometimes paid for maintenance and pest control out of his own pocket, even though his company did not own the properties.

The residences — at least 15 in recent years — were mostly scattered across West Baltimore and ranged from a five-building complex to single-family rowhouses. In a text message last year to a former employee, Thomas said PHA Healthcare housed 300 adults and more than 50 children at a cost of over $200,000 a month. (It also serves some patients elsewhere in the state, Thomas said.)

Though the company bills Medicaid for its group sessions, it was not clear that all the people who led them were qualified, patients said. Several of their LinkedIn profiles show they have no prior experience in addiction treatment, and their names do not appear on Maryland’s list of approved counselors or trainees. Some live in other countries, which is unusual, treatment experts said. One seems to have worked as a human resources consultant in Nigeria. Another, also in Nigeria, describes himself as a “public relations enthusiast.” Some patients said it was hard to relate to counselors who lived thousands of miles away.

Relapses, overdoses and even deaths happen on occasion at treatment programs; patients with long-term drug addictions often have other health issues, and it is impossible to know whether any person would have survived outside the program. Even so, the number of deaths at PHA Healthcare alarmed representatives of some established drug treatment providers — including large residential programs — who said they had no fatalities in many years, and rarely if ever more than two or three. Bernard Gyebi-Foster, who leads Tuerk House, one of Baltimore’s most prominent programs, said he recalled no more than five patient deaths in 13 years.

More rigorous programs routinely take precautions that PHA Healthcare did inconsistently. Clients must undergo regular drug tests. Houses are stocked with the overdose-reversal drug Narcan. People caught bringing in narcotics are offered additional treatment or kicked out. Patients can see their counselors in person and are connected with both a mental health professional and a physician who can prescribe medications that curb drug cravings. Some programs check on patients multiple times a day, and even throughout the night.

At PHA Healthcare, residents said, it is possible to go for weeks without being seen.

Shaw, the 32-year-old mother who died, grew up in Baltimore’s Park Heights neighborhood, graduated Edmondson-Westside High School and worked in security, said Dominic Shaw, her brother. In recent years she struggled to find stable housing, he said.

Shaw was outgoing and enjoyed chatting on the front stoop of her apartment building, her neighbors recalled. But by January, she had been struggling for months, said Star Halsey, who lived in the unit next door and sometimes watched Shaw’s baby, August. Shaw stopped cleaning, drank heavily and started covering her windows with cardboard to block out sunlight.

PHA Healthcare ran only three units in the small building where Shaw had been placed, and there was no house manager, Halsey said. When Shaw stopped coming out of her apartment one day, no one visited her until concerned residents reported a smell wafting through the building.

The maintenance man found mother and child lying on a bed in a room cluttered with cardboard boxes, piles of clothes and a crib. The 13-month-old was wearing a green onesie, a pacifier dangling from it.

According to a medical examiner’s report, Shaw had tested positive for cocaine two weeks earlier. The report said that was the last time anyone from the company saw her.

Thomas also came to the apartment the morning they were found. He called it one of the worst days of his life. He said it had been days, not weeks, since Shaw and August had been seen. In the aftermath, he said, he moved families at all of his houses to one complex where a house manager checked on them daily.

But he did not report the two deaths to health authorities. Because the program offers outpatient services, he said, it is only required to report “treatment-related deaths,” or fatalities that occur while a client is getting counseling. In other words, for the program to inform the state, someone would have to die on a video call.

‘Spinning Out of Control’

Long before she and her boyfriend entered PHA Healthcare, Vlakos grew up in a town south of Baltimore, near the airport. As a girl she rode horses, cared for stray animals and babysat children whose parents came to her church’s 12-step meetings. But she was raped by an acquaintance at age 12, began using heroin in her late teens to dull the trauma and suicidal thoughts, and eventually moved to Baltimore for treatment, then drugs, said her mother, Angela Vlakos.

After enrolling in PHA Healthcare, Vlakos filled coloring books with vibrant markers and hung the pages on her walls. She bought zinnia seeds and tried to cultivate an indoor garden before the flowers, barely sprouted, were stolen by other residents.

One bright spot was Vlakos’s counselor, Emily Dommartin, who had a master’s degree in social work and was paid $1,200 a week to lead group and one-on-one sessions online. Dommartin lived in New York, but as many as 60 clients flocked to her Zoom meetings. She held “Goal Wednesdays,” when clients shared their progress toward milestones like getting a driver’s license or seeing a child again.

In private, some relayed disturbing anecdotes. One texted that she was dealing with an infestation and “the roaches are biting my babies.” Another said that a program staff member had tried to sexually assault her, Dommartin said.

Dommartin grew so concerned that last January, she drove to Baltimore to meet her patients in person. But her bosses brought them to meet her at the program’s headquarters. She believed they did not want her to see how her patients lived, she said.

A month later, she got a call from Thomas. He’d heard she had concerns about the program and asked what could be improved, she recalled. She provided a list: The ramshackle housing in drug-ridden communities. The lack of detox services. Irregular drug testing. She said she was fired two days later without explanation.

Dommartin kept in touch with Vlakos, who seemed to be doing well. The patient was hired at the day care of a local gym and interviewed for an affordable-housing voucher, after years on a wait-list, that could pay for an apartment.

But the problems at PHA Healthcare continued to pull Vlakos down. She grew frustrated during sessions led by her new counselor, who played videos recapping the history of the fentanyl crisis or showing herself walking through the city in Nigeria where she lived.

Then Vlakos’ boyfriend, Dillon Broadwater, was arrested after fighting with their roommates, according to a police report.

In one of her final texts to Dommartin, sent this September, Vlakos wrote, “I am spinning out of control.” She said that her thoughts were racing and that she needed counseling. “I prayed so hard for God to help me and I woke up to a text from you,” she said.

Two weeks later, a roommate found her dead in her bedroom. The plywood-boarded building they were staying in was in such disarray that a police officer said it looked abandoned.

Two months later, Broadwater picked up a growing stack of envelopes delivered to a local nonprofit they used as a mailing address. He opened one letter and discovered that it held Vlakos’ housing choice voucher, her long-awaited ticket out of PHA Healthcare.

An Opportunity in Baltimore

Raised in New York by his mother and her aunt, Thomas spent his early years at elite schools. He graduated in the top 10% of his high school class, then studied political science at Tufts University, according to records his lawyer would later file in court. He enrolled at Georgetown Law, dropped out, then worked as a financial adviser at Salomon Smith Barney, Merrill Lynch and Morgan Stanley.

In 2003, in his early 30s, he started a private equity firm in Washington, D.C., that specialized in corporate takeovers and converting companies to be employee-owned.

A couple of years later, he helped two companies in Maine restructure under that model. The companies took on debt to buy out their owners on the employees’ behalf; then Thomas hired himself to operate them as the employees’ trustee.

But he used the companies for personal gain, the U.S. Labor Department and federal prosecutors would allege. He took out a loan at one company for a $230,000 down payment on a house, prosecutors said. Over two years at the other company — Gagne Precast Concrete Products, a family-owned business just outside Bangor, Maine — he withdrew cash, seized checks and transferred money to another business he controlled. He diverted at least $1.1 million, the Labor Department said.

The company began missing loan payments, and in 2008, after about 25 years in business, it was seized by a bank. The employees all lost their jobs, recalled Dan Sinclair, who handled Gagne Precast’s inventory. “He destroyed families,” he said.

Thomas was sued in 2011 by the Labor Department for allegedly mismanaging the employee ownership funds he had created; he settled the case, paid back at least $300,000 and accepted a 10-year ban on doing similar work. The next year, he was indicted on a charge of tax evasion. He pleaded guilty and was sentenced to 18 months in prison.

During his incarceration, he lost his marriage and his business. But he also found new opportunities, Thomas said in an interview. Men who were tired of stories of gun violence and drug dealing wanted to hear Thomas talk about building companies. In turn, “they said that Baltimore would be a place I could come, and opportunity would be there for me,” Thomas recalled.

He was released in 2014, broke, and started a business in Baltimore.

He and his mother began to buy and renovate abandoned buildings in Park Heights, an impoverished neighborhood in Northwest Baltimore, and called the venture Park Height’s Angel Incorporated. In 2018, at least one of its homes had been certified by the Maryland Health Department as a drug addiction recovery residence, records show. That required well-maintained buildings, detailed staffing plans, inspections and regular drug tests for clients.

The company struggled. A year later, it filed for bankruptcy, claiming four properties and more than a million dollars in debt.

In 2020, Thomas started PHA Healthcare. He enlisted his mother, Ruby Thomas, now 77, and others with little or no experience in treatment to work with him.

Tayonna Jennings, 38, a woman Thomas had lived with, became real estate operations director, identifying landlords to rent from and overseeing house managers, according to former employees.

Danee Baxter, 32, a former event coordinator, became clinical director, her LinkedIn profile shows. But she was licensed as a trainee, not a full counselor, according to state records.

Humphrey Holmes, 39, was briefly in charge of hiring counselors. Thomas had met him in a federal halfway house after leaving prison; Holmes had pleaded guilty in 2012 to bank fraud after using fraudulent Social Security numbers to apply for loans and cash checks.

Gregory Heard, 58, a principal at a small New Jersey-based hedge fund, consulted on the company’s business operations.

Thomas, Jennings and Baxter declined to comment or did not answer messages.

In an interview, Heard said the program’s fast growth was an “incredible testimony to the depth and level of care we provide.” When patients enroll, the program sends an Uber for them, he said, and a house manager greets them on the doorstep. “We are going to deliver the Ritz-Carlton experience.”

Asked about drug use and violence at the properties, Heard said anyone caught doing drugs or instigating violence would be discharged.

Holmes said he had been managing a chain of prepaid cellphone stores in 2022 when Thomas asked him to work as a contractor. Holmes had no experience in treatment but had family members who were addicted to drugs, and he wanted to help others. As time went on, he said, he saw patients were not getting the treatment they needed, and his bosses would not answer basic questions about the business’s operations. He quit this year after many counselors were fired without explanation, he said.

Regulations ‘Just Got Stuck’

There were warning signs about PHA Healthcare even before it opened.

In its license application in 2020, the program said it would treat 16 people. But its policy manual appeared to be written for a much larger organization with different services, noted its accreditation agency, the Joint Commission, which is best known for reviewing most U.S. hospitals.

Even so, 14 days later, the state approved the company’s application.

At the time, the Health Department was straining to provide oversight of treatment programs.

In 2017, with a shortage of providers and rising overdose rates, Maryland began issuing licenses to virtually any company that had obtained preliminary accreditation from the Joint Commission or a similar agency — an easing of rules few other states had undertaken. It began to rely on the agencies for inspections as well.

Then the administration of Gov. Larry Hogan — a Republican who emphasized government efficiency and took office in 2015 — stopped filling many open state positions, leaving the department with high vacancy rates.

In January 2020, a new contractor, Optum, rolled out broken technology that left the state unable to process Medicaid claims for addiction services. Maryland was forced to pay treatment providers based on educated guesses for nearly a year. Optum could not monitor or properly audit spending, and the Health Department stopped referring fraud cases to prosecutors.

Once COVID-19 arrived, auditors stopped visiting programs in person.

Signs mounted that some providers had been taking advantage.

In interviews, patients in other programs described being warehoused in bedrooms tightly packed with bunk beds, or forced to hand over food stamps to cover rent.

Some established operators said they began losing clients to upstart companies that left fliers at their doors and offered gift cards for enrolling. Patients came back with stories of abuse and exploitation, they said.

Established treatment companies also began hearing more examples of competitors providing free housing with outpatient counseling.

Federal kickback laws make it illegal for Medicaid providers to offer free housing to patients in exchange for enrolling in their government-funded treatment, former prosecutors and state health officials said. If a company does offer both housing and counseling, it must allow its tenants to get counseling elsewhere.

Housing some people who do not attend treatment does not on its own remove the problem, according to Eva Gunasekera, a former Justice Department lawyer who led investigations into health care fraud. Prosecutors may look at the percentage of residents in housing who are getting treatment from a company, and whether they were ever required to attend, she said.

Thomas said in an interview that PHA Healthcare had housed “many people” not in the company’s treatment, and continued to house some after they stopped. It gave clients housing through a “separate but related entity” that he helped manage, he added.

State officials have heard rumors of similar arrangements since at least 2021, said Dr. Aliya Jones, who oversaw addiction treatment for Maryland from 2020 to 2022. In some cases, officials found out only after programs closed abruptly and left people homeless. But it was “a problem amongst a whole lot of other problems,” she said.

Jones said her staff decided to discourage providers from running unregulated homes but could not recall whether other formal actions were taken. They tried to update the state’s regulations, but “it just got stuck” on the desk of the health secretary then, Dennis Schrader, who was focused on the pandemic, she said.

There are two well-reimbursed types of outpatient treatment in which providers say some of their competitors offer free housing, including the main form PHA Healthcare provides. State spending on those services grew from $41 million annually in 2021 to nearly $144 million in 2024, or 43% of all state money for addiction treatment in Baltimore. Last fiscal year, PHA Healthcare alone accounted for 8% of all spending in the city on its main type of treatment.

In 2023, Herrera Scott was appointed by Gov. Wes Moore, a Democrat. She said she soon heard complaints about exploitative providers. She blamed Hogan’s administration for stripping the Health Department of its “teeth.”

A spokesman for Hogan, however, said the governor’s office had not been told of problems with updating regulations or of issues surrounding PHA Healthcare.

“The Hogan administration prioritized expanding access to mental and behavioral health services and building a comprehensive statewide support system” during the pandemic, said Mike Ricci, the spokesman.

In July, the Health Department temporarily stopped issuing licenses for those categories of outpatient treatment. It expects to impose regulations next year to strengthen oversight and potentially require providers to obtain state approval for any recovery homes they operate.

The state took action after increasingly severe warnings about programs using illegal inducements to attract patients.

In September 2023, a Medicaid notice warned providers to stop “offering housing as an incentive” to draw patients into treatment.

“That is absolutely not legal,” Spencer Gear, who oversees licensing at the state Behavioral Health Administration, told treatment providers during a meeting shortly after Maryland issued a second warning, in February. “We are seeing a very big problem” in some types of outpatient counseling, he added.

This October, Medicaid warned providers for a third time about illegal housing, now threatening to refer them for prosecution.

‘A Narrative of Truth’

A few people tried complaining to local health officials about PHA Healthcare, to little effect.

After the death of Shaw and her baby this year, a former employee filed an online complaint about the company with Behavioral Health System Baltimore, a nonprofit that oversees treatment providers on behalf of the city, but got no response, the former employee said. The organization said it had no record of the complaint.

Kellijo Crosson, 42, who was enrolled at PHA Healthcare from April 2023 to June 2024, said she called the city’s Health Department repeatedly about the program’s family housing. She was told she had reached the wrong agency, and her voicemail messages were not returned. A lawyer she reached through the department’s website suggested she hire an advocate, she said.

Nonetheless, this year, Thomas received a $150,000 grant through the city for creating housing for homeless people and addiction patients, he said. Jennings received an award from the City Council for her “relentless commitment to affordable housing development,” a social media post shows.

The business last year began renting a suite in a downtown building overlooking the waterfront for more than $13,000 a month, but several of the offices sit empty.

Last Friday, PHA Healthcare filled the space with Christmas decorations, a catered lunch and a few dozen visitors. Among them were property owners looking to fill their buildings with treatment programs; State Senator Malcolm Augustine, a Democrat Thomas introduced as “a dear friend”; members of a public relations firm hired by Thomas who flew in from California and Georgia; and a handful of patients. The guest of honor was the television host Nick Cannon, who was on tour in Baltimore for his comedy show.

One patient in attendance — who declined to be named and was not counted among the 16 the reporters interviewed — said she had experienced violence and rape at other treatment programs. But after joining PHA Healthcare two years ago, she said, she stopped using drugs, and the company now pays her to clean its properties. “Other programs are like jail,” she said, adding, “PHA is the only thing that saved me.”

Facing the audience Thomas admitted to making a mistake over the past several years: His company had not invested in a website, social media, business cards, shirts and hats. He said he believed if he focused on the people, the rest would take care of itself.

But now it was time to create “a narrative of truth,” he said.

“I’ve heard people say: ‘Hey, I know a person who’s had a bad experience at PHA Healthcare. I know five, I know 10,’” he added. “But what about the thousands who we’ve turned around?”

Justin Fenton and Nick Thieme contributed reporting. Kirsten Noyes contributed research.