Sheriff auctions stock to settle couple's debt

FREDERICK -- Looking for the perfect stocking stuffer for the investor in your life? Sheriff Jim Hagy may have a deal for you.

If an advertised sale goes off as expected today, the area outside the Frederick County Courthouse will more closely resemble Wall Street than Court Street. By court order, the sheriff will sell more than 1.26 million shares of Bio-Tech Imaging Inc. (BTI) stock.

The stock will be sold in 10,000-share lots. The funds collected will be applied to debts Robert and Joanne Hallowitz owe to KH Funding Co. In December 1999, the Silver Spring-based loan company financed the couple's purchase of a home in New Market, but they defaulted on the loan, according to court records.

Robert Hallowitz, a former physician, drew national attention in 1993 when his license to practice medicine in Maryland was revoked because he was having sex with patients, treating people while under the influence of drugs, and using hypnotic techniques to gain cultlike control over patients.

His case and the state board of physicians' decision to suspend him was chronicled in an edition of the television show "48 Hours." The segment was titled "The Hallowitz Affair."

Sheriff Hagy said he's fulfilling a duty by selling the stock. He periodically is ordered by the court to sell personal property, but he said the cases are usually settled before the auction is held. About once a year, an auction actually occurs.

In his 10 years as sheriff, he's seen some unique items targeted for sale, including cattle. He said he once had a person's house targeted to resolve a debt of only a few hundred dollars, but that case was settled before the home changed hands.

Suzanne Doxzen, an executive assistant who has worked for four sheriff's administrations in her 29 years with the office, said this is the first time she can recall that company stock has been put up for sale to satisfy a debt.

Because the value of and interest in the property is difficult to discern, Sheriff Hagy said he didn't "have a clue what to expect" at the sale.

KH Funding won the judgment against the Hallowitz's in Frederick County District Court. The first lawsuit was filed almost 18 months ago and eventually was settled, but a second case was opened when the couple failed to meet the terms of the settlement agreement.

Including missed mortgage payments, rent due through a later agreement with the company, interest, penalties and legal costs, the Hallowitz's owe more than $30,000 to KH Funding. The sale, however, may satisfy only a small portion of that debt.

A copy of the stock certificate in court files showed that the shares up for sale were issued to Mr. and Mrs. Hallowitz in January 1995. They were part of the capitalization of 100 million shares then valued at one-tenth of a cent per share.

The value of the stock is hard to determine.

BTI, based in Frederick, is a privately held company involved in developing advanced diagnostic products for medical use. James W. Hawkins, the company's president and chief executive for about one week, would not disclose how many shares of common stock exist or the price paid for the last shares that were sold.

The company recently has had financial troubles, Mr. Hawkins admitted, and some of its creditors attempted to force a Chapter 7 bankruptcy filing. However, BTI resolved those issues, he said, and he and other experienced managers have been brought on board to "right the fiscal ship."

The Hallowitz's stock, Mr. Hawkins said, was "founder's shares" in the company. According to information on the U.S. Patent and Trademark Office Web site, Mr. Hallowitz and Chester King, the former president of BTI, share four patents for inventions with medical applications.

Mr. Hallowitz practiced medicine in Gaithersburg and was known for his work with patients suffering from Chronic Fatigue Syndrome. Internet documents indicate he spoke about the illness at national seminars.

But the doctor's career derailed in 1993 when patients complained of behavior that an administrative law judge later called "unspeakably abusive and inhumane." The judge called him "a danger to his patients."

Testimony considered by the state's Board of Physician Quality Assurance indicated Mr. Hallowitz repeatedly claimed to be God, often returned to work after lunch breaks during which he smoked marijuana or hashish, and had sex with several patients. He fathered two children with a patient who happened to be the wife of another patient.

A transcript of the October 1993 "48 Hours" show featuring the Hallowitz case indicated that he said he and the woman he had children with felt "moved by love and by God to do this." But Dr. Israel Weiner, then the chairman of the Board of Physician Quality Assurance, was unmoved.

"True love is no excuse," Dr. Weiner told the TV show. "There is no medical condition which is improved by the patient seeing the genitals of the doctor."

The board revoked Mr. Hallowitz's license in July 1993, and records indicate he never appealed the decision. His name has been posted on national databanks as a warning of his past problems in case he ever applied for a license again.

Court documents indicate that legal papers recently were served to the couple in Aurora, Colo. Directory assistance indicated they have an unlisted phone number.

A spokeswoman for the Colorado Board of Medical Examiners said no one named Hallowitz has applied for a license to practice in the state.