A former CEO of the Miami Beach Community Health Center Inc., who is accused of embezzling $6.8 million, faces federal and state charges that could send her to prison for up to 30 years.
Kathryn Abbate, 64, of Hollywood was fired last May when the alleged thefts dating back at least five years were uncovered, according to a related civil lawsuit filed in Miami-Dade Circuit Court. The center is suing two accounting firms and a partner, claiming they failed to report the embezzlement though it "occurred right under the accountants’ nose."
Abbate was charged Wednesday in the federal case with theft of money from programs receiving federal funds. If convicted, she could be sent to prison for up to 10 years, fined up to $250,000 and ordered to pay restitution, according to federal prosecutors.
They led the investigation, which was joined by the Miami-Dade state attorney’s office and the Miami-Dade inspector general’s office.
In the state case, Abbate was charged with one count each of organized fraud and grand theft. If convicted, she could be sentenced to up to 30 years in prison.
Abbate is free on a $150,000 personal surety bond, said her attorney Bruce M. Lyons of Lyons & Sanders in Fort Lauderdale.
"There is certainly fault here other than my client," he said. "We are cooperating with the investigators in this matter, and we will be as candid and as honest as we can be so that we can get to the bottom of this thing."
Lyons said Abbate "had a very successful tenure as the CEO of the facility in Miami Beach and wants to see it succeed."
A statement from State Attorney Kathy Fernandez Rundle said, "Every stolen dollar took a part of a sick person’s future."
U.S. Attorney Wifredo Ferrer said, "We will not relent in our efforts to charge individuals who use the health-care system to line their own pockets."
The charges end "a sad chapter in the history of the Miami Beach Community Health Center," the center said in a statement, lambasting Abbate for an "outrageous breach of a sacred trust."
The nonprofit center helps uninsured and underinsured Miami-Dade County residents obtain medical care, and no patient is turned away based on economic status.
The civil suit seeks $6.8 million plus legal and accounting fees for the suit and all accounting fees paid since at least 2007 to McGladrey LLP, CohnResnick LLP and Steven D. Schwartz, a CohnResnick partner in New York.
The two accounting firms audited the center’s finances, prepared its federal income tax returns and performed other accounting tasks. The work was overseen by Schwartz, first at McGladrey, then at CohnResnick, according to the lawsuit.
Abbate joined the center in 1998 and moved up to CEO in 2005. She allegedly padded her salary by telling the payroll department to pay her sums of $40,000 at a time totaling $3.2 million that she called vacation compensation and recorded as salary, according to Richard E. Brodsky of the Brodsky Law Firm in Miami, who filed the suit on behalf of the center.
He said she stole another $3.6 million by writing more than 800 unauthorized checks to herself, almost all of which were recorded as bound for community development. The lawsuit said Schwartz didn’t tell the center about any irregularities until he flagged a $5,000 check to Abbate in May 2012. That’s when a CohnResnick review of the center’s financial records revealed the extent of the embezzlement, the suit states.