The Miami Beach Community Health Center, one of the state’s oldest public health centers, has sued two auditing firms that, administrators say, failed to detect the theft of nearly $7 million by the agency’s former chief executive officer.
The executive, Kathryn Abbate, was fired last year after the health center’s board accused her of diverting $6.8 million in money intended to provide healthcare for the needy to her personal use. Two other executives were either fired or resigned for their part in the alleged scheme.
The “thefts” began around 2008, and ended in May 2012, the lawsuit states. Abbate, the suit claims, “stole” $3.2 million in unauthorized compensation, and another $3.6 million in over 800 unauthorized personal checks to herself.
Throughout, the lawsuit says, the two accounting firms — Chicago-based McGladrey LLP and New York-based Cohn Reznick LLP — turned a blind eye as Abbate amassed a small fortune, though auditors were aware of what was going on.
The two accounting firms were paid to conduct annual audits, prepare federal income tax returns, and other auditing functions, the health center says. McGladrey was the health center’s auditor from 2008 through 2010, and Cohn, then known as J.H. Cohn, kept the center’s books in 2011 and 2012.
“The thefts occurred right under the accountants’ nose,” the lawsuit said.
Lewis Greenberg, marketing manager for McGladrey, declined to comment on the suit. “We do not comment on any pending litigation,” he said.
Officials at Kohn Reznick could not be reached.
“For many years, our former accountants not only failed the center and the community it serves, but also failed the government agencies, foundations and other organizations that help fund its operations,” Jane Gross, the center’s chairwoman, said in a prepared statement. “At a time when many not-for-profit organizations are struggling to keep providing valuable services to Florida’s most vulnerable, there was no greater breach of trust.”