The Miami Beach Community Health Center has sued its former leader in an attempt to recoup $7 million she plundered from the organization.
The center has also partially settled a lawsuit against its auditors, claiming they failed to notify the board of directors about the years-long theft.
Before she was caught, Kathryn Abbate won accolades for her leadership of the center, which caters to the poor and uninsured throughout Miami-Dade County. Her reputation changed in 2012, when she was charged with embezzling millions of dollars from the non-profit organization to feed what her lawyer described as a gambling and drug addiction.
Abbate pled guilty to the theft and will begin a 42-month prison stint in August.
A restitution hearing will be held in late July, said Bruce Lyons, her attorney in the criminal case. With that in mind, he called MBCHC’s lawsuit against its former leader “vindictive.”
Attorney Richard E. Brodsky, who brought the suit on behalf of MBCHC, explained the legal action in this way: “You can call it an insurance policy against the possibility that whatever she pays the government either will not be enough, or that the government won’t be able to pursue her assets or trace her assets with the same vigor that we can.”
The center is already on its way to recovering some of the stolen money. Brodsky said an unspecified settlement was recently reached with auditing firm McGladrey LLP.
MBCHC had sued the firm, claiming auditors “had actual knowledge” or else were “reckless in not knowing” that Abbate was funneling money to herself. The suit also claims McGladrey “had a duty to bring these matters to the attention of the Board of Directors” — but didn’t.
A spokeswoman for the firm declined to comment.
The suit is still pending against other auditors who were hired to look over the center’s books.
Lyons, though he isn’t representing Abbate in the current suit, questioned the assertion that the board of directors didn’t know about the fraud. He pointed to an April 2009 memo signed by the board chair that outlined an increase in Abbate’s salary and approved a buy-out of her leave time.
The board, he said, “sat there for years and allowed what occurred, to occur.”
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