Kathryn Abbate, former head of the Miami Beach Community Health Center, was charged in state and federal courts on Wednesday with stealing several million dollars from the clinic, which is funded with state and federal money.
Abbate, 64, a Hollywood resident, pleaded not guilty in federal court after she surrendered to FBI agents earlier in the day. She was released on a $150,000 bond that a prosecutor and her defense attorney jointly recommended to the magistrate judge.
She was fired last summer after outside auditors uncovered the alleged fraud. The center’s board accused her of diverting $6.8 million in funds for personal use over a four-year period — money intended to provide care for the poor who used the center.
The center receives about $4 million annually in federal funding. In 2011, the clinics received about $15 million from various county funds, including the Children’s Trust, AIDS support and Jackson Health System.
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Abbate, who in 2010 earned $1.2 million in salary and other compensation, faces up to 10 years in prison on the federal charges and up to 30 years on the state charges.
According to the federal information charging Abbate with theft, she caused the center to “disburse millions of dollars in over 800 checks made payable to her for ‘community development.’ Abbate provided no backup documentation, such as invoice or receipt, for any of these checks.”
The court document says the theft occurred from 2008 to 2012.
She is also accused of a coverup, by showing the center’s auditors documents in 2012 that “falsely and fraudulently indicated that $1 million of these funds were paid to five doctors.” In fact, the document says, “the funds weren’t paid to the doctors.”
In state court, she is charged by information with one count of an organized scheme to defraud and one count of grand theft in the first degree.
Miami-Dade Inspector General Christopher Mazzella said Wednesday that the state charges focus on Abbate’s alleged coverup of the $1 million involving the five doctors, which were supposed to be payments to the University of Miami Miller School of Medicine. UM never received the money, Mazzella said.
Mazzella said he planned to brief the Miami-Dade County Commission as soon as possible because the center had “a total breakdown of fiscal accountability” and “very very lax oversight.”
He said he’ll be “putting the county on notice that there needs to be close oversight of this organization, which spends millions and millions in county funds.”
“The big picture here is how the hell did this happen?” Mazzella added. “How could somebody steal this money with minimal excuses? It’s almost ridiculous. It’s mind-boggling.”
The center released a statement praising the “strong action” of the U.S. Attorney’s Office because it “closes a sad chapter in the history” of the center. “From the time Ms. Abbate’s outrageous breach of a sacred trust came to light, the center has cooperated fully with the U.S. Attorney’s Office.”
Abbate was charged by information instead of indictment, a sign she is expected to cooperate with authorities in the ongoing investigation and eventually plead guilty.
After Wednesday’s bond hearing and arraignment in federal court, Abbate’s attorney, Bruce Lyons, said that “depending on what’s asked of her, she will cooperate.”
Lyons said he did not understand why State Attorney Katherine Fernandez Rundle also filed theft charges against Abbate because they are virtually the same as the federal charges. “It’s unusual,” said Lyons, a longtime criminal defense attorney in South Florida. He said he hopes the state attorney’s charges will be eventually dropped as part of his effort to resolve the federal charges.
"The fact that the state attorney entered into the equation late in the game became an impediment to reaching a resolution of the federal case," Lyons said. "But I am hopeful that will happen."
In a prepared statement, Fernandez Rundle said: “There is no excuse for the theft of funds intended to heal the sick and the poor of our community. Every stolen dollar took a part of a sick person’s future.”
In a separate statement, U.S. Attorney Wifredo A. Ferrer said: “We will not relent in our efforts to charge individuals who use the health care system to line their own pockets. Our investigation remains ongoing.”
Abbate could see her federal sentence reduced depending on the extent of her cooperation with Assistant U.S. Attorney Michael Berger and agents from the FBI and the U.S. Department of Health and Human Services.
The center, which has three facilities, employs about 300 people and receives about $4 million annually from the federal government.
Abbate’s alleged misdeeds go back to 2008, when she earned $824,000 — several times what other Miami-area clinic heads earned. In a Miami Herald story about her sky-high salary in 2010, Abbate said her base salary was $275,000 and the rest was buying out “my pension and vacation time.” She told The Herald she needed additional money because “I had a sick child.”
In 2009, federal tax reports show, Abbate’s total compensation was $987,902, rising to $1.2 million in 2010. By contrast, the chief executive of Community Health of South Florida, with operations in South Miami-Dade and twice the revenues of Abbate’s center, earned $265,000 in 2008.
One of the allegations in the federal charges against her is that Abbate “obtained unauthorized compensation by causing MBCHC to issue unaccrued vacation pay to her that was not approved or authorized by the board of directors.”