MIAMI – Stephen Costa, 40, is headed to federal prison for fourteen years after admitting he masterminded a sprawling $78 million operation that flooded the nation’s legitimate drug supply with diverted pharmaceuticals. The scheme preyed on the sick and vulnerable, pushing medications—many intended for patients battling HIV and cancer—through a shadowy network of shell companies and onto the streets.
Costa’s reign of deception, detailed in court documents, spanned from early 2013 to May 2019, and ensnared a total of 20 defendants through a series of superseding indictments. The feds say Costa wasn’t just opportunistic; he built his criminal enterprise by acquiring licensed pharmaceutical wholesale companies, using recruited associates as figureheads. Many of those he enlisted were old hands from a similar scheme he ran in New York, or acquaintances from past ventures – a clear indication of a seasoned operator.
The operation was simple, yet devastatingly effective. Costa purchased diverted drugs from established suppliers, then dictated pricing, marketing, and distribution strategies to his network of co-conspirators. These drugs weren’t going to hospitals or clinics, but were being funneled to pharmacies across the country, masquerading as legitimate shipments. Unsuspecting patients, believing they were receiving properly sourced medication, were instead being given drugs with questionable origins. The total haul: approximately $78 million worth of diverted pharmaceuticals.
Even facing consequences for a similar operation in New York, Costa remained undeterred. Alarmingly, before reporting to prison to serve that sentence, he actively worked to ensure his Miami operation continued. He connected his primary supplier with a co-conspirator, effectively setting up a continuation plan during his incarceration. And it worked – Costa continued to profit from the illicit sales even while serving time in another state. He received multiple payments from the ongoing operation, proving his continued control from behind bars.
The bust, a joint operation between the Food and Drug Administration, Office of Criminal Investigations (FDA-OCI), and FBI Miami, finally brought Costa’s empire crashing down in May 2019. U.S. Attorney Hayden P. O’Byrne for the Southern District of Florida, along with FBI Special Agent in Charge Brett D. Skiles and Acting Special Agent in Charge Maximillian Pagano of the FDA-OCI Miami Field Office, announced the sentencing today. Assistant U.S. Attorney Frank Tamen led the prosecution, while Assistant U.S. Attorney Nicole Grosnoff is handling the forfeiture of assets seized from the operation.
Costa’s fourteen-year sentence sends a message, but the damage is done. Countless patients were potentially exposed to substandard or counterfeit medications, and the integrity of the pharmaceutical supply chain has been deeply compromised. Further information on the case, including court documents, can be found at www.usdoj.gov/usao/fls and www.flsd.uscourts.gov, under case number 19-cr-20674.
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Key Facts
- State: Florida
- Agency: DOJ USAO
- Category: Drug Trafficking|Fraud & Financial Crimes|Organized Crime
- Source: Official Source ↗
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