Stephen Costa: $78M Prescription Drug Scheme, Plea and Forfeiture

Stephen Costa, a former Miami real estate broker, was sentenced in July 2025 to 14 years in federal prison for orchestrating a $78 million prescription drug scheme that pushed street-bought HIV, cancer, and psychiatric medications into pharmacies under counterfeit labels. The conspiracy ran out of Miami from early 2013 until federal agents shut it down in May 2019, and the investigation ultimately produced charges against 20 defendants.¹

How the Scheme Worked

Costa acquired two licensed pharmaceutical wholesale and distribution companies in Puerto Rico and used them to reroute diverted drugs into states including Florida and North Carolina.² He also set up new corporations in the names of recruited associates to widen the distribution network.¹ Front companies in the operation included Drogueria Las Rosas, Wholesale Supply LLC, and Wholesalers Group, Inc., with activity spanning Florida, Arizona, Delaware, Washington, and Puerto Rico.³

The medications were not sourced from manufacturers. Conspirators bought bottles on the street, cleaned them with chemicals like lighter fluid to strip the original labels and glue, repackaged the pills under false labels, and generated fraudulent “pedigrees” to make the products look as if they had come directly from drugmakers. The relabeled drugs went out by FedEx using stolen or spoofed return addresses of real businesses, and the ring sold them to pharmacies at roughly 17 percent below wholesale acquisition price, undercutting the market just enough to move volume without flagging suspicion.³ The targeted drugs were high-priced treatments for HIV, cancer, and psychiatric conditions.¹

The Danger to Patients

Prosecutors stressed that this was not just a paperwork fraud. The diverted drugs were often stored improperly, past expiration, or mislabeled. In at least one instance, investigators found a bottle containing pebbles or rocks instead of medication.³ Patients filling prescriptions at pharmacies that unknowingly bought from the ring believed they were receiving authentic medicine shipped by authorized manufacturers, when many of those prescriptions were for life-threatening conditions.¹

A Prior Conviction That Didn’t Stop Him

Costa had already been prosecuted once for essentially the same conduct. In September 2015, he pleaded guilty in New York to conspiring to commit healthcare fraud in a scheme that began around 2013 and involved buying and stealing medications from Medicaid beneficiaries in New York City. Those drugs included the HIV treatments Atripla, Trizivir, and Truvada, along with the antipsychotic Zyprexa, which were relabeled and sold to pharmacies.⁴

For the New York case he received three years in prison starting in 2016, three years of supervised release, a $10,000 fine, and $1.2 million in restitution. During supervised release he tested positive for cocaine and was ordered to perform community service.⁴ The Miami operation continued throughout. According to federal prosecutors, Costa kept expanding it after the New York conviction and arranged to introduce a primary drug supplier to a co-conspirator so the business would keep running while he served his New York sentence. Several of the people he recruited in Miami were former New York accomplices.¹

The Investigation and Co-Defendants

The federal investigation was called Operation Southern Hospitality and was led by the FBI’s Miami field office together with the Food and Drug Administration’s Office of Criminal Investigations.¹ Agents shut the operation down in May 2019, and the initial indictment was filed that October. Prosecutors then filed a series of superseding indictments between 2019 and 2024, eventually naming 20 defendants.⁵

Sentences for convicted co-defendants ranged from three to more than eight years, and prosecutors sought asset seizures of $50,000 to $3 million per defendant.³ One co-defendant, Angel Caminero Alvarez, who prosecutors said served as a director of operations arranging drug pickups and payments, was placed on fugitive status in November 2019 and remained at large as of the most recent filings.⁶

Guilty Plea, Sentence, and Forfeiture

In November 2024, Costa pleaded guilty to two counts: conspiracy to traffic in medical products with false documentation, and conspiracy to commit money laundering. On July 16, 2025, U.S. District Judge Darrin P. Gayles sentenced him to 14 years in federal prison and ordered him to surrender to the Federal Bureau of Prisons by August 15, 2025.⁷

Costa and his wife, Annie Gonzalez, were also required to forfeit their home in the Kendall area of Miami-Dade County. The couple bought the property in 2015 for $865,300 using a balloon mortgage, and prosecutors said Costa instructed an accomplice in 2016 to wire $384,300 in drug-scheme proceeds to the seller to help pay it off. The house was valued at roughly $1.7 million at the time of sentencing.⁷ The case was formally terminated on July 16, 2025, and no appeal had been filed as of early 2026.⁵

Real Estate License and Scope Realty

Costa had held a Florida real estate license since 2003, and in 2021 he co-founded Scope Realty, a residential brokerage in South Miami. Legal filings listed him as a co-founder and co-owner, but his name did not appear on the company’s website, which featured Amy Caballero and Perla Valenzuela as co-CEOs.⁴

Costa never reported his 2015 New York conviction to the Florida Department of Business and Professional Regulation, as state law requires within 30 days. A 2022 FBI memorandum also showed that between 2020 and 2021 he gambled $373,700 in chips with cash and placed $1 million in bets at the Seminole Hard Rock Casino without disclosing the activity or the source of the funds to his probation officer. After Miami Herald reporting in mid-2024, the Florida DBPR confirmed it was investigating the failure to disclose, and the Miami Association of Realtors opened its own inquiry.⁴ Costa’s broker license has since been revoked. Scope Realty continues to operate under Miami broker Adalis Carbo, who took over after a former Scope agent asked that the brokerage be transferred under her license. Florida Division of Corporations filings from January 2026 list Carbo as the firm’s current manager.⁷

1
U.S. Department of Justice. Conspiracy Ringleader $78 Million Diverted Prescription Drug Operation Sentenced
2
Miami Herald. Conspiracy Ringleader in $78 Million Diverted Drug Operation Sentenced
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Miami Herald. Prescription Drug Diversion Ring in South Florida
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Miami Herald. Miami Real Estate Broker Federal Indictment
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CourtListener. United States v. Costa
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U.S. Department of Justice. Two CEOs of Wholesale Pharmaceutical Companies and Two Owners of Bank Accounts Used for Money Laundering Charged
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The Real Deal. Stephen Costa Sentenced to 14 Years in Prison