MANHATTAN (CN) – CityTime, a program given more than $600 million to design automated payroll software for New York City employees, was “corrupted to its core,” Manhattan U.S. Attorney Preet Bharara said at a press conference.
Alleging that “virtually all” of the program’s money was tainted by fraud, Bharara announced new charges Monday against four of eight individual defendants and one corporation listed in the indictment, charged with bilking the program from 2003 to 2010.
“In short, today we allege what many have long feared: The CityTime project was corrupted to its core by one of the largest and most brazen frauds ever committed against the City of New York,” Bharara said.
Carl Bell, the chief systems engineer for CityTime’s primary contractor Science Applications International Corporation (SAIC), pleaded guilty to the charges last week.
Padma and Reddy Allen, wife-and-husband top executives from the primary subcontractor Technodyne, allegedly fled to India.
Their company Technodyne is the only corporate defendant listed in the indictment unsealed today.
Except for the Allens, each of the eight individual defendants named in the indictment has been arrested.
“While Padma and Reddy Allen are trying to get away with their crimes by fleeing abroad, we will take all steps to locate them and bring them to justice,” Bharara said.
Originally budgeted for $63 million, CityTime’s coffers ballooned approximately 10 times that amount “with additional expenditures still required to complete the project,” authorities say.
Defendant Mark Mazer, a principal agent and representative of the New York City Office of Payroll Administration, was charged with overseeing the project, authorities say.
According to the indictment, Mazer approved time sheets for consultants who were on leave, who had been fired, and who were working less time than was reported.
Under Mazer’s stewardship, the Office of Payroll Administration gave more than $600 to SAIC, which allegedly awarded $400 million to the project’s primary subcontractor Technodyne.
In return, SAIC program manager Gerard Denault allegedly received more than $9 million in kickbacks, while Bell got more than $5 million.
According to the 43-page indictment, Technodyne gave $75 million to companies D.A. Solutions and Prime View, while their executives, Dimitry Aronshtein and Victor Natanzon, allegedly padded Mazer’s pockets with $25 million.
Natanzon pleaded guilty to his role in the CityTime fraud in February 2010.
“Following the money in this charged criminal scheme is like tracking a ricocheting pinball from contractor to subcontractor to shell companies and foreign bank accounts and eventually, into the defendant’s pockets,” Investigation Department commissioner Rose Gill Hearn said.
Bharara said that investigation remains active. The first round of charges were filed in December 2010, and additional charges were filed two months later.