Convictions Affirmed in $700M City Time Scam

     MANHATTAN (CN) – The Second Circuit on Monday upheld the 20-year sentences doled out to three men convicted of a $100 million fraud and kickback scheme tied to the modernization of New York City’s municipal payroll system.
     Mark Mazer, Dimitry Aronshtein and Gerard Denault were convicted in April 2014, of conspiring to launder money and violate the Travel Act by defrauding New York City into paying more than $700 million for a project originally budget at $63 million.
     The CityTime information technology project was intended to the city’s timekeeping and payroll systems and prevent payroll waste, fraud and abuse. U.S. Attorney Preet Bharara called the trio’s actions “the single largest fraud ever perpetrated on the city of New York.”
     In April 2014
     Mazer was also found guilty of wire fraud and conspiring to commit wire fraud; Aronshtein was found guilty of paying bribes and conspiring to commit federal programs to bribery; and Denault was found guilty of wire fraud, conspiring to commit wire fraud, honest services fraud and conspiring to commit honest services wire fraud.
     On appeal, the three men, former managers and contractors on the project, challenged nearly every aspect of the judgment against them. However, none of their arguments proved persuasive to the Second Circuit.
     Aronshtein, for instance, argued the district court was wrong to deny his motion to suppress evidence obtained from his home because the search warrant was overbroad.
     The three-judge panel disagreed, holding that it is routine for a warrant to be more vague than usual when complex financial transactions are involved. The panel also found the officers did not act unreasonably in the warrant’s execution.
     Mazer and Denault claimed they did not violate the wire fraud statues because the city was not technically gypped out of anything.
     Again, the Second Circuit disagreed, finding the city was deprived of money through unauthorized severance payments and the misrepresentation of a subcontractor that prompted the waving of rebidding a contract for a cheaper price.
     The convictions of the men on the wire fraud charges were based “on sufficient evidence that the city did not receive the benefit of its bargain.”
     Finally, the panel found that there was not reversible error in the district court’s sentencing determination.
     In doing so, however, the judges reminded the court that “it is best practice to provide a more thorough explanation of the reasons for the sentences imposed and to do so separately for each defendant.”
     “Even when, as here, a judge is not required to say more, doing so still serves a ‘salutary purpose,'” the panel said.
     It continued: “An individualized and non-cursory explanation ensures the defendant in a multi defendant case that the district court considered his arguments, which at least partially quells the concern (that would otherwise linger during the defendant’s term of incarceration) that his sentence was imposed for the wrong reasons and, in that way, helps to secure his ‘trust in the judicial institution.'”
     “Additionally, a more tailored explanation informs the defendant of precisely what it is about his conduct, as distinct from the conduct of his codefendants,
     that prompted the sentence, thereby advancing the aims of specific deterrence. In sum, while we have no reason to reverse the district court in this instance, we encourage it to provide more robust and individualized explanations even when our case law does not mandate it,” the panel said.
     Henry Mazurek, an attorney for Mazer, told the Reuters news agency that he was “troubled and disappointed” by the ruling, but vowed to continue to fight for his client’s release “for as long as [he] is unjustly imprisoned.”
     Another of the attorneys involved in the case, Susan Wolfe, who is representing Aronshtein, has said her client will now ask the U.S. Supreme Court to review the case.

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