Thread: DA: $600M-plus of NYC payroll project was tainted

DA: $600M-plus of NYC payroll project was tainted

By SAMANTHA GROSS, Associated Press
1:26 p.m., June 20, 2011

NEW YORK — A city payroll technology project that has cost taxpayers more than $600 million was "corrupted to its core," with nearly the entire sum tainted by an epic fraud that involved hundreds of contractors, systemic overbilling and an international money-laundering conspiracy, federal prosecutors said Monday.

The indictment unsealed Monday alleges that the cost of the project, known as CityTime, ballooned tenfold as multiple layers of contractors and subcontractors conspired to hire consultants the city didn't need, inflate the prices the city was charged and multiply the hours for which the city was billed.

"The corruption on CityTime was epic in duration, magnitude and scope," U.S. Attorney Preet Bharara said as he detailed the new charges. "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."

Prosecutors and the city's Department of Investigation announced that the chief systems engineer on the project, Carl Bell, had pleaded guilty to charges including wire fraud and money laundering and was cooperating with investigators. Bell is the second employee of defense and technology giant SAIC Inc. to be charged in the case.

Prosecutors claim the company, which handles a large number of contracts for the U.S. government, was warned about aspects of the fraud in a whistleblower's complaint in 2005, but the deception expanded despite an internal investigation. A company spokeswoman declined to comment.

Authorities revealed an SAIC subcontractor, TechnoDyne LLC, has been criminally charged in the case, along with the husband and wife who owned the company. Padma and Reddy Allen fled to their native India in February after being subpoenaed by a grand jury and transferred much of their company's operations and personnel there, the indictment claims. A call to the Allens' U.S. lawyer was not immediately returned.

In all, 11 people and one company have been charged in the case, which prosecutors say involved $40 million in kickbacks. Two of the individuals have pleaded guilty and a third has died. Others involved in the case have pleaded not guilty.

According to prosecutors, the SAIC project manager and Bell both received a set dollar amount for each hour worked by a TechnoDyne consultant on the project - an incentive to hire unneeded staff and falsely inflate the number of hours billed to the city. Another outside consultant given extensive control of the project by the city received $25 million in kickbacks, prosecutors claim.

The project to computerize the timekeeping system for city employees started in 1998 and carried an estimated price tag of $63 million. In the years since Mayor Michael Bloomberg took office in 2002, the timeframe has more than doubled and the cost has skyrocketed. By April 2010, the city had approved about $628 million in payments to SAIC.

In the wake of the investigation, Joel Bondy, appointed in 2004 by Bloomberg to oversee the city office that ran the project, was suspended without pay and resigned.

"Virtually the entirety of the well over $600 million that the city paid to SAIC on the CityTime project was tainted, directly or indirectly, by fraud," prosecutors said in the indictment unsealed Monday. Before that, authorities had said about $85 million of the money had been involved in the fraud.

Following an internal review ordered by Bloomberg, the city has said it will reduce outside contracting on technology efforts and expand an office to oversee the projects. Future contracts will be for smaller projects and give contractors clearer requirements, Deputy Mayor Stephen Goldsmith has said.

"Our Department of Investigation uncovered this fraud, bringing it to federal prosecutors," Bloomberg spokesman Marc LaVorgna said Monday. "We will be using all available avenues to recover any funding owed to the City. SAIC has been removed from the project and substantial reforms have been made to the way large city contracts are managed."

http://www.signonsandiego.com/news/2011 ... s-tainted/

Just Classic...

Why don't I just hand my money right to the criminals rather than pay taxes?

Oh yeah, we need that middle man for his cut and his oversight on which criminal gets the money.