Bloomberg's CityTime Payroll System Rife With Fraud - Why Isn't He Being Held Accountable?

Just last August, Mayor Bloomberg threatened to delay city employee paychecks if City Controller John Liu didn't agree to a 3 year extension of the contract Bloomberg had given to CityTime for its troubled payroll system.

That contract extension was worth more than $100 million.

CityTime claimed if the extension for its consultants was not granted, the city could not pay its employees.

Here is the background of that story from Juan Gonzalez at the Daily News:

In a series of tense private negotiations with Liu over the past few weeks, mayoral aides have said Scientic Applications International Corp., the vendor in charge of designing CityTime, will walk off the job when its current contract expires Sept. 30.

SAIC wants a three-year renewal for "operation and maintenance" of CityTime, City Hall says.

Amazingly, after more than 10 years of SAIC rolling out the system, the city's payroll office still can't operate it without the consultant.

"If the contract [for SAIC] is not renewed, it will cause significant problems with ensuring nearly 70,000 employees are paid," City Hall spokesman Marc La Vorgna said yesterday.

The pay of city workers, in other words, is being held hostage by a private company. That company is now the only entity that can assure the city's payroll gets out.

This is the same company, as the Daily News reported in March, that had more than 230 consultants billing the city an average of $400,000 each annually for CityTime. That included 11 SAIC consultants who are billing more than $600,000 a year.

What's wrong with this picture?

Liu is one of the few city officials with the guts to demand some accountability.

Earlier this year, he launched the first-ever audit of CityTime to figure out how taxpayers have spent more than $700 million on a project that was supposed to cost $68 million.

The project, which features computerized timekeeping and, in some cases, biometric hand scanners, is supposed to replace the old paper timesheet system.

Last December, Joel Bondy, the head of the city's payroll office, told a City Council hearing that the bulk of some 140,000 city workers targeted to use CityTime would be on it by next month.

But city officials admit only 66,000 employees are now using it.

No wonder Liu has called the entire effort a "money pit" and has urged City Hall to cancel the project.

Today four consultants from CityTime were indicted by the U.S. Attorney's office on fraud charges:

Four consultants to the city's problem-plagued payroll system were busted today on charges of ripping off more than $80 million in an elaborate fraud and kickback scheme.

The wife and mother of alleged ringleader Mark Mazer -- who has been paid $4.4 million to help oversee the costly CityTime project -- were also accused of helping launder proceeds of the five-year flimflam.

According to a complaint filed in Manhattan federal court, Mazer steered more than $76 million worth of bogus contracts to firms run by Dmitry Aronshtein, who is believed to be a relative, and Victor Natanzon.

To cover up the fraud, the three of them, along with co-defendant Scott Berger, allegedly cooked up phony timesheets intended to justify the spending.

Aronshtein and Natanzon then kicked back more than $24.5 million to a series of shell companies controlled by Mazer's wife, Svetlana, and his mother, Larisa Medzon, the complaint says.

The Mazers allegedly used more than $3 million of their crooked cash to buy and renovate two homes, and also splurged on six late-model cars over the past two years.

Department of Investigations Commissioner Rose Gill Hearn -- whose office uncovered the massive scam -- called it a shame that "supposed experts hired and paid well to protect the city's interests were exposed as the fox guarding the hen house."

Manhattan U.S. Attorney Preet Bharara noted the irony of how "a project intended to prevent payroll waste, fraud, and abuse, was itself allegedly bilked in part by fraudulent timekeeping."

Mayor Bloomberg called it a "major fraud perpetrated on city taxpayers" over the past few years.

"As you know we have zero tolerance for any waste, fraud or abuse and there are no sacred cows in city government," he said.

Bloomberg said he directed Deputy Mayor Stephen Goldsmith to take direct oversight of CityTime.

"We have no tolerance for this whatsoever," he said. "And you can rest assured that we will do everything possible to insure that we get that money back and that the perpetrators are prosecuted to the fullest extent of the law."

But wait, Mr. Mayor, oh great man who holds everybody accountable in this city:

YOU were the one who insisted the contract get a three year extension.

So how is it YOU are NOT being held accountable for insisting this company get a contract extension even though the system was hundreds of millions over budget, 12 years late being completed and didn't deliver what was promised?

Maybe it's my training in English literature, but it sure is hard not to see the irony in that.

Good to see others noticed this irony too:

City Councilman Letitia James (D-Brooklyn), one of the chief critics of the City Time contract, charged that the administration was asleep at the switch.

"I am shocked," she said. "Eighty million just disappeared and no one from the administration raised a question."

James pointed out that the stolen $80 million could have been used to prevent cuts to child care, senior services and firehouses.

She called on the MTA not to go forward with its $10 million contract with the main City Time consultant, SAIC.

James also said she's worried that other major city contractors aren't being scrutinized.

"This happened on the watch of the Bloomberg Administration," she said. "I am certain there are other consultant contracts that need to be monitored."

I am certain of that too.

But before we get to the other consultant contracts, let's get to the bottom of just why it it was that Bloomberg insisted this one was so important to the city.

Bloomberg himself called the CityTime system a "disaster".

So why did they get a three year extension?