Company Involved In CityTime Money Laundering Shuts Down, Owners Flee The Country

Mayor Bloomberg thinks he did a heckuva on the CityTime project - at least that's what he told his radio audience last Friday.

But this doesn't sound like a heckuva job to me - it sounds like a widening corruption scandal that has seen the city looted of hundreds of millions of dollars:

WAYNE, N.J. — A New Jersey technology company that had been a major contractor on the Bloomberg administration’s troubled CityTime payroll project has abruptly halted operations and terminated its employees’ contracts amid a widening federal and city investigation, according to a company memo sent out late Tuesday night.

The top two executives of the company, TechnoDyne L.L.C., have also left the country and returned to their native India, according to people familiar with the case who were not authorized to speak publicly because the investigation was ongoing.

Whether the two executives — Reddy and Padma Allen, American citizens who are husband and wife — will return is unclear. While they are mentioned as unnamed co-conspirators in a federal complaint that was made public on Friday, neither they nor their company has been accused of wrongdoing.

The sudden demise of TechnoDyne — which, according to earlier company statements had 500 employees and $100 million in annual revenue — means that for the first time, the scandal has begun to have an adverse effect on a substantial number of people who may have been simply associated with a CityTime contractor, and not necessarily involved in the project.

Led by the United States attorney’s office in Manhattan and the city’s Department of Investigation, the authorities have accused several employees of CityTime contractors of defrauding the city in an $80 million scheme that began in 2005. But even before the accusations, CityTime, an automated payroll project, had become a liability for Mayor Michael R. Bloomberg because of its costs, which have climbed to about $700 million after an initial estimate of $63 million.

On Friday, investigators charged the project’s senior manager, Gerard Denault, with receiving over $5 million in kickbacks, as well as wire fraud conspiracy and money laundering. Mr. Denault urged his employer, Science Applications International Corporation, to hire TechnoDyne as the project’s main information technology subcontractor.

TechnoDyne received $464 million out of $628 million that was paid to Science Applications International and, according to the complaint, funneled $5.6 million to a sham consulting company, said to have been based in India and owned by Padma Allen’s mother, that Mr. Denault actually owned.

The complaint said that there was evidence that TechnoDyne tried to “conceal its interest” in the sham company, “and thereby its connections to the millions of dollars that were being paid to Denault.”

By Tuesday night, as TechnoDyne employees, concerned that the company’s Web site and switchboard were not working, began contacting reporters, the company had issued a memo.

Sent to The Times by an employee, and signed by its human resources department, the memo read, in part: “Due to legal action recently taken against TechnoDyne by a governmental authority, TechnoDyne is unable to continue normal operations,” and as a result, “is terminating the services of its employees and consultants,” effective immediately.

The company — which investigators said relied on Science Applications International for 80 percent of its revenue — pledged to cooperate with immigration lawyers to help workers who have H-1B visas or green cards. The company also said it would keep employees updated on compensation, health insurance and other issues.

Phone calls and e-mails placed to a spokeswoman for the company were not returned. Meanwhile, a visit early Wednesday to the company’s two addresses in Wayne — one in an office park, the other at a UPS store — did not reveal any activity or presence, other than the company’s name tacked onto a building directory. One person who works in the office park said that few people had shown up to TechnoDyne’s office in recent months.

TechnoDyne, which was founded in 1998, billed itself as an information technology consulting company that helped governments and private businesses with software development and cloud-computing management.

The company also enlisted prominent lobbyists in the city procurement process, including Gino P. Menchini, a former commissioner at the city’s Department of Information Technology and Telecommunications, and Agostino Cangemi, a former deputy commissioner at the same agency.

A spokeswoman for Mr. Menchini’s and Mr. Cangemi’s current company, National Strategies, said that the company never worked on CityTime, and that once the TechnoDyne allegations were known Friday, the contract between National Strategies and TechnoDyne was terminated immediately.

Padma Allen, who is also a medical doctor, had gained wider recognition of late. In December, Dr. Allen attended a White House briefing in on minority business issues. In 2010, she was named one of Ernst & Young’s entrepreneurs of the year in New Jersey.

Daily News columnist Juan Gonzalez wrote this morning:

As for Bloomberg, he keeps minimizing the worst scandal of his administration. He touts how the project - more than eight years late - will soon be completed.

Let's see what he says in a few more months.

Indeed, the chutzpah of the mayor to minimize the scandal that has seen hundreds of millions of dollars stolen from the city even as he touts his fiscal prudence in laying off thousands of teachers to save $300 million is, well, I'd like to say it's beyond belief.

But actually with Bloomberg, it just isn't.

It is, however, beyond the pale.

Bloomberg: We Did A Heckuva Job With The CityTime Project

The Mayor of Accountability has given himself a thumbs up on the scandal-plagued CityTime project.

The project is years behind schedule, $700 million over budget, has seen six people (four of whom were consultants hired by the city) arrested for stealing $80 million in city dollars from the project, the project director himself arrested for taking $5 million in kickbacks to steer $450 million in contracts to firms doling out money to him, and the US attorney says more arrests in the case are forthcoming.

So how did Mayor Bloomberg react to the latest news about the project director being arrested for kickbacks, wire fraud and money laundering and more arrests to come?

He gave himself a pat on the back:

On his morning radio show, Mayor Bloomberg insisted that CityTime is now up and running, but admitted mistakes were made.

"The one thing here there's no excuse for is we didn't catch fraud, which we should have," he said. "But having said that, the project is done, it is working, it will stop fraud and it will be efficient."

From CK: Jonathan Lemire sent me some additional quotes from Bloomberg's radio appearance this morning. Following is a formal statement from the mayor's office.

• “Could we have stopped it? I don’t know. If we look back, if we turned left instead of right, but we didn’t.”
• "We actually did a pretty good job here, in retrospect."
• "The FAA hasn't been able to get their new traffic control system and the IRS -- at the federal level some of these programs go on for decades, cost billions and billions of dollars and never come up with anything."

• 
  

"We actually did a pretty good job, in retrospect"?

What the hell is he talking about?

Let me repeat:

$700 million over budget, years behind schedule, seven arrests so far and more to come, $80 million stolen, $5 million in kickbacks to steer $450 million in contracts and you have to wonder how much of that contributed to the $700 million over budgeting problem - and Bloomberg says he did a pretty good job, in retrospect?

Mayor Bloomberg, the Accountability Mayor, the man who loves to point the Royal Finger Of Accountability at everybody else, just cannot accept responsibility for this mess.

He needs to be called to account for this.

Especially since the arrests in this scandal and the widening DOE scandals seem to be coming every week now.

The Royal Finger of Accountability lands squarely on his chest for this.

CityTime Consultant Arrested For Kickbacks, Fraud And Money Laundering

The Bloomberg Consultant Scandals (and I think we can now label them such - there are enough of them) just keep coming and coming.

Another arrest was announced this morning:

A former consulting company executive was charged on Friday with receiving at least $5 million in illegal kickbacks in connection with his work as a project manager on the CityTime automated payroll project, people briefed on the matter said.

The consultant, Gerard Denault, a former executive of Science Applications International Corporation, was also charged with wire fraud conspiracy and money laundering in an indictment unsealed in United States District Court in Manhattan.

Mr. Denault was arrested in Danbury, Conn., on Thursday, and he is expected to be presented in federal court in Manhattan on Friday.
He was charged as a result of an ongoing investigation by the city’s Department of Investigation and the United States attorney’s office in Manhattan.

“It is deeply disturbing that while he was hired to help cut costs and save money, in reality, Gerard Denault was allegedly ripping city taxpayers off to to pad his own pockets,” said Preet Bharara, the United States attorney in Manhattan.

Mr. Denault’s lawyer, Barry A. Bohrer, did not immediately return a phone message or an e-mail on Friday morning.

On Wednesday, Science Applications International said it had fired Mr. Denault for misrepresenting the number of hours he had worked and promised to return to the city $2.4 million, the amount the company had billed for Mr. Denault.

The complaint filed in federal court said that for much of the last decade, the Bloomberg administration has been developing the project, meant to modernize the payroll system for city employees, and working to implement it.

Originally budgeted for $63 million, the CityTime project costs have ballooned to roughly $700 million, with additional expenditures still expected to complete the program.

Mr. Denault’s arrest brings to seven the number of people who have been charged by prosecutors in the CityTime case. One of those charged pleaded guilty in February is cooperating with investigators.

Mr. Bahara said that the investigation was continuing and that “there are more individuals yet to be held accountable.

There are more individuals yet to be held accountable in this mess?

Great - how about Bloomberg?

He is the financial and managerial genius who has overseen this mess.

Accountable Talk points out that Denault was charged with steering $450 million in city money to various subcontractors who paid him at least $5 million in kickbacks for the contracts.

Think about that dollar number for a minute - $450 million.

The mayor is going to lay off 4,278 teachers to save $300 million.

Denault steered $450 million in city money to subcontractors in a project that went $700 million overbudget in order to receive $5 million in kickbacks.

That's an awful lot of money that could have been used to pay teachers and lower class sizes that was doled out by a guy Bloomberg hired who just got arrested for taking kickbacks on city contracts.

When the mayor trots out the layoff card again in a couple of weeks, he must be called to account for this scandal. $700 million over budget, $80 million stolen by four consultants involved in the project, another $5 million in kickbacks taken by another consultant involved in the project and the investigation is still ongoing and the US attorney says more people will be held accountable for this.

So far, one person has managed to skirt accountability for this mess, and that is the Accountability Mayor himself, Bloomberg.

But no longer.

There have been too many consultant scandals, too much money stolen, too many people arrested - both consultants hired by the city and city employees who were supposed to be conducting oversight of these consultants - for Bloomberg to avoid scrutiny and accountability.

And keep in mind - this is just the tip of the iceberg.

The US attorney says more arrests are coming in the CityTime scandal, the Judith Hederman case at the DOE looks like it is going to widen and culminate in some arrests, Comptroller John Liu is investing many other city contracts, especially contracts handed out by the DOE, that look fishy (including anything involving two vendors, IBM and Verizon, who helped another DOE consultant, Willard Lanham, hide $3.6 million in stolen city money.)

The Bloomberg Consultant Scandals are just growing and growing.

Ed Koch had Donald Manes and Mario Biagi and Stanley Friedman and the Parking Bureau scandal to deal with in his third term.

Bloomberg is going to have to deal with the fallout from the Bloomberg Consultant Scandals.

And the amount of money that has disappeared in criminal activity during the Bloomberg years is adding up and making the money stolen in the Koch scandals of the 80's look like peanuts.

So have it, Mr. Mayor. Tell us how fiscally prudent you must be by laying off 4,278 teachers so you can save $300 million in teacher salaries.

Then we can ask you, point blank and on camera, how have you allowed all this money to be stolen by city consultants on your watch and how have you allowed all these city employees at the DOE and elsewhere to engage in so much criminal activity.

I mean, you are the Accountability Mayor, after all.