Government Lies, Corruption and Mismanagement
New York City Mayor Michael Bloomberg's Biggest Scandal: The CityTime Fiasco
Well, it's summer in the big city, and the CityTime fiasco just keeps getting worse. It may now be the biggest theft of all time. Federal prosecutors and the city Department of Investigation unveiled a new indictment today that alleges that more than $40 million was stolen by consultants working on the project to automate the city's payroll system. "We have developed evidence that the corruption on the CityTime project was epic in duration, magnitude. and scope," U.S. Attorney Preet Bharara says. "CityTime served as a vehicle for unprecedented fraud."
Prosecutors unveil new indictments in CityTime scandal; project was 'corrupt to its core': Bharara
BY Greg B. Smith, DAILY NEWS STAFF WRITER, June 20th 2011
The bloated CityTime project to computerize the municipal payroll is one of the biggest frauds against the city ever, prosecutors said Monday in unveiling three new indictments.
"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," Manhattan U.S. Attorney Preet Bharara said.
The new charges bring to 11 the number of contractors and consultants charged in a long-running scheme to siphon off $94 million in kickbacks and ill-gotten gains as the CityTime project ballooned in cost from $70 million to $700 million.
Daily News columnist Juan Gonzalez first raised questions of corruption within CityTime last year, triggering a probe that's cast a lingering shadow over Mayor Bloomberg's third term.
"This has become an unprecedented case," said Rose Gill Hearn, commissioner of the Department of Investigation, whose office tracked years of bribes and kickbacks laundered through shell corporations from Eastern Europe to India.
Prosecutors Monday said two employees of SAIC, the contractor the city hired to oversee CityTime, secretly pocketed $14 million in kickbacks from Technodyne, a New Jersey-based subcontractor, by skimming $5 off every hourly charge the company submitted.
One SAIC employee, Carl Bell, has pleaded guilty and is cooperating with prosecutors. The other, Gerard Denault, has pleaded not guilty.
Charges against Technodyne's founders, Padma and Reddy Allen, also were revealed Monday. Authorities said both fled to India early this year shortly after they were subpoenaed to testify before a grand jury.
A lawyer representing the couple did not return calls.
The latest charges follow an earlier indictment alleging another scheme to steal $80 million through inflated bills.
Mark Mazur, the accused mastermind of that scheme, was another consultant hired to monitor CityTime for signs of fraud.
Mazur has pleaded not guilty.
No city employee has been charged, although Joel Bondy, the head of the Office of Payroll Administration, which was in charge of CityTime, was forced to resign.
CityTime Fiasco: Biggest Theft in History, NYC's Taxpayers Screwed
By Graham Rayman, Village Voice, Jun. 20 2011 @ 4:41PM
Well, it's summer in the big city, and the CityTime fiasco just keeps getting worse. It may now be the biggest theft of all time.
Federal prosecutors and the city Department of Investigation unveiled a new indictment today that alleges that more than $40 million was stolen by consultants working on the project to automate the city's payroll system.
"We have developed evidence that the corruption on the CityTime project was epic in duration, magnitude. and scope," U.S. Attorney Preet Bharara says. "CityTime served as a vehicle for unprecedented fraud."
The indictment charges four new individuals with various fraud counts in connection with the scam. Among those newly charged is Carl Bell, a chief systems engineer with Science Applications International Corp. (SAIC), the main contractor on the project.
Bell pleaded guilty to receiving at least $5 million in kickbacks. Another SAIC official, Gerard Denault, got $9 million in kickbacks. Mark Mazer, a contractor who supposedly oversaw the project for the city, received a staggering $25 million in kickbacks.
The indictment also charges Reddy and Padma Allen, top officials with a subcontractor called Technodyne, which paid kickbacks to Bell, Denault, and Mazer. Technodyne got $400 million in payments from the city.
Not only did the conspirators allegedly bill for time not worked, they hired consultants at inflated rates, hired much more staff than necessary, created shell companies to funnel cash and kickbacks to other conspirators, in some cases, through India and Latvia, and then lied to investigators about it.
In 2005 and 2006, Mazer and Denault convinced the city, in a colossal blunder, to amend the contract from a fixed price, under which SAIC was responsible for cost overruns, to a more open-ended arrangement that made the city responsible for cost overruns.
The indictment also discloses that as early as 2005, SAIC had gotten an internal whistleblower complaint about corruption and kickbacks, but the firm apparently did nothing about it.
CityTime was originally budgeted at $63 million, and is now expected to cost close to $800 million. More than $600 million has already been paid to SAIC.
Comptroller John Liu says the indictment "shed more light on just how flawed the management of the CityTime project was." "Virtually the entirety of the more than $600 million that was paid to SAIC was tainted directly or indirectly by fraud," he added.
As for the Bloomberg administration, which was supposedly overseeing the project, they are so far mum on the scandal.
CityTime consulting company Technodyne goes bust, terminates over 200 employees in wake of scandal
BY JUAN GONZALEZ, DAILY NEWS STAFF WRITER
Wednesday, June 01, 2011
The firm that received most of the $700 million that the city spent on the scandal-plagued CityTime payroll project has gone out of business.
More than 200 employees of consulting company TechnoDyne were informed Tuesday night that they are out of work and the company has closed its doors.
"TechnoDyne is terminating the services of its employees and consultants effective today, May 31, 2011," an email to employees stated. "Due to legal action recently taken against TechnoDyne by a governmental authority, [the firm] is unable to continue normal operations."
The startling news came days after federal prosecutors arrested CityTime's main project manager, Gerard Denault and charged him with taking $5.6 million in kickbacks from Technodyne's husband-and-wife owners.
In return for those kickbacks, Denault - a vice president at defense giant Scientific Applications International Corp., CityTime's main contractor - steered more than $460 million in subcontracting payments to Technodyne since 2004, according to a complaint unsealed by U.S. Attorney Preet Bharar Friday.
City official who quit amid CityTime scandal made millions as lobbyist
BY JUAN GONZALEZ AND GREG B. SMITH, DAILY NEWS STAFF WRITER
Sunday, February 06, 2011
A top consultant on the scandal-plagued CityTime project was accused of bid-rigging and conflict of interest when he worked for the city in the 1990s, the Daily News has learned.
Somehow, Sal Salamone managed to retire from his city job unscathed to make millions as a behind-the-scenes liaison to the city for computer companies - including SAIC, the company in charge of CityTime.
Now the Department of Investigation is looking at what role Salamone played in the CityTime fiasco, in which eight consultants have been charged with stealing $80 million.
Sources say Salamone, who has not been charged, was a go-between for SAIC and city officials as the project's price tag jumped from $68 million to $700 million.
"I fault those in city government for turning a blind eye to this guy," said Dick Dadey of the watchdog group Citizens Union.
Dadey said Salamone's tainted resume should have barred him from returning to City Hall.
"Even though he may not have been formally charged and convicted of acting against the best interests of the city, he should not have been allowed to return to working with the city," he said.
Salamone first came under scrutiny in 1993 when he was the city's director of information and technology management.
In an August 1993 report, DOI accused several aides to Mayor David Dinkins of improperly favoring a troubled city vendor, Lockheed Information Management Services.
In 1986, Lockheed was accused of bribing city officials in what became known as the Parking Violations Bureau scandal.
By 1993, Lockheed was angling for a contract to computerize the city's parking ticket system. That's when DOI probers found evidence Salamone leaked a rival's bid secrets to Lockheed.
When the Investigations Department told the city about the leak, the then-parking bureau director said there was a "very strong likelihood" the bid had been compromised. The bid was terminated.
Salamone retired weeks before DOI's report went public.
Just before he left, the Investigations Department found, Salamone lined up consultant jobs with computer companies for whom he'd approved lucrative city contracts.
The city's conflict of interest board was notified, but took no action. Salamone went off the radar screen for years until he surfaced in the CityTime mess.
In December, prosecutors accused eight CityTime consultants and their relatives of stealing $80 million in an overbilling scheme.
While CityTime's cost was rising at an alarming pace and the embezzlement scheme was secretly unfolding, Salamone was getting $773,000 as SAIC's key liaison to the city on CityTime.
During that time, the mayor's budget director, Mark Page, repeatedly defended CityTime. Page acknowledged through a spokesman that he was acquainted with Salamone when both worked at City Hall in the 1990s.
"Mark doesn't really know him," spokesman Ray Orlando said. "Mark didn't have any interaction with him on the CityTime project."
While working on CityTime, Salamone doubled as a lobbyist for computer vendors seeking city work, pocketing $1.3 million in fees since 2006, records show.
Last week SAIC decided not to renew its consulting contract with Salamone, a spokeswoman email@example.com