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Queens Chronicle

Liu warned mayor in March about CityTime

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Posted: Thursday, December 23, 2010 12:00 am

For the past week, Mayor Bloomberg has been on the defensive, shrugging off political shots after six individuals — including four consultants to the Office of Payroll Administration — were indicted on federal fraud and money laundering charges, accused of bilking the CityTime payroll project out of tens of millions of dollars.

Bloomberg, speaking last week on his radio show, characterized the information technology initiative launched during the Giuliani administration and intended to prevent payroll waste, fraud and abuse as an example of a “big project” with “big things” that slipped “through the cracks.”

But a January Daily News report and at least two missives — one dating back to 2003 and the other sent from City Comptroller John Liu to the mayor — paint a starkly different picture.

News columnist Juan Gonzalez detailed nearly a year ago how the project’s cost went from $63 million in 1998 to more than $600 million in 2009, due in part to the hiring of hundreds of consultants, most of whom were contracted or sub-contracted by the Virginia-based firm Science Applications International Corp. at an average annual salary of $400,000 per consultant, all paid for by the city.

Liu wrote to Bloomberg in March, urging him to stop “the hemorrhaging of funds that are still slated to be poured into CityTime.

“It is clear from the funds already expended, and the lack of results shown that this project has ballooned out of control,” said Liu, who set CityTime’s total cost at more than $738 million.

Gonzalez and The New York Times on Tuesday reported on a letter sent nearly eight years ago from Richard Valcich, who at the time was the executive director of the OPA, to SAIC, excoriating the firm for being unable to deliver results on time and costing the city millions. The letter was obtained under a Freedom of Information request.

Liu, a former Flushing city councilman, announced in September that an agreement had been reached between the city and SAIC, stipulating that the CityTime project would be completed by June 30, 2011, and that the city would not pay the firm any more money for the implementation of the time-keeping system until it is finished.

The 42-page federal complaint charges four consultants — Mark Mazer, Dmitry Aronshtein, Victor Natanzon and Scott Berger — with operating an elaborate scheme that led to the misappropriation of more than $80 million in city funds allocated for CityTime. Additionally, Mazer, Aronshtein, Natanzon, Mazer’s wife, Svetlana, and his mother, Larisa Medzon, were charged with “using a network of shell corporations to launder the proceeds of the fraud.”

Mazer, of Spherion Inc., was the alleged mastermind of the scheme, helping to shape and approve contract amendments and work orders that resulted in higher staffing levels on CityTime, steering the new business to firms run by Aronshtein and Natanzon. It is also alleged that Mazer, Aronshtein, Natanzon and Berger generated and approved fraudulent timesheets.

As a result of last week’s developments, Bloomberg and Liu decided to suspend Joel Bondy, Valcich’s successor at the OPA, without pay, pending further investigation. According to Gonzalez, Bondy, who lives in Bayside, was a consultant at Spherion on the CityTime project just prior to becoming executive director in 2004.

Liu also announced last Thursday that effective immediately he was suspending all payments to Spherion “until the city conducts a comprehensive review of subcontracting, consultant billing and recordkeeping practices.”

The effects of the scandal have even reached Albany. On Tuesday, state Comptroller Tom DiNapoli rejected a $118 million contract between SAIC and MTA New York City Transit to upgrade its VHF radio system in Queens, Brooklyn, Manhattan and the Bronx. DiNapoli asserted that “there are too many unanswered questions” regarding the firm’s role in the scandal, “and too many public dollars at risk for this contract to go forward.”

Bloomberg last Thursday promised that his administration “will do everything possible to ensure any taxpayer dollars that were fraudulently distributed are recouped and that those who were complicit in attempting the scam the public face the full force of the law.”

Welcome to the discussion.