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The former project manager of the scandal-scarred CityTime payroll project was charged yesterday with intentionally delaying its completion and driving up its enormous costs in exchange for at least $5.6 million in kickbacks from a subcontractor.
Gerard Denault was allegedly left in charge of CityTime — which has so far cost taxpayers more than $720 million, up from an estimated $63 million budget a decade ago — despite warnings that he was scheming with subcontractor TechnoDyne to pad its bills.
The scam went on as Denault got a series of promotions that boosted his annual salary from about $193,000 in 2004 to nearly $645,000 last year as his alleged scam pumped up the project’s profitability.
Federal-court papers say Denault’s thievery persisted despite an anonymous whistleblower’s attempt to alert the project’s prime contractor, Science Applications International Corp., more than six years ago about “gross mismanagement” to benefit the subcontractor.
After a “brief” internal investigation, SAIC closed the probe and “and took no adverse action against Denault,” court papers say.
The feds, however, got their own tip about Denault in January, and he was busted Thursday night on fraud and conspiracy charges.
Denault, 49, declined comment after being released yesterday on $1 million bond, but lawyer Barry Bohrer said Denault was “proud” of his work, and would fight the charges.
The Manhattan federal-court complaint against him identifies the husband-and-wife owners of TechnoDyne — Reddy and Dr. Padma Allen — as uncharged co-conspirators in the alleged scam.
Court papers say TechnoDyne got $464 million, or about 80 percent of its income, from CityTime’s bloated budget.
In a statement announcing Denault’s arrest, US Attorney Preet Bharara noted that “there are more individuals yet to be held accountable” in the case.
The charges against Denault follow last year’s arrests of a former computer consultant, Mark Mazer, and several alleged accomplices who reportedly stole about $80 million while working on CityTime.
Just hours before Denault’s arrest was announced yesterday, Mayor Bloomberg defended the unfinished electronic-payroll system on his weekly radio show, saying, “We actually did a pretty good job.”
He later expressed gratitude “that the city’s Department of Investigation found the fraud, and is addressing it with the US Attorney’s Office.”
Federal prosecutors yesterday charged Gerard Denault, a CityTime project manager, with taking kickbacks.
* Denault allegedly received $5.6M for steering $464M in work to subcontractor, Technodyne.
* His pay skyrocketed from $193,000 in 2004 to nearly $645,000 last year as his alleged scam boosted costs and profits.
* SAIC has promised to repay the city $2.5M billed for his salary.
* The city’s cost for the electronic-payroll project soared from an initial estimate of $63M more than a decade ago to the current estimate of $720M.