Somehow $80 million in alleged fraud just slipped through the cracks, Mayor Bloomberg said yesterday, when asked about the mind-blowing CityTime payroll scandal.
“If you want to know how big projects have things that slip through the cracks, this is as good an example as you need,” Bloomberg said on his weekly WABC radio show.
His comments came on the heels of the arrest of six people charged with defrauding the massively over-budget CityTime project that was supposed to digitize worker timecards a decade ago.
“Nothing goes without some problems, whether it’s in your family, your company, your government, the world. On balance, New York City is — and I’ll still stand by this in spite of this — relatively corruption- and crime-free,” he said.
Over a period of five years, supposed information-technology consultants allegedly looted the coffers of the Office of Payroll Administration with inflated invoices and doctored timesheets, all under the watch of Bloomberg appointee Joel Bondy, according to the criminal case filed in Manhattan federal court.
Fallout from the scandal continued yesterday.
Spherion, the IT consulting firm that used accused fraudster Mark Mazer and crew as a subcontractor on the CityTime project, suffered another blow when the city Department of Education suspended a separate contract for tech services.
“In light of recent developments, we have stopped payments to Spherion and will be conducting an expedited investigation into their contracts with the DOE to ensure that city funds were used in a lawful manner,” said DOE spokeswoman Barbara Morgan.
The Florida-based company, which was not charged with any wrongdoing, received $17.3 million in fees from the Department of Education since 2003, records show.
The firm has collected tens of millions of dollars in fees from the city over the past five years, including $40 million from the Department of Information Technology and Telecommunications.
How the $80 million scam worked, according to federal charges:
1. Joel Bondy, head of Office of Payroll Administration, hires Mark Mazer as a “quality assurance” consultant for the CityTime payroll system. Mazer is granted a large budget to hire subcontractors and issue work orders.
2. Mazer awards “sub-subcontracts” worth $55 million to DA Solutions, the company of his uncle, Dmitry Aronshtein; $20 million to friend Victor Natazon’s Prime View; and $1.4 million to friend Scott Berger’s SRB Consulting.
3. Each man funnels one-third of his fees back to Mazer through shell companies created by Mazer’s wife, Svetlana, and mother, Larisa Aronshtein Medzon (Aronshtein’s sister, bottom right). Berger, Natazon and Aronshtein wire Mazer $24.5 million into various bank accounts connected to the shell companies.
4. Meanwhile, Aronshtein and Natazon pay workers $20 to $40 per hour while billing OPA up to $150 per hour. Timesheets are submitted for contract workers who had been terminated or were on vacation.