Metro

$500M payback for CityTime fiasco

The epic CityTime scandal ended with a stunning resolution yesterday when the company chiefly responsible for a corruption-ridden timekeeping system that cost taxpayers $652 million agreed to repay more than $500 million.

Manhattan US Attorney Preet Bharara, who engineered the settlement with Science Applications International Corp., called it “the largest by-dollar amount arising out of any state or local government fraud in history.”

The amount recovered was so large that Mayor Bloomberg — whose administration defended the CityTime system until the bitter end — made an unusual appearance with Bharara and city Department of Investigation Commissioner Rose Gill Hearn to thank prosecutors and to reiterate his commitment to root out corruption.

“I wish we had found $500 million in a more pleasant way,” conceded the mayor, who can now blunt at least some of the criticism over an astonishing rip-off under his watch that may be the city’s biggest ever.

SAIC didn’t have much choice but to cooperate after two of its managers were snared 15 months ago in a wide-ranging, seven-year kickback scheme that involved at least nine other individuals and was so riddled with fraud that Bharara said there was no way to estimate what it should really have cost.

Government contracts account for 93 percent of SAIC’s $11 billion in revenues — and they’d be endangered if the company itself were convicted. In return for the cash, the appointment of an independent monitor for three years and a “statement of responsibility,” the publicly traded company won’t be prosecuted on one count of wire fraud as long as it cooperates with the feds for three years.

It will pay $370 million in restitution, another $130 million in fines and won’t try to collect $40 million still owed by the city on the completed project.

“Half a billion dollars is a staggering sum,” observed Bharara, “but it is a sum commensurate with the scale of the crimes.”

Officials said that the city will receive $466 million of the payout and could collect all or part of another $52 million in assets frozen by the feds.

They put the final cost of the timekeeping and payroll system, which now serves 163,000 employees, at between $134 million and $186 million.

SAIC issued a statement by CEO John Jumper saying the settlement was “an important step in our efforts to move forward as a better, stronger company, dedicated to the highest standards of ethics and performance for our customers.”

He added that the firm had instituted “strong improvements to our compliance system and have new leadership in place.”

But its problems may not be over. Bharara refused to say if other SAIC contracts are being scrutinized.

“I’m not going to comment beyond what’s in the public documents,” he said when asked if SAIC’s failure to police CityTime was an isolated incident.

SAIC admitted that CityTime’s cost exploded from $115 million in 2005 to about $620 million in 2011 after its contract was amended so that the risk of cost overruns was shifted to the city and a corrupt manager began hiring hundreds of consultants, receiving a kickback of $5 for every hour they billed.

One of the suspects in the scandal has died, two have pleaded guilty, and eight still face prosecution. Two of them, subcontractors Reddy and Padma Allen of TechnoDyne LLC, are fugitives and believed to be in India, where they were accused of stashing at least $40 million.

Prosecutors have frozen 19 banks accounts with $4.7 million tied to the Allens and have attached seven homes worth $6.8 million they allegedly bought with CityTime loot.

Bloomberg concluded, “This is a good day for New York City. We do have a functioning system and, in the end, at a very reasonable cost.”