NYC
12/16/2010 09:54 am ET | Updated May 25, 2011

CityTime Fraud: Prosecutors Unveil $80M Money Scheme

That federal prosecutors charged consultants of CityTime, the city's payroll timekeeping program, in an $80 million fraud scheme is but the latest problem with the broken system.

CityTime was created as a way for the city to streamline timekeeping of all city employees and to fight corruption and waste within city government. Instead, it has functioned much to the opposite effect.

Mayor Bloomberg acknowledges the project to be a "disaster" and Wednesday's massive fraud charge does not help.

The New York Times highlights some of the significant failures of the payroll system:

The project's cost has exceeded $600 million, nearly 10 times over budget, and is six months past its due date. Meanwhile, consultants who were hired to oversee putting the project into effect have been paid nearly $50 million -- $46 million more than they were initially supposed to receive.

Prosecutors charge that consultants tasked with managing CityTime had manipulated the system in order to funnel money to themselves, and to give hugely expensive projects to companies and businesses they controlled.

Mayor Bloomberg was furious at the recent allegations. "The issue is that here we had somebody that we trusted, or one of our contractors trusted, and that trust was misplaced," Mr. Bloomberg said. "And we just have no tolerance for this whatsoever."

Consultants Mark Mazer, his wife Svetlana, his mother Larisa Medzon as well colleagues Scott Berger, Victor Natanzon, and Dmitry Aronshtein appeared in court Wednesday and deny the charges against them.