Public Employee Press

Feds catch CityTime crooks in $80 million fraud
Scandal shows corruption in Bloomberg contracting-out policy

A day after the U.S. Justice Dept. charged consultants in the CityTime payroll project with "massive fraud," municipal labor leaders at a Dec. 16 news conference demanded that the Bloomberg administration cancel looming layoffs and stop contracting out city work.

DC 37 Executive Director Lillian Roberts called the $80 million fraud indictment of the four consultants the "tip of the iceberg" of widespread waste and corruption in contracting. She called on Mayor Bloomberg to rescind the pink slips of about 130 DC 37 members scheduled for layoff Jan. 14 and scrap his plan to eliminate 10,000 city jobs by 2012.

Outraged that the cost of CityTime had ballooned from $63 million 10 years ago to $780 million with no objection from the mayor, Roberts demanded closer government scrutiny of the Bloomberg administration's spending of $10 billion on 18,000 contracts.

Accompanying labor leaders on the City Hall steps, City Council Contracts Committee Chair Letitia James said the indictment pointed to a "web of fraud and deceit." She praised Roberts and Local 375 Secretary Jon Forster for their persistence in bringing public attention to the corruption and mismanagement at CityTime.

James called for the firing and arrest of Office of Payroll Administration Director Joel Bondy, who was responsible for overseeing the CityTime project.

That afternoon, Comptroller John C. Liu and Bloomberg agreed to suspend Bondy. Liu also froze payments to Spherion, a quality assurance contractor involved with paying the consultants, until the city reviewed subcontracting, consultant billing and recordkeeping practices.

While Bondy had not been charged as PEP went to press, the federal complaint points to his close relationship with defendant Mark Mazer. Prosecutors charged Mazer and his colleague Scott Berger with taking kickbacks from consultants they hired, Dmitry Aronshtein and Victor Natanzon, who were charged with submitting fraudulent timesheets. Mazer's wife and mother laundered the proceeds of the fraud through shell corporations, said the charges.

At the press conference, Forster called the CityTime scandal a "classic case" of how contracting out often leads to corruption." Local 375 President Behrouz Fathi pointed out that the union has repeatedly said, "City workers can do the job more efficiently and better than consultants."

Data Processing Employees Local 2627 President Robert D. Ajaye said CityTime consultants earn at least three times as much as civil service computer workers, who typically make $70,000. Under an agreement between Liu and Bloomberg, in June Local 2627 members will take over the work of the CityTime contractor, Science Applications International Corp.

—Gregory N. Heires