Government // Open Government
02:56 PM

NYC Tech Project Riddled With Fraud, Indictments Issued

The CityTime payroll project was meant to cost $63 million, but has soared to $600 million. Top officials of TechnoDyne, the principal subcontractor, were charged with fraud and have fled to India.

A couple indicted in an IT project-related scam that has cost New York City tens of millions of dollars have fled to their native India, avoiding arrest for their alleged involvement in a kickback scheme that also incriminates a third-party government contractor.

The U.S. Attorney for the Southern District of New York on Monday indicted Reddy and Padma Allen, a couple who served as the CEO and CFO of a company called TechnoDyne, for allegedly engaging in fraud, kickback, and money laundering schemes related to a project to modernize the city's payroll system called CityTime. The first indictments in the case were handed down in February.

TechnoDyne--the principal subcontractor of the project's prime contractor Science Applications International Corp. (SAIC)--also was named in the indictment, along with several other consultants, including an SAIC employee. That employee--New York-based SAIC chief systems engineer named Carl Bell--pled guilty on June 14 to multiple charges and admitted receiving millions of dollars in kickbacks, according to the U.S. Attorney.

Indeed, there are nine separate charges in the case that range from wire fraud conspiracy to bribery to honest fraud conspiracy to obstruction of justice. As described by the U.S. Attorney, those named in the indictment implemented an elaborate scheme to convince the city to pay them millions for work not completed or employees that no longer worked for the company or worked fewer hours than claimed on timesheets. Not everyone named in the case has been charged on all nine counts, however.

New York has been working on the CityTime project for more than a decade; it was initially was meant to cost $63 million. So far it's cost the city $600 million, a bloated figure that's partially result of fraudulent behavior of those named in the indictments, according to the U.S. Attorney.

The Allens' role in the scheme was to receive and funnel fraudulent payments from the project to SAIC, according to the U.S. Attorney. This allegedly was done by consultants hired to work on the project--Mark Mazer and Gerard Denault--approving timesheets for project employees who were on leave or had been let go, as well as work orders and payment for unnecessary staff increases.

Denault and SAIC's Bell also allegedly tried to cover up kickbacks they received related to CityTime by making them appear to be legitimate income from separate consulting businesses, according to the U.S. Attorney.

What industry can teach government about IT innovation and efficiency. Also in the new, all-digital issue of InformationWeek Government: Federal agencies have to shift from annual IT security assessments to continuous monitoring of their risks. Download it now. (Free registration required.)

Comment  | 
Print  | 
More Insights
Oldest First  |  Newest First  |  Threaded View
Jason A. Salamon SAIC
Jason A. Salamon SAIC,
User Rank: Apprentice
12/8/2011 | 7:13:45 PM
re: NYC Tech Project Riddled With Fraud, Indictments Issued
There is no way that SAIC will ever be caught doing this stuff. People are idiots if they think so. We have too much money and power.
Time to Reconsider Enterprise Email Strategy
Time to Reconsider Enterprise Email Strategy
Cost, time, and risk. It's the demand trifecta vying for the attention of both technology professionals and attorneys charged with balancing the expectations of their clients and business units with the hard reality of the current financial and regulatory climate. Sometimes, organizations assume high levels of risk as a result of their inability to meet the costs involved in data protection. In other instances, it's time that's of the essence, as with a data breach.
Register for InformationWeek Newsletters
White Papers
Current Issue
Top IT Trends to Watch in Financial Services
IT pros at banks, investment houses, insurance companies, and other financial services organizations are focused on a range of issues, from peer-to-peer lending to cybersecurity to performance, agility, and compliance. It all matters.
Twitter Feed
InformationWeek Radio
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.