The U.S. Attorney for the Eastern District calls it the “single biggest fraud ever perpetrated on the city of New York.” The scandal involves the CityTime, a computerized timekeeping program designed to keep tabs on the hours worked and the salaries earned by city employers.
The project was supposed to cost $63 million. But the current estimate of cost is $740 million. Under a deal announced Wednesday, SAIC Inc. will pay back a total of $500 million.
The prosecutor, Preet Bharara, evoked the memory of scandals gone by, when fraud and greed afflicted City Hall. In 1873, Boss Tweed was convicted of making a fortune building the courthouse that still stands today on Chambers Street. The city was defrauded of about $31 million in that year. In 2012 terms, that could be many hundreds of millions of dollars -- or more.
Today’s CityTime scandal makes it clear that a huge company, in this case, SAIC Inc., can find the money to pay back half a billion dollars, apparently without great strain. Can smaller companies buy their way out of accusations of wrongdoing as easily?
Mayor Bloomberg stood next to Bharara as he announced the settlement. The mayor called this “a major victory for taxpayers…for justice and public integrity.”
But, as Daily News columnist Juan Gonzalez wrote, for a guy about to receive a $500 million settlement "the mayor did not seem all that elated.” Perhaps he was reflecting on some of the big salaries paid to hundreds of outside consultants on this project.
How could such a massive fraud occur on the mayor’s watch? Was he betrayed by someone -- or some people -- he trusted? Is there any mechanism that should be put in place to prevent such a calamity in the future?
Bharara and Investigation Commissioner Rose Gill Hearn deserve credit for their intensive investigation of this fraud.
A shameful scandal has been uncovered. But there are many unanswered questions -- and we can hope that the prosecutors and the mayor will answer them. The questions all boil down to one: how did they get away with it?