CityTime Company Agrees to Pay Back Hundreds of Millions

SAIC Inc. was in charge of the troubled project.

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    The company in charge of developing New York City's troubled CityTime payroll system has agreed to pay back hundreds of millions of dollars in alleged overbilling and other financial misconduct, officials said.

    Under a deal to be announced by city officials Wednesday, SAIC Inc. will pay back a total of $500 million and admits that it failed to investigate claims of corruption as early as 2005..

    The project, when conceived a decade ago, was supposed to modernize the payroll system for city employees at a cost of $63 million. It has cost $700 million so far.

    The company is charged with one count of conspiracy to commit wire fraud. Under the deferred prosecution deal, SAIC pleaded not guilty to the charge and agrees to pay $370 million in restitution and $130 million in penalties.

    The company has also agreed to an independent monitor.

    The city will get $466 million from the settlement -- all the restitution and $96 million of the penalties.

    If SAIC cooperates with the terms of the deferred prosecution deal for three years, it will have met its obligations, officials said.

    SAIC CEO John Jumper said in a statement that the CityTime contract "became a vehicle for fraud perpetrated by two former SAIC employees conspiring with others not in the company." The settlement, he said, allows the company to move on.

    "We also understand that the company is responsible for the actions of all its employees, and we accept that responsibility, as well as the accountability that goes with it," he said.

    Eleven people have already been charged in connection with the case; two have pleaded guilty and charges are pending for eight others. A final defendant died after being arrested.

    In addition, U.S. Attorney Preet Bharara has filed a civil action against a subcontractor, Technodyne, trying to seize tens of millions from accounts linked to the company and two executives who ran the company. Technodyne had already been criminally charged and has not commented.