Company In Charge Of CityTime Agrees To Pay $500M To NYC
NEW YORK (CBSNewYork/AP) -- The company in charge of developing New York City's troubled CityTime payroll system is paying back half a billion dollars in alleged over billing.
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SAIC Inc. attorney Douglas Lobel entered the agreement Wednesday before a federal judge in Manhattan to pay $500 million in restitution and penalties in a deal that helps it avoid prosecution.
"This resolution is, as far as our office is aware, the largest by dollar amount arising out of any state or local government contract fraud in history," said U.S. attorney Preet Bharara. "It is also a resolution that ensures that every penny of fraud will be returned to the city and that the city will be made whole."
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CityTime was expected to cost $63 million when it was launched in 1998. But the cost ballooned tenfold as the undertaking grew into what prosecutors say became an international conspiracy.
Mayor Michael Bloomberg has been demanding the company pay up for a project he said was tainted by fraud and kickback schemes.
"Today's settlement is a major victory for taxpayers and just as importantly, it is a major a victory for justice and public integrity," Bloomberg said in a statement.
"This settlement starkly shows that when the City is victimized it will find the perpetrators and recoup its financial loss," Rose Gill Hearn, commissioner of the Department of Investigation, said in a statement. "Lax oversight or disregard for warning signs of fraud are not the way for companies to do business in this city and will not be tolerated."
New York City stands to receive $466 million in the settlement which includes all of the restitution and $96 million of the penalty money. In addition, a $41 million city payment to SAIC has been waived.
The deal recoups the bulk of the well over $600 million that the city spent on the timekeeping project. Prosecutors have said that "virtually the entirety'' of that money "was tainted, directly or indirectly, by fraud.''
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