DNAinfo News Editor
MANHATTAN — Four contractors were charged Wednesday with stealing $80 million from New York City while working on CityTime, an automated payroll system designed by the city to prevent fraud, the U.S. Attorney's Office said.
The consultants, which included Mark Mazer, Dmitry Aronshtein, Victor Natanzon and Scott Berger, were charged with fraud in a kickback scheme that involved using shell companies to launder their proceeds.
"Mark Mazer and his cohorts allegedly used the City as their own personal cash cow, making misrepresentations that led to the misappropriation of tens of millions of dollars in taxpayer funds," said U.S. Attorney Preet Bharara in a statement, adding that it was an "ironic twist" that the funds were stolen from CityTime, given that it was created to stop such abuse.
Mazer, who was hired for $4.4 million to do quality assurance work on CityTime, allegedly directed tens in millions of the project's funds to firms run by Aronshtein — believed to be his relative — and Natanzon, according to the U.S. Attorney's Office. He then allegedly falsified timesheets to make the payouts seem legitimate. The firms run by Aronshtein and Natanzon paid him upwards of $20 million in kickback money distributed to shell companies set up by his wife Svetlana, and mother, Larisa Medzon, both of whom were also charged, according to prosecutors.
Mazer used the money to buy two houses and six pricey cars for himself and his wife, among other expenditures, the U.S. Attorney's Office said.
CityTime has been a long-troubled project, with endless delays and budget troubles. Only 35 percent of city employees were using CityTime as of June 2010, when the project was supposed to be completed, according to Bharara.
Mazer, Aronshtein, Natanzon and Berger were all charged with conspiring to commit wire fraud. They each face a maximum sentence of 20 years in prison and a huge fine if convicted. Mazer, Aronshtein, Natanzon, Svetlana Mazer and Larisa Medzon are also charged with conspiring to launder the proceeds of the fraud. That charges carries a maximum sentence of 20 years in prison and a several hundred thousand dollar fine.