$80,000,000 Scheme to Defraud NYC

Massive Fraud Relating To New York City’s CityTime Project Involved Use Of Shell Corporations And False Timesheets PREET BHARARA, the United States Attorney for the Southern District of New York, and ROSE GILL HEARN, the Commissioner of the New York City Department of Investigation (“DOI”), announced today charges against four consultants to the New York City Office of Payroll Administration (“OPA”) – MARK MAZER, DMITRY ARONSHTEIN, VICTOR NATANZON, and SCOTT BERGER – for operating a fraudulent scheme that led to the misappropriation of more than $80 million in New York City funds allocated for an information technology project known as “CityTime.” MAZER, ARONSHTEIN, and NATANZON are also charged — along with MARK MAZER’s wife, SVETLANA MAZER, and his mother, LARISA MEDZON — with using a network of shell corporations to launder the proceeds of the fraud. Each of the defendants was arrested this morning. They are expected to be presented in Manhattan federal court later today.

Manhattan U.S. Attorney PREET BHARARA said: “In an elaborate scheme that included shell companies, kickbacks, and international money laundering, 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. Mazer then allegedly used front companies controlled by his wife and mother to personally pocket more than $25 million in City money. In an ironic twist, funding for CityTime, a project intended to prevent payroll waste, fraud, and abuse, was itself allegedly bilked in part by fraudulent timekeeping. In these times of shrinking government budgets and fiscal austerity, the crimes charged today are particularly galling. I want to praise Commissioner Rose Gill Hearn and her DOI team for their exceptionally quick and diligent work in this matter. Working with our partners, we will continue to ferret out public corruption and prosecute those responsible to the full extent of the law. This investigation is continuing.”

DOI Commissioner ROSE GILL HEARN said: “The shame is that a project to save time and money on the City payroll fell prey in part to the accused swindlers who cost the taxpayers a stunning $80 million and counting. The supposed experts hired and paid well to protect the City’s interests were exposed as the fox guarding the hen house, secretly pocketing millions and purchasing expensive homes and cars, it is charged. Ironically, when CityTime’s hand scanners got in their way, they even resorted to fudging paper timesheets, according to the Complaint. DOI investigators methodically followed the money to reveal the deception and end the shell game. DOI and the U.S. Attorney’s Office for the Southern District of New York continue to investigate this brazen scheme and are committed to pursuing this case to its just conclusion.”

For more information, read the Press Release here.