Tech Firm Linked to NYC Scandal to Pay $500 Million

Wednesday, 14 Mar 2012 | 2:25 PM ET
Rubberball | Getty Images

The technology company in charge of New York City's scandal-plagued CityTime payroll project agreed Wednesday to pay $500 million in restitution and penalties in a deal that helps it avoid prosecution.

SAIC attorney Douglas Lobel entered the agreement before a federal judge in Manhattan. The CityTime project was designed to automate the timekeeping of about 165,000 city employees working under various contracts.

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.

The agreement includes $370 million as restitution to the city and $130 million as a penalty.

Mayor Michael Bloomberg had demanded the company repay the city more than $600 million spent on the project.

"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. "Our administration has zero tolerance for corruption."

Lobel declined to comment after the court hearing.

Prosecutors also filed papers seeking to seize more than $11 million from an SAIC subcontractor and its owners, who are believed to have fled the country.

New York City stands to receive $466 million in the settlement — 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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