Three men found guilty in New York City payroll fraud case

Three men were found guilty of a massive fraud and kickback scheme in New York City. Credit: Adam Gerard, Flickr
Three men were found guilty of a massive fraud and kickback scheme in New York City. Credit: Adam Gerard, Flickr

A U.S. jury convicted three men on Friday in a massive kickback and fraud scheme while implementing a new payroll system for New York City that eventually cost more than $600 million.

Mark Mazer, 50, who was accused of playing a central role in the fraud, was found guilty on all six counts including conspiracy to defraud the city, wire fraud, and conspiracy to commit bribery.

The jury also convicted Dimitry Aronshtein, 53, Mazer’s uncle, and Gerard Denault, 52, a former employee at lead contractor Science Applications International Corp, on charges including conspiracy to commit money laundering.

The government accused Mazer and a network of relatives and other conspirators of masterminding a fraud that netted more than $40 million.

Five other defendants had already pleaded guilty to aiding the scheme, including Mazer’s wife, mother and cousin, while two others charged in the fraud remain at large and are considered fugitives.

During the trial, prosecutors said Mazer, Aronshtein and Denault pocketed millions of dollars while managing the cpayroll project, an initiative intended to modernize the city’s payroll system that was originally budgeted at $63 million.

Costs ballooned to more than $600 million as a result of the scheme, prosecutors alleged. Mazer steered business to consulting firms controlled by his co-conspirators and used shell companies to launder and conceal the payments, the government said.

“The jury has found what this office alleged from the outset: these defendants were at the heart of a conspiracy to steal from New York City and its taxpayers,” Manhattan U.S. Attorney Preet Bharara said in a statement. “Awarded a lucrative contract to design a streamlined payroll system for the city, instead they built a money-making machine for themselves.”

The government recovered most of that money after SAIC, the project’s primary contractor, agreed in March 2012 to forfeit more than $500 million to avoid prosecution.

Defense lawyers had argued that the three men never took any steps to deceive the city while managing the project.

“The size and the enormity of the dollars is not a substitute for evidence,” Gerald Shargel, Mazer’s attorney, said during closing arguments. “It’s not a substitute for proof.”

The jury convicted Aronshtein, who owned subcontractor D.A. Solutions, Inc., on four counts including a charge that he paid bribes and illegal kickbacks to Mazer, a CityTime consultant who served as the principal agent on the project.

The jury meanwhile found Denault, a project manager at SAC, guilty on all but one of the seven counts against him, conspiracy to commit bribery.

Shargel said on Friday he was “obviously disappointed.” He and lawyers for the other defendants said they planned to appeal.

U.S. District Judge George Daniels scheduled sentencing for March 12 and ordered the defendants to home confinement in the meanwhile.



News
Entertainment
Sports
Lifestyle
News

Turkey: Voting begins in country's first direct presidential…

Some 53 million people are able to vote in the election, including 2.8 million citizens abroad. Until now, Turkish presidents were elected by parliament.

News

Libya seeks ceasefire as south Tripoli a militia…

By Patrick Markey and Aziz El YaakoubiTRIPOLI (Reuters) - Black plumes of smoke marked shell blasts and bulldozed earthen barricades mapped out the frontlines around…

Breaking: News

Russia mad about sanctions, says U.S. contributing to…

Russia reacted angrily on Saturday to additional sanctions imposed by the European Union over Moscow's role in the Ukraine crisis, saying they would hamper cooperation…

National

Mutant worms stay sober, even on alcohol

U.S. researchers have developed "mutant worms" that do not get drunk by alcohol, a breakthrough that could lead to new treatment for people trying to quit drinking

Movies

Review: Brett Ratner's big 'Hercules' movie is small…

The latest "Hercules," starring Dwayne Johnson as the half-god beefcake of Greek myth, strips its hero and tale of most of its fantastical elements.

Arts

Scientists recreate world's smallest Monet copy

Scientists have reproduced a famous Impressionist painting using nano-printing, to create what has been described as the world's smallest work of art. Reworked at the…

Television

Jerry Seinfeld is ambidextrous, and other Reddit AMA…

See some of the weirder highlights of Jerry Seinfeld's recent Reddit AMA.

Going Out

Grab a pedestrian and start dancing at What…

As a New Yorker, I’ve mastered the art of focusing my gaze straight ahead. Though it occasionally piques my interest, the absurdities that play out…

U.S. Soccer

Orlando City takes shot at NYCFC over Frank…

Orlando City reminded the world how big a signing Brazilian star Kaka earlier this month with a photo of Kaka mobbed by fans juxtaposed against Lampard.

NBA

Jeremy Lin says 'Linsanity' is over as he…

Jeremy Lin lit up the NBA two years ago with his play for the Knicks but he has no desire to recreate "Linsanity" in his new career with the Lakers.

NFL

2014 NFL Fantasy Football Top 100 overall player…

2014 NFL Fantasy Football Top 100 overall player rankings

U.S. Soccer

NYCFC announce signing of Frank Lampard

The tease of a big signing Thursday by new MLS side NYCFC ended up being one rumored for weeks. England midfielder Frank Lampard agreed to…

Tech

Forget Wi-Fi: Li-Fi could be the future

Li-Fi technology – developed by Mexican company Sisoft – is wireless internet connectivity using specialized LED light.

Tech

Weather app Climendo might be the most accurate…

The wait for a truly accurate weather forecast could finally be over thanks to a nifty new app called Climendo.

Tech

Napkin Table puts focus off the phone and…

Michael Jan, a design student at Tunghai University in Taiwan, has invented a serviette-picnic blanket hybrid called the Napkin Table.

Style

Essie's new Color Boutique

Essie launches high-tech kiosks at major airports and malls across the country.