(Reuters) — Four consultants were charged on Wednesday with defrauding New York City of nearly $80 million in public funds allocated for a project intended to ensure that city workers would be paid efficiently.
The four consultants to the city's Office of Payroll Administration were charged with conspiring to commit wire fraud in a scam in which one of them steered city funds to consulting firms run by the others.
The consulting firms were paid more than $76 million in city funds, of which $24.5 million was kicked back to shell companies that had been set up, prosecutors said.
The accused men used city coffers as "their own personal cash cow," U.S. Attorney Preet Bharara said in a statement.
"In these times of shrinking government budgets and fiscal austerity, these crimes are particularly galling," he said.
One of the consultants, Mark Mazer, and his wife Svetlana, who was accused of conspiring to launder the proceeds, are alleged to have purchased two homes worth more than $3 million and at least six cars in the last two years, prosecutors said.
The four consultants — Mazer, Dmitry Aronshtein, Victor Natanzon and Scott Berger — were working on an automated timekeeping system intended to make sure city employees are paid efficiently.
Mayor Michael Bloomberg said they betrayed the city's trust.
"We have zero tolerance for any waste, fraud or abuse," he said at a news conference. "You can rest assured we can do everything possible to get the money back."