Massive Fraud in Thompson’s Term Mars ‘Watchdog’ Reputation

NEW YORK -

Bill Thompson has been been building his mayoral campaign on his status as New York City’s top financial watchdog for eight years, but a massive fraud that occurred under his watch could have been stopped with a simple audit, an investigative report publicized by the Daily News alleges.

The Thompson campaign said that he met with administration officials to warn them about the CityTime project that was supposed to modernize the city’s payroll system. But they admitted he could have done more.

Spokesman John Collins said that Thompson met with Mayor Michael Bloomberg’s budget director Mark Page “more than once” to warn about “possible problems in this contract, and had assurances that those issues would be addressed.”

In what prosecutors called a “fraudsters’ field day that lasted seven years,” an initial price tag of $73 million quickly ballooned to more than $700 million, with about $500 million of that disappearing into a hidden network of overseas bank accounts. Ten people were eventually charged.

“We just kept giving [CityTime] increases, and there was no limit to it,” a former auditor said. “It was so obvious it was a runaway train. What needed to happen was that somebody needed to do an overall assessment to see where the money is going.”

That someone was supposed to be the comptroller, the chief watchdog over taxpayer dollars. But that probe was never done.

CityTime began with hopes of huge savings by bringing the city’s paper timekeeping systems into the computer era. But a look at  the 626 audits Thompson’s office conducted during his eight years, none looked at CityTime.

When Thompson took office as controller in 2002, the city’s Office of Payroll Administration, controlled by one member each from the mayor’s and comptroller’s offices, said they expected the program to cost $73 million.

Within a year, it was obvious that the initial money was insufficient for the 81 disparate city agencies, and OPA requested the first of seven funding hikes. Thompson was warned to reject it but he signed off on all of them.

An audit even discovered nine consultants drawing paychecks weeks after they stopped working. Thompson’s office was informed but did not look at CityTime, an audit which would have uncovered the whole scheme.

When Thompson left office, John Liu, his successor, began investigating CityTime. His audit revealed a stunning lack of oversight that allowed the CityTime contract to become a “money pit.”

“This situation should not have occurred,” the auditor said.