By Nate Raymond
NEW YORK (Reuters) - Three men found guilty of engaging in a scheme to line their own pockets while implementing a payroll system for New York City whose costs ballooned to $700 million were each sentenced to 20 years in prison on Monday.
U.S. District Judge George Daniels in Manhattan, in sentencing Mark Mazer, Gerard Denault and Dimitry Aronshtein, also had sharp criticism for the city, which he said for years failed to stop the men's "brazen scheme."
The judge called New York's contracting process an invitation for waste and fraud and said that until changes are made, criminal cases connected to it would remain "routine."
"The process is in need of significant reform," he said.
A spokeswoman for the New York City Law Department had no immediate comment on the judge's remarks.
Mazer, Denault and Aronshtein received the maximum sentence for each count on which they were convicted in November, with the sentences for each man to be served concurrently.
The three were part of what prosecutors called a network of relatives and other conspirators involved in a massive fraud and kickback scheme.
Prosecutors sought lengthy sentences for the men, including 80 years for Mazer, 50, who was hired to manage the CityTime payroll project and was accused of playing a central role in the fraud.
The government asked for 105 years for Denault, 52, a former employee at contractor Science Applications International Corp, which became the lead contractor on CityTime in 2000, and up to 40 years for Aronshtein, 53, Mazer's uncle and a subcontractor on the payroll project.
Daniels also ordered the trio to forfeit $47 million. He declined to let them remain free on bail.
Lawyers for the men indicated they planned to appeal. Only Aronshtein made a statement during the hearing, saying not a day goes by that he had not asked, "How did I get into this situation?
"I feel like the biggest loser for putting my wife and my family in this situation," he said.
The CityTime payroll project, launched in 1998, had an initial budget of $63 million. By 2011, costs had soared to nearly $700 million, prosecutors said.
The conspiracy resulted in kickbacks of $30 million to Mazer and $9 million to Denault, prosecutors said. Aronshtein personally reaped more than $5 million after making the kickback payments, prosecutors said.
"It is a classic tale of greed and corruption," Daniels said Monday.
Mayor Bill de Blasio, asked about the case at a press conference ahead of the sentencing on Monday, called it "a very sad chapter for the city.
"It is a reminder of how vigilant we have to be. ... You know, beware of deals that are too good to be true. I think this one got missed, and obviously it cost the city a lot."
Jurors in November convicted Mazer on all six counts he faced including conspiracy to defraud the city, wire fraud, and conspiracy to commit bribery.
The jury found Aronshtein guilty on four counts including a charge that he paid bribes and illegal kickbacks to Mazer. Denault was found guilty on all but one of the seven counts against him, conspiracy to commit bribery.
Five other defendants had already pleaded guilty to aiding the scheme, including Mazer's wife, mother and cousin, while two others charged remain at large and are considered fugitives.
Much of the city's losses were already recovered after SAIC agreed in March 2012 to forfeit $500 million as part of a deferred prosecution agreement.
The case is U.S. v. Mazer et al., U.S. District Court for the Southern District of New York, No. 11-121.
(Reporting by Nate Raymond in New York; Editing by Leslie Adler)
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