White Collar Villains: Mark Mazer and Friends Bilk NYC of $80 Million Through Fraud & Kickbacks
Friday, January 7, 2011 at 9:00 am
You might call it a case of insider-trading -- only it wasn't stock that IRS agent Albert Bront was trading on, it was institutional knowledge. Bront filed fraudulent tax returns from 2003 to 2007, during which he took excessive deductions and neglected to declare all his income. (I'd like to make a joke here, but I'm just too frightened to.) He did the same for two -- at this point presumed innocent -- relatives, while not telling them he'd lied on their filings.
But just because you know where to bury the bodies (bogus alimony and mortgage deductions, apparently) doesn't mean somebody else doesn't know to look there. Bront was caught in 2009, and threatened to kill the agents after they served him a search warrant for his home. He even attempted to run back inside to retrieve one of his three guns before an officer drew his own weapon and stopped him. When arrested, according to the police report, he kicked the squad's front seat, pounded the passenger door with his elbow and continued yelling.
The 51-year old Santa Clara, California man plead guilty to filing false tax returns and agreed to make $127,116 in restitution. In exchange, charges related to his death threat were dropped. He faces up to nine years in prison when sentenced in April. He will remain in jail until that time. But rest assured, in this case at least, there was someone watching the watchers...
Democractic Connecticut State Senator Thomas Gaffey had a good thing going, and he lost it all over about $2800. More proof that greed makes you stupid. Gaffey argues its simply an oversight. He's accused of double-billing the state and his political action committee for expenses associated with attending legislative conferences throughout the country with his girlfriend, Patricia Murphy.
According to Murphy, she told Gaffey that she couldn't afford to pay the costs of going with him on a junket to San Francisco and he told her "the PAC would pay his share and that he would pay for her." Instead on six occasions he not only charged the costs of the trips to his PAC, but the state as well, to the tune of $2800. (Imagine what a cheap date he'd have been for lobbyists if he ever got to Washington!)
The trips occurred between 2004 and 2007, during Murphy and Gaffey's five-year relationship, which ended in '07. During a 2008 investigation by the State Elections Enforcement Commission he was fined $6000 and forced to dissolve the PAC which meant the forfeiture of $10,000 controlled by the committee. Despite winning reelection in November, it became clear state police were pursuing a criminal charge and on Monday he was picked up and charged with six counts of sixth-degree larceny.
He plead guilty Wednesday to misdemeanor criminal counts, and has resigned his State Senate post, though in a statement he says he could've remained on, but only by enduring "an ongoing political controversy for years to come," something he wanted to spare his friends and family. He will remain in his full-time position as director of recycling and enforcement at the state's quasi-public trash agency, the Connecticut Resources Recovery Authority.
It's worth noting that the 51-year old, 16-year legislative veteran and former deputy president pro tempore of the Senate faced a eerily similar scandal regarding state reimbursements in 2002. He and another state legislator, then employed by the trash agency, collected state legislators' mileage reimbursements for their trips to and from their homes to the state seat in Hartford in trash agency vehicles, but lagged thousands of dollars behind in reimbursing the trash agency for their personal mileage on the same vehicles.
Once you've been convicted of EVER defrauding the federal government or a state agency you should never be allowed to suckle at the state's tit again. Call it the "No Soup For You" law, because you don't have to be a Soup Nazi to want a little justice.
In the annals of larceny, government software contracts rank just above snatching sugary confections from infants. Unlike consumer software which must actually work to produce profits, software for bureaucratic agencies by nature come in late, over budget and ineffectual, if they work at all. So New York's experiences with the City Time project, which seeks to convert all 165,000 of New York City's employees to electronic paysheets, was almost inevitably going to be a boondoggle.
Mazer was hired to oversee the contract by the Office of Payroll Administration's executive director, Joel Bondy, who'd been Mazer's boss when he worked at the Administration for Children's Services. While at ACS in 1999, Mazer was questioned about the disappearance of 200 laptops, and eventually left government work. Newspaper sources say he was forced to leave.
Before that, in 1994, he was questioned about $2 million missing from the Child Welfare Administration which was issuing foster-care checks without backup documentation. Mazer was allegedly taken off that job, banned from the room where checks were written, and saw his salary cut by 25%. Later Mazer was accused of sexual harassing two women while working at Human Resources Administration; the city settled with the two women for a total of $260,000.
Mazer's latest scam involved paying two companies DA Solutions and Prime View, owned by Dmitry Aronshtein and Victor Natanzon, to act as consultants for more than $76 million, of which $25 million was kicked back to Mazer through a series of shell companies. Mazer's colleague Scott Berger, his wife, Svetlana, and mother Larisa Medzon were also charged for participating in the scheme.
Before taking over the OPA, Bondy worked as a subcontractor on the CityTime project for Spherion, a temporary staffing agency. Mazer was hired through Spherion to work on the project, earning $4.4 million (in addition to the kickbacks). Spherion, who first came onto the project in 2001 with a three-year, $3.4 million contract to oversee quality assurance, has had its deal amended 11 times and has now made nearly $50 million. When the project was initiated in 1998 it was supposed to cost $63-68 million. Estimates now top $700 million, and it still isn't complete. The target for completion is July, but no one in New York's holding their breath (except maybe David Blaine, but he's just practicing for his next stunt.)
Of course anyone who's followed attempts at government software modernization's probably scrambling to set up their own company. The one involved in the City Time project, Science Applications International Corp (SAIC), were also responsible for the FBI's attempted millennial software upgrade, Virtual Case File, which cost over $170 million and was delivered stillborn.
Not that the FBI's latest endeavor, Sentinel, seems to be faring better, having spent over $400 million, and recently attempted to reduce the role of Lockheed contractors on the contract, which may again not produce the comprehensive system they sought. And the IRS' modernization program, involving equipment and software, has already gone on for 12 years and run through $3.7 billion, with only a few parts of the plan achieving functionality so far.
It's true for companies as well as individuals and the indigent: Government's the place to go to be paid for barely working.
Read last Friday's Top 5 White Collar Villains: Wachovia, Your One-Stop For Ponzi Scheme Profits & Money Laundering.