Gerard Denault, Ex-CityTime Project Manager, Indicted for Taking $5 million in Kickbacks (Updated)


The private consultant on the CityTime debacle fired this week for failing to keep track of his time sheets has now been charged with taking $5 million in illegal kickbacks, the Department of Investigation and the U.S. Attorney’s office said.

Gerard Denault, formerly of Science Applications International Corp., was also charged with wire fraud, conspiracy, and money laundering. He was arrested in Danbury, Connecticut, yesterday. He is accused of taking the kickbacks via international shell companies.
Denault, 49, is the sixth person indicted in connection with CityTime corruption charges.

The CityTime system was supposed to automate the city’s payroll system, but it ballooned in cost from $63 million to nearly $800 million, and has become one of the Bloomberg administration’s biggest embarrassments. DOI investigators worked with federal prosecutors in bringing the case.

“Since we first brought criminal charges in connection with the $80 million
CityTime fraud last December, our investigation has unfortunately
only expanded,” U.S. Attorney Preet Bharara said. “It is deeply disturbing that while he was hired to help cut costs and save money, in reality, Gerard
Denault was allegedly ripping City taxpayers off to pad his own

According to the complaint, Denault convinced SAIC to hire a subcontractor known as Technodyne, which has received some $464 million from the city so far. In return, Technodyne officials paid off Denault with $5.6 million in kickbacks funneled through overseas wire transfers.

Technodyne would transfer money to a corporate cousin in India which would then move the money to a shell company, MKG Consulting, which was owned by Denault. Denault also knowingly approved SAIC bills to the city which exceeded the value of the work being performed.

“The CityTime investigation remains very much
 ongoing, and there are more individuals yet to be held
 accountable,” Bharara added.

(Update) Mayor Bloomberg weighed in on the Denault indictment this afternoon, calling the fraud “despicable.”

“It appears there may well have been widespread fraud and gross negligence within SAIC, which confirms the need to continue our detailed examination of every dollar spent on the project,” Bloomberg said in a statement. “We are aggressively exploring all options for how we can recover any costs the city was improperly charged.”

Thus far, 163,000 city employees are on using CityTimes, he said.