NYC Mayor Michael Bloomberg had demanded CityTime, which was in...

NYC Mayor Michael Bloomberg had demanded CityTime, which was in charge of managing the timekeeping of roughly 165,000 city employees since 1998, pay hundreds of millions of dollars in restitution after authorities investigated the agency for alleged conspiracy. Credit: Getty Images, 2012

The technology company in charge of New York City's scandal-plagued CityTime payroll project agreed Wednesday to pay $500 million in restitution and penalties in a deal that helps it avoid prosecution.

SAIC Inc. attorney Douglas Lobel entered the agreement before a federal judge in Manhattan. The CityTime project was designed to automate the timekeeping of about 165,000 city employees working under various contracts.

CityTime was expected to cost $63 million when it was launched in 1998. But the cost ballooned tenfold as the undertaking grew into what prosecutors say became an international conspiracy.

The agreement includes $370 million as restitution to the city and $130 million as a penalty.

Mayor Michael Bloomberg had demanded the company repay the city more than $600 million spent on the project. Lobel declined to comment after the court hearing.

Prosecutors also filed papers seeking to seize more than $11 million from an SAIC subcontractor and its owners, who are believed to have fled the country.

New York City stands to receive $466 million in the settlement — all of the restitution and $96 million of the penalty money. In addition, a $41 million city payment to SAIC has been waived.

The deal recoups the bulk of the well over $600 million that the city spent on the timekeeping project. Prosecutors have said that "virtually the entirety" of that money "was tainted, directly or indirectly, by fraud."

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