Federal prosecutors on Wednesday indicted six people for using shell companies and kickbacks to divert money from a troubled city program.

The charges involve the misappropriation of $80 million, and revolve around a company whose questionable ties to a city official were first reported by City Limits.

The CityTime initiative was supposed to automate and improve the way city agencies do timekeeping for their employees. But an original budget of $63 million swelled to a cost of more than $628 million.

As City Limits reported in 2008, objections to the program came from public employee unions who found some proposed aspects of CityTime to be too intrusive. In addition, some of the companies involved had a history of performance problems on government contracts. And the city official overseeing CityTime, Office of Payroll Administration (OPA) Executive Director Joel Bondy, had before joining city government worked as a subcontractor on CityTime for Spherion, a firm brought in to do "quality assurance" on the project.

Spherion also employed Mark Mazer, one of the six people indicted Wednesday, on the CityTime project.

In a statement announcing the indictments, the U.S. Attorney for the Southern District of New York said that Mazer "had an informal position of authority at OPA, with direct access to the Executive Director of OPA and the ability to, among other things, help shape and approve contract amendments and work orders that resulted in higher staffing levels on the CityTime project."

The statement continues: "At the same time that Mazer was approving staffing increases, he was steering the new business to consulting firms run by Dmitry Aronshtein, who is believed to be his relative, and Victor Natanzon. These two consulting firms collectively were paid over $76 million in City funds, and then secretly kicked back over $24.5 million of that $76 million to shell companies linked to Mark Mazer."

In September, City Comptroller John Liu—who earlier this year rejected some payments requested under the CityTime contract—and the Bloomberg administration agreed that the main CityTime contractor, SAIC, had until next June to complete the project and would receive a limited, final payout upon completion, or pay a fine if the project misses the deadline.

In addition to Mazer, Aronshtein and Natanzon, the indictments name Scott Berger, Mazer's wife Svetlana Mazer, and his mother Larisa Medzon.

Mark Mazer, Aronshtein, Berger and Natanzon face up to 20 years in prison on a charge of conspiring to commit wire fraud. Those four men are also charged—along with Svetlana Mazer and Medzon—with conspiring to launder the proceeds of the fraud conspiracy, which also carries a possible penalty of two decades behind bars.

The city's Department of Investigation assisted in the probe.

"CityTime may have become the poster child for abusive outside contracts, but we believe it is merely the tip of the iceberg and an outrageous example of the greed and corruption that are the result of an unregulated procurement process," DC37 Executive Director Lillian Roberts said in a statement.