Reddy Allen and Dr Padma Allen have been indicted on federal fraud and kickback charges in relation to the scandals surrounding mayor Michael Bloomberg administration`s CityTime project, intended to modernise the municipal payroll system.
A grand jury said on Monday that more than USD 600 million of the project`s bloated budget is "tainted" by fraud.
The couple secured a lucrative, no-bid subcontract for the CityTime that made it look like their firm, TechnoDyne, was "a successful and fast-growing company," the New York Post reported.
But the "engine of its growth" was actually an overbilling scam in which the Allens paid out more than USD 15 million in kickbacks and hired a bevy of crooked subcontractors, according to the indictment unsealed in Manhattan federal court.
Authorities say the brazen corruption was part of a "massive and elaborate scheme" involving high-ranking executives at prime contractor Science Applications International Corp who pocketed USD 5 for every hour worked by 300-plus consultants.
CityTime was initially budgeted at USD 63 million, but has cost taxpayers more than USD 720 million to date.
Manhattan US Attorney Preet Bharara called the alleged scam "truly jaw-dropping" and "epic in duration, magnitude and scope."
Bharara said prosecutors were seeking to have the Allens extradited from their native India, where they fled in February after getting slapped with grand-jury subpoenas.