Reporting by Nate Raymond in New York; Editing by Noeleen Walder and Leslie Adler

NEW YORK (Reuters) – Three women avoided prison on Tuesday for crimes stemming from a massive fraud and kickback scheme involving a New York City payroll project that prosecutors say pushed its costs to $700 million.

U.S. District Judge George Daniels in Manhattan ordered Svetlana Mazer and Anna Makovetskaya to serve three-year probation terms and pay fines of $3,000 each. He imposed probation of three years, including six months home confinement, on Larisa Medzon.

The three are all relatives of Mark Mazer, the former manager of the CityTime payroll project, whom prosecutors said directed the women to carry out acts that furthered the fraud.

Each pleaded guilty in June 2013 to felonies ahead of Mazer’s trial. Mazer was sentenced to 20 years in prison in April.

“I have no one to blame but myself, and I will be haunted with that fact for the rest of my life,” Medzon said through a Russian interpreter.

Launched in 1998 with a $63 million budget, the CityTime payroll project aimed to modernize New York City’s timekeeping and payroll systems.

But by 2011, costs soared to nearly $700 million thanks to what prosecutors say was a massive kickback and fraud scheme.

Prosecutors said Gerard Denault, a former employee at contractor Science Applications International Corp, received over $9 million in kickbacks to enable a company, Technodyne LLC, to obtain subcontractor work.

Mazer, 51, who managed the project, meanwhile arranged with Denault to have a company controlled by his uncle, Dimity Aronshtein, become a subcontractor, prosecutors said.

Mazer steered more than $65 million to Aronshtein’s company and another $23 million to another firm in exchange for more than $30 million in kickbacks, prosecutors said.

He also directed Svetlana Mazer, Medzon and Makovetskaya to set up shell companies and bank accounts to launder the scheme’s proceeds, prosecutors said.

Medzon, 69, pleaded guilty to intentionally structuring cash transactions to avoid currency reporting requirements. Makovetskaya, 43, pleaded guilty to conspiracy to make false statements to a bank.

Svetlana Mazer, 49, pleaded guilty to obstructing justice by deliberately failing to disclose her interest in the shell companies in response to a city ethics questionnaire.

The women previously agreed to forfeit their interests in $27 million in various bank accounts and four real estate properties.

Mark Mazer, Denault and Aronshtein were each convicted at trial and sentenced to 20 years in prison. Two other individuals have also pleaded guilty to aiding the scheme and two defendants are considered fugitives.

Much of the city’s losses were recovered after SAIC agreed in March 2012 to forfeit $500 million as part of a deferred prosecution agreement.

The case is U.S. v. Mazer et al., U.S. District Court for the Southern District of New York, No. 11-121.