Report Alleges Favoritism, Possible Illegality; WNY Connection

7:31 PM, Oct 22, 2010   |    comments
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ALBANY (GANNETT AND WGRZ-TV) -- An extraordinary report Thursday by the state Inspector General's Office contends that Gov. David Paterson and top legislative officials pushed a lucrative gaming contract for Aqueduct Race Track in Queens to a politically connected New York City bidder.

WEB EXTRA: Read the Inspector General Report

Inspector General Joseph Fisch forwarded the case to state and federal prosecutors, singling out top Senate leaders for potential crimes of betraying the public trust.

The scathing 300-page report offers an unflattering behind-the-scenes view of the state's top leaders just two weeks before Election Day, when all statewide seats and all 212 legislative seats will be on the ballot.

Fisch described a "political free-for-all" in which campaign contributors, an army of lobbyists and powerful state leaders provided an unfair advantage to Aqueduct Entertainment Group (AEG) in its bid to operate the lucrative video-lottery-gaming facility at Aqueduct.

He contended that confidential information was leaked to AEG from top state officials and efforts were made to try to steer the multi-billion-dollar contract to the company, which was run by a group of influential businessmen and New York City community leaders.

"This process was doomed from the start, and at each turn, our state leaders abdicated their public duty, failed to impose ethical restraints and focused on political gain at a cost of millions to New Yorkers," Fisch said.

NYS Sen. Antoine Thompson (D-Buffalo) is also mentioned in the Inspector General's report, albeit only over the course of a few paragraphs of its 316 pages.

Thompson is identified as one of five Senators, to whose campaigns the Democratic Senate Campaign Committee allegedly directed AEG to make contributions.

The Inspector General claims that a review of campaign financial disclosure forms shows Thompson's campaign got a total of $8,600 from AEG, or businesses closely allied with AEG in their effort to land the contract.

The report raises questions as to why Thompson would have received donations, noting his district - unlike the other four Senators mentioned - is no where near Aqueduct, while also suggesting Thompson would have little to no influence on who got the contract.

However, it concludes that while Thompson didn't receive a "staggering" amount of contributions, "the genesis of the manner in which contributions were dispensed to Senators by AEG evinces the direct link between the contributions, and efforts to obtain the VLT franchise by courting the Senate."

Thompson issued the following statement:

"I absolutely had no involvement in any pay to play transactions and negotiations whatsoever in the selection of a bidder for the Aqueduct racetrack deal in Queens, nor do I sit on the Racing, Gaming and Wagering Committee. I knew nothing about the potential origins of the contributions, as my campaign accepts contributions from various sources. However, in our effort to exercise excess caution in this matter and to provide transparency, we are going to return the money to donors."

"Unfortunately, and shamefully, consideration of what was in the public's best interest, rather than the political interest of the decision makers, was a matter of militant indifference to them."
The Inspector General's office said Gov. David Paterson, Senate Democratic Leader John Sampson of Brooklyn, Senate President Malcolm Smith and Assembly Speaker Sheldon Silver, D-Manhattan, all played a role in the "multi-million dollar debacle" - either through trying to help AEG against other bidders or by not doing more to stop the favoritism.

The state's leaders eventually rejected AEG's contract after criticism of a rigged bidding process. In August, the contract was awarded for $380 million to Genting New York, a Malaysian-based company.

The report states that Paterson ignored advice from the state's budget director and the Lottery Division to reject AEG's bid, which ranked near the bottom of the ranked competitors. Fisch said Senate leaders leaked the bids of other companies to AEG lobbyist Hank Sheinkopf, a prominent Democratic political consultant, in order for AEG to revise its proposal.

Silver, Fisch said, believed AEG wasn't the best choice but didn't do enough to stop the selection, which by law had to be made through an agreement among the legislative leaders and the governor.

The report questioned the legitimacy of testimony provided under oath from Sampson, Senate Secretary Angelo Aponte and Senate Racing and Wagering Chairman Eric Adams, D-Brooklyn. There testimony was forwarded to prosecutors.

Fisch said that Sampson said "I don't recall" at least 100 times during his testimony to the Inspector General's Office.

In a statement, Sampson said the IG's report recognizes the "well-known flaws" in the initial process of selecting an operator for the roughly 4,500 VLTs at Aqueduct.

He said mistakes were made but that the process was ultimately improved in the final agreement with Genting. He is also conducting an internal review.

"We will commence an immediate internal review to develop recommendations for better coordinating external communications with advocates and lobbyists," Sampson said.

"I am confident any review will prove I did nothing improper in this process, and I stand ready to fully cooperate with any and all future inquiries," he said.

In a statement, Paterson spokesman Morgan Hook said the governor took steps to improve the process and adhere to the state's procurement rules.

"Due to these actions by the governor, after years of delay ground is expected to be broken next week on this valuable economic development for New York," Hook said.

Assemblyspeaker Sheldon Silver released this statement Thursday afternoon:

"Today's report by the New York State Inspector General is the comprehensive, thorough investigation I asked for in February concerning the circumstances surrounding the initial selection of AEG to operate a video lottery terminal facility at Aqueduct Racetrack.

I was unconvinced that the bid submitted by AEG and initially approved by the Governor and Senate in January had been adequately evaluated, critically analyzed and carefully considered. Because serious concerns had been raised regarding the selection process, I demanded that every bidder meet certain requirements before the Assembly would approve the awarding of this franchise. Essentially, those same requirements were adopted as part of the new bidding process and were ultimately met by the successful bidder.

As the Assembly continues to review the IG's findings, it is our objective to ensure that the establishment of a video lottery franchise at Aqueduct Racetrack is undertaken quickly, provides a stable revenue stream for the state, and fosters economic revitalization in the surrounding communities."

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