Members of the firms eyeing the state’s racetrack franchise have given generously to Albany decision-makers and have extensive ties to offshore, unregulated wagering houses, the state’s inspector general confirmed last week. Gov. Eliot Spitzer called for the inspector general to report on the integrity of the bidders seeking to control the franchise, comprised of Aqueduct Race Track in Ozone Park, Belmont Park Race Track on the Queens-Nassau border, and Saratoga Race Course, located upstate. The request for the report, released on July 2, accompanied Spitzer’s pledge to place integrity at the center of the bid-awarding process. Excelsior Racing, Empire Racing, Capital Play and the New York Racing Association, which currently runs the franchise, are vying for the new contract.
According to Inspector General Kristine Hamann, the New York State Temporary Commission on Lobbying inquired into flights provided by Richard Fields to then Attorney General Eliot Spitzer and then Senate Minority Leader David Paterson between February 2006 and January 2007. Fields is one of Excelsior’s principal investors. As a result of the inquiries into the plane trips, which brought Spitzer to gubernatorial fundraisers in three different U.S. cities, the governor-to-be’s campaign returned $103,871 to Fields.
Other members of the Excelsior team also forged relationships with state leaders, donating over $150,000 to the New York State Senate Republican Campaign Committee, headed by Senate Majority Leader Joseph Bruno, and the Spitzer-Paterson campaign between 2002 and 2007.
Report authors wrote of the well-documented relationship between Bruno and former Empire Racing board member Jared Abbruzzese. Abbruzzese has been subpoenaed in the federal government’s investigation into Bruno’s business dealings. Abbruzzese donated over $150,000 to Bruno-controlled campaign committees and last March allegations surfaced that Bruno steered $500,000 in state funds toward Evident Technologies, an Abbruzzese-owned company.
Empire’s political action committee made sizable donations to the New York State Senate Republican Campaign Committee and to Spitzer’s gubernatorial campaign in 2006. Attorney General Spitzer’s 2002 reelection campaign received $10,000 from a New York Racing Association board member.
Although investigators found no dubious lobbying measures taken by Capital Play, Karl O’Farrell, its only shareholder, owns an Australia-based rebate shop. Several representatives from the three other bidding firms maintain business relationships with rebate shops — offshore-based gambling brokerage houses that guarantee to return a percentage of every bet to a bettor. Because they don’t require identification from bettors, many of whom wager over the Internet or through telephone calls, many drug dealers use them to launder money. Although not illegal, some rebate shops, such as O’Farrell’s, are blocked from doing business with New York’s race tracks.
Report authors described as “noteworthy” the move by four Empire investors to divest themselves from the firm when it became known last March that they would be subject to extensive background checks and have to swear to the accuracy of questionnaires answered.
Investigators cited stakeholders from each firm who did not disclose, among other things, their involvement in pending lawsuits, their holdings in certain companies and their outstanding tax liens. Others didn’t provide complete tax returns or disclose their relationships with others in different racing or gaming entities.
Working in conjunction with the New York State Division of Criminal Justice, the Federal Bureau of Investigation and the New York State Police, three private firms — Deloitte Financial Advisory Services, PricewaterhouseCoopers and Thacher Associates — headed the investigations.
Assemblywoman Audrey Pheffer (D-Ozone Park) said that she found connections between bidding firms and rebate shops disturbing, but added that she doesn’t believe that campaign donations will sway the bid-awarding process. Pheffer said that many past Spitzer and Bruno donors may harbor business or legislative interests somewhere in the state. “That doesn’t mean that Bruno and Spitzer could be bought,” she said.
State Sen. John Sabini (D-Jackson Heights), who served on a Spitzer ad hoc committee on the future of horse racing in New York, said: “I’m not surprised that people in New York are doing business.” But he added that he did not believe donations to Albany lawmakers would affect the selection process.
A Spitzer spokesman did not return messages seeking the governor’s response to the inspector general’s report and comment on the possible effect of campaign donations on the bid-awarding process. In a statement he released upon receiving the report, Spitzer said: “Today, with the IG’s (Inspector General’s) release of its Integrity Review ... one of the important predicate steps in the selection process has been completed.”
Earlier in the year Spitzer vowed to select a firm before the legislative session closed on June 21. Although some expect a decision to come this summer during a special session in Albany, Spitzer faces an absolute deadline of Dec. 31, when the New York Racing Association’s current contract with the state expires.
Photo: Michael O'Kane
©Queens Chronicle 2007
