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Post date: June 14 2003

Nyra Management Faulted For "corrupt System"

Attorney General Spitzer -- in conjunction with the New York State Police and the State Inspector General's office -- today released a report revealing rampant criminal activity at the New York Racing Association, Inc. (NYRA).

The report identifies a series of improper and illegal activities by NYRA employees and sharply criticizes NYRA management for failing to address the problems. The report recommends replacing the current management of NYRA.

"Behind the facade of the racetracks was a corrupt system in which track employees were permitted to enrich themselves at the expense of the public," Spitzer said. " NYRA officials ignored blatant criminal conduct and failed to institute even basic reforms to ensure that illegal activities were halted."

State Police Superintendent James W. McMahon said: "This investigation was both comprehensive and extremely complex as it involved the activities at three thoroughbred tracks in three different counties in New York. I am extremely proud of the outstanding investigative work the State Police Special Investigations Unit contributed to the overall success of this sustained investigation."

State Inspector General Jill Konviser-Levine said: "While none of those who corrupted the system were employees of New York State, the Office of the Inspector General was gratified to provide assistance in exposing both the individual wrongdoing and systemic weaknesses set out in the report. This effort is one more example of what can be accomplished when law enforcement agencies combine their expertise and resources."

The report grew out of a major criminal investigation of money laundering, identity theft and tax evasion schemes involving tellers at NYRA facilities at Saratoga, Belmont and Aqueduct. The criminal investigation, conducted jointly by the Attorney General's office, State Police and State Inspector General, has produced multiple criminal pleas and convictions.

Key findings of the new report include the following:

  • Track tellers handled large amounts of cash without proper oversight. The tellers regularly incurred huge shortages in their accounts and used NYRA funds for improper and illegal uses;

  • Track tellers bet on horse races in violation of NYRA rules and used the money in their registers for making personal wagers;

  • Track tellers had a variety of schemes for cheating patrons out of a portion of their winnings;

  • Parking lot attendants fleeced people driving luxury cars, charging four times the maximum on-track parking rate and pocketing the difference; and,

  • Track security personnel were poorly trained and given little direction. In addition, their numbers were inadequate to effectively police the grounds of the tracks.

The report notes that NYRA's top management was informed as early as 1995 of serious problems at the track, including the fact that 40 percent of tellers were running massive shortages in their registers. Officials took no action on the 1995 report or on several subsequent audits and reports that revealed additional problems. The report documents how NYRA officials withheld information and misled state regulators on repeated occasions.

The report also documents how senior management abused expense accounts and spent thousands of dollars at a time on food, drink and entertainment.

Spitzer stressed that the integrity of the races at NYRA tracks was not being questioned in his report. Instead, the report focuses on the actions of certain NYRA employees and its management.

"It should be clear from the report that the current management has failed, does not understand the problems and cannot be relied upon to restore the public trust," Spitzer said.

The Attorney General thanked the following law enforcement agencies and officials for their assistance on both the ongoing NYRA investigation and development of the new report: The State Police Special Investigations Unit, including investigators Michael E. DiSilvio, Paul Borella and Thomas Perry, working under the supervision of Lt. Matthew Renneman; the New York State Inspector General's office, including Deputy Inspector General Ann Palillo, working under the direction of Chief of Operations Robert Werner, and Vincent Gisonti and Lester Dier of the Attorney General's Investigations Bureau.

The report was compiled by assistant attorneys general Zachary Weiss and Meryl Lutsky, working under the supervision of Deputy Attorney General Peter B. Pope, Chief of the Criminal Division of the Department of Law.

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