Crime and Corruption New York Style

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New York Democrats Implicated in Aqueduct Slot Scandal

A new report by the New York State Inspector General accuses Governor David Paterson and Democratic legislative leaders of rigging the process for picking a company to run video slot machines at Aquaduct race track.

Inspector General Joseph Fisch says as a result, Aqueduct Entertainment Group (AEG), was picked for the lucrative contract over the strenuous objections of the state Budget Director and the Division of the Lottery.

WNYC's Bob Hennelly discusses the latest developments with WNYC's Amy Eddings.

This scandal has been under investigation for some time by federal investigators. What's the significance of today's report?

It's the first independent investigation of the controversial selection process that gave what Inspector General Joseph Fisch says was an unqualified company, AEG, a major leg up for a contract worth hundreds of millions of dollars. In Fisch's report there are 300 pages describing how Gov. Paterson, Assembly Speaker Sheldon Silver and Democratic Sen. Conference Leader John Sampson let political considerations guide the process. Fisch says as a result tens of thousands of dollars in campaign cash flowed to the Democrats from bidders looking for the contract.

Give us some background, when did this start?

Under special legislation passed under the Spitzer administration, the selection was left up to former Gov. Eliot Spitzer, Assembly Speaker Sheldon Silver and Republican Sen. Majority Leader Joe Bruno. The bill removed all normal lobbying restrictions and allowed lobbying cash to flow to the people making the decisions.

How was that allowed to happen?

It was Assembly Speaker Silver who actually called for the Inspector General's report. Fisch's says senate leaders leaked bid details of competitors to AEG, lobbyists who then could change what they were saying. Fisch's report says Sen. Malcolm Smith, who had publicly recused himself from the project, was improperly lobbying for AEG behind the scenes. Even Paterson's aide, David Johnson, who's involved in a domestic violence suit and is being prosecuted, he took the Fifth Amendment before the Inspector General, as did lobbyist Hank Sheinkopf.

This began in the Spitzer administration, but the IG's report covers the Paterson Administration. Who does the IG blame for rigging the contract for AEG?

That's a situation where anyone who had information was evidentaly involved in funneling it around so AEG could look more and more competitive. In fact, they would make it a moving target so competitors -- even Steve Winn -- pulled out at one point, even though, as the IG says, he was more qualified.

So, the competitors were complaining that this was favorable for AEG, Paterson announced it was going to award the contract to AEG and eventually he squelched the whole project after the lottery division raised some concerns about AEG; it imploded. And now the Paterson administration is saying 'we didn't award it to AEG, we revamped the process' and this other group is coming in and going to break ground.

In the process, the Inspector General says millions of dollars were lost and an opportunity was lost; all this momentum was lost. The New York Lottery Division was given the responsibility to choose a company, they did it much quicker, non-controversial, had a bidding round that didn't have any of this skulduggery in involved. Evidently Genting New York LLC that paid the $380 million, as they were supposed to, and they're supposed to break ground next week.




The NY experience with gambling and political corruption: http://www.nytimes.com/2010/10/22/nyregion/22casino.html?hp