Report slams Paterson, 2 Dems for Aqueduct slot contract

ALBANY - Gov. David A. Paterson and the legislature's Democratic leaders put their political interests ahead of the public interest in choosing a slot-machine operator for Aqueduct racetrack, investigators said Thursday.

In a scathing 308-page report, state Inspector General Joseph Fisch condemned the so-called "three-men-in-a-room" negotiations that resulted in Aqueduct Entertainment Group briefly winning the lucrative gambling contract in January. Fisch said the selection process was compromised by politics, campaign donations and regionalism.

Fisch sent his report to federal and Manhattan prosecutors, suggesting State Senate Democratic chief John Sampson and a top Senate staffer may have lied to investigators. Fisch also said the state Legislative Ethics Commission should probe Sampson and Senate president Malcolm Smith for alleged violations of ethics rules.

"Our state leaders abdicated their public duty, failed to impose ethical restraints and focused on political gain at the cost of millions [of dollars] to New Yorkers," Fisch said, referring to the state's need for the bidder's franchise fee to help solve the budget deficit.

The same method - Paterson, Sampson and Assembly Speaker Sheldon Silver meeting in secret - is used to negotiate the budget and other key actions, leading some experts to call the inspector general's findings a condemnation of how the Capitol has worked under Paterson. They also speculated the report would reinforce voter anger ahead of the Nov. 2 elections when all statewide offices and legislative seats are up for grabs.

"This is a sordid tale of incompetence, influence-peddling and greed," said Blair Horner of the New York Public Interest Research Group.

Fisch's eight-month investigation found the most fault with Senate Democrats whose leaders had conflicts of interest with AEG but still lobbied for it with Paterson and Silver. The Senate Democratic Campaign Committee even directed AEG supporters to donate to the campaigns of five senators.

Fisch accused Sampson and Senate secretary Angelo Aponte of leaking information about other bidders to AEG. Fisch said Sampson insisted AEG do business with a developer friend and a business group in Brooklyn, which Sampson represents.

Fisch found Smith (D-Queens) pushed behind the scenes for AEG's selection even though Smith publicly claimed to have recused himself because of personal and business relationships with two AEG partners.

Senate Democrats received more than $40,000 of the more than $100,000 in campaign donations made by bidders and their supporters for the video-lottery terminal contract. Paterson received about $20,000 and Assembly members even less, according to the report.

Fisch accused Paterson of a "lack of leadership" in awarding "the largest contract in New York State history." The inspector general said Paterson aides failed to tell him the lottery and budget divisions had determined AEG wasn't qualified to run the new gambling parlor at the Queens thoroughbred track.

Fisch faulted Silver (D-Manhattan) for knowing AEG should be eliminated and not insisting on its immediate removal. "Fearing political embarassment," Silver instead made new demands of AEG he knew it could not meet, Fisch said.

AEG's selection collapsed and another firm, Genting New York LLC, was chosen using the standard procurement process that forbids many of the problems Fisch identified.

Paterson aide Morgan Hook did not respond to the criticism, saying only the process used to select Genting was far better and done at Paterson's insistence.

Sampson said, "I did nothing improper in this process."

Noting he'd called for the probe in February, Silver said he always doubted AEG's suitability and made new demands on all of the bidders before a contract was awarded.

Neither Smith nor Aponte responded to messages seeking comment Thursday. Spokeswomen for the U.S. attorney and Manhattan district attorney each declined to comment, while the ethics commission said it will review the report.

Albany's big four under fire

State Inspector General Joseph Fisch yesterday blasted Gov. David A. Paterson and the legislature’s Democratic leadership for the failed selection in January 2010 of an operator for slot-like machines at Aqueduct racecourse. Here’s what Fisch said the leaders did wrong:

Gov. David A. Paterson
* Was disengaged from the chaotic selection process
* Top aides failed to provide him with crucial information about the winning bidder
* Should not have acquiesced to State Senate Democrats’ demands for Aqueduct Entertainment Group to receive the contract
* Should have insisted, as he later did, on a selection process free from political influence and campaign donations

Sen. John Sampson of Brooklyn, Democratic majority conference leader
* Improperly gave AEG confidential information about rival bidders
* Should not have attended an AEG “victory party” at a lobbyist’s home
* Insisted AEG include a developer friend in its plans
* Insisted AEG help a Brooklyn business group favored by Sampson

Senate President Malcolm Smith (D-Queens)
* Lobbied for AEG with Paterson despite recusing himself because of friendship with two AEG partners
* Should not have attended an AEG “victory party” at a lobbyist’s home

Assembly Speaker Sheldon Silver (D-Manhattan)
* Needlessly prolonged the selection process by not simply rejecting AEG’s bid when he knew it failed to meet state requirements

Compiled by James T. Madore
SOURCE: NYS Inspector General’s Report: “Investigation Regarding the Selection of Aqueduct Entertainment Group to Operate a Video Lottery Terminal Facility at Aqueduct Racetrack.”