In a weird way, the smelly deal to convert Aqueduct racetrack into a “racino”—a combination racetrack and casino—may prove beneficial to New York’s taxpayers, because it has shed light on shady deals that might have escaped the public’s notice.
As this page has contended for several weeks, the deal between the state and a politically connected outfit called Aqueduct Entertainment Group reeks of political favoritism.
AEG, which was awarded a lucrative contract to install and operate slot machines at Aqueduct, is connected to an array of political figures from Queens, including the Rev. Floyd Flake, a former congressman. It’s becoming clear that the AEG deal is part of a culture of shady dealmaking involving political figures from the borough.
Federal investigators are now looking into the operation of a nonprofit group, the New Directions Local Development Corp., founded by State Senator Malcolm Smith, one of AEG’s biggest supporters, and Congressman Gregory Meeks, both of Queens. Four former or current members of Mr. Smith’s staff are connected to the group, which has received tens of thousands of dollars from the state at Mr. Smith’s behest.
New Directions, which was established to encourage economic development in southeastern Queens, also has ties to a charity that collected more than $30,000 on behalf of victims of Hurricane Katrina but spent just over a thousand bucks. Senator Smith and Congressman Meeks insist that they had nothing to do with the fund’s day-to-day operation.
Federal prosecutors seem to have their sights set on connections between AEG and New Directions. The state’s Lottery Division, which oversees racino operations, was on the receiving end of subpoenas last week. The governor’s office stated that prosecutors were focusing on New Directions, not the AEG deal. There is some indication, however, that the federal probe includes the state contract with AEG.
As well it should. The AEG deal deserves a full public airing, and the group’s connections to New Directions cry out for aggressive investigation. The burgeoning scandals may or may not be related, but they are coalescing into one potentially huge election-year embarrassment for Governor Paterson.
This story isn’t going away. It’s hard to imagine Mr. Paterson conducting an effective gubernatorial campaign while his administration is dealing with federal subpoenas. It may be time for the governor to think long and hard about his prospects this year.