Report on failed AEG deal roils Queens Dems

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Democratic Queens officials and state leaders scrambled in the aftermath of a scathing report released last week by the office of state Inspector General Joseph Fisch about the bidding process used to select a vendor to operate video lottery terminals at Aqueduct Racetrack in Howard Beach, a scandal that has come to be known as “Aquegate.”

The 308-page document, released last Thursday after an eight-month investigation,  revealed the names of numerous top Democratic figures and threatened to have an impact on next week’s state elections as its revelations add to the litany of accusation, charges and conviction against top-tier state Democrats in recent years.

“This process was doomed from the start, and at each turn our state leaders abdicated their public duty, failed to impose ethical restraints and focused on political gain at a cost of millions to New Yorkers,” Fisch said in a statement. “Unfortunat­ely, and shamefully, consideration of what was in the public’s best interest, rather than the political interest of the decision makers, was a matter of militant indifference to them.”

A number of leading Democratic officials, including Gov. David Paterson, state Senate President Pro Tempore Malcolm Smith (D-St. Albans), Senate Democratic Conference Leader John Sampson (D-Brooklyn) and state Assembly Speaker Sheldon Silver (D-Manhattan) are named in the report for allegedly “participat­ing in the multimillion-dollar debacle” which resulted in the Jan. 29 selection of Aqueduct Entertainment Group as the winning bidder for contract to build and operate the VLTs at the racetrack.

The report put the named leaders on the defensive as they clambered to distance themselves from the negotiations and deny the charges.

“In response to the findings of the report, we will commence an immediate internal review to develop recommendations for better coordinating external communications with advocates and lobbyists,” Sampson said in a statement. “I am confident any review will prove I did nothing improper in this process, and I stand ready to fully cooperate with any and all future inquiries.”

The report is having implications in Queens elections, as Anthony Como, the Republican challenger to Sen. Joseph Addabbo (D-Howard Beach), has demanded that Addabbo’s role in the selection process be examined and that he step down as a member of the Senate Racing and Wagering Committee. The demands came in response to statements by Sen. Eric Adams (D-Brooklyn) in the report indicating that Addabbo’s testimony that he was “neutral” in the selection process may be disingenuous and that Adams alleged that Addabbo had provided him with a ranked list of the bidders.

“Sen. Addabbo’s involvement in the Aqueduct scandal demands further investigation by the U.S. attorney,” Como said in a statement.

Addabbo denied the accusations in an interview Monday, saying he came into office after the process was already underway.

“What do my people see? My people see jobs starting, they see job creation. The state got $380 million. We got to save Aqueduct as a racetrack,” he said. “The report, which started long before I got on the scene, when I got on the scene, as soon as I got there I said we need to get started [picking a suitable vendor]. ... I complained to the governor’s office.”

Como and state Sen. Frank Padavan (R-Bellerose) both called on their opponents — Addabbo and former City Councilman Tony Avella, respectively — to return tens of thousands of dollars of campaign funds they received from the Democratic Senate Campaign Committee, money Padavan described as “tainted” by the Senate Democatic leadership’s involvement in Aquegate.

The investigation accuses Paterson’s office of ignoring expert advice from the state Office of the Budget director and Division of the Lottery, which pushed for AEG’s bid to be disregarded due to the group’s “precarious” finances.

It alleges that Senate leaders and an assistant to Secretary of the Senate Angelo Aponte gave AEG lobbyists — with whom it alleges Senate leaders and particularly Sampson were overly cozy — leaked bid analyses, giving the group an advantage in the bid process. Sampson allegedly attended a February “victory party” at the home of AEG lobbyist and former state Sen. Carl Andrews after the group originally secured the contract, according to the investigation.

Sampson is accused in the report of “likely” pressuring AEG to include a city contractor in the deal before endorsing the group as the bid winner, and Smith is accused of maintaining in public a face of recusing himself from the selection process, but still advocating on AEG’s behalf. Silver chose not to actively participate in the process despite believing that AEG was not the best choice, according to the document.

AEG was awarded the multibillion-dollar contract to build and operate the VLTs at the racetrack Jan. 29 following a selection process the report described as a “political free-for-all.” The group’s selection from a list of potential bidders was reversed by Gov. David Paterson when questions about the vetting process and political favoritism came to light.

A new selection process occurred in the intervening months, and Genting New York was selected as the new developer Aug. 10, in part because it paid the state $380 million up front. Genting is slated to break ground Thursday on the project, which will be called Resorts World New York, though there are rumblings the state may be looking at reconsidering the selection process once more and further delaying the project, which is estimated to lose the state as much as $1 million per day in revenues while negotiations continue.

Reach reporter Connor Adams Sheets by e-mail at or by phone at 718-260-4538.

Updated 6:27 pm, October 10, 2011
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