From the NY Times
http://www.nytimes.com/2003/06/14/nyregion/14TRAC.html
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June 14, 2003
Racetracks Teem With Corruption, State Study Finds
By DAN BARRY


Some of the tellers specialized in "dropping the customer," racetrack lingo for cheating inexperienced bettors out of winnings. Some abetted criminal activity like money laundering and tax evasion. Some used the money in their cash registers to place personal bets. One teller even accepted a gold watch as collateral from a customer.

Meanwhile, the top manager charged with overseeing the tracks was turning a blind eye to the corruption — failing year after year to act decisively on signs of trouble — while abusing expense accounts at pricey restaurants.

Such is the near tragicomic state of the New York Racing Association, as described by the New York attorney general's office in a 64-page examination of the practices and culture of the nonprofit corporation that owns and operates the trifecta of New York racetracks: Aqueduct, Belmont Park, and Saratoga.

The association, which handles about $3 billion a year, is so "insular, opaque, and unaccountable," the report concludes, that the state should consider eliminating the association's stewardship of the three premier tracks.

The report, completed this month, culminates a three-year inquiry. It describes an institution in which cash receipts are not counted at the end of the day; where the arrests of employees do not spur institutional reforms; and where the presence of bookmakers with organized-crime connections is barely noticed. Even the parking lot at the racetrack is not immune from corruption — the report says that some attendants pocket the fees or charge extra of those driving luxury cars.

The report is not a formal indictment, officials at the attorney general's office say, as arrests and convictions have already been secured. Rather, the officials say, it is a critical assessment of the racing association, coupled with a strong recommendation that the governor and the State Legislature take action.

What impact the report might have on the racing association's future remains unclear; John E. McArdle, a spokesman for Joseph L. Bruno, the Republican State Senate majority leader, said that the senator would not comment until he had seen the report. But Eliot Spitzer, the attorney general, said yesterday that change was needed.

"What's appalling about the N.Y.R.A. is that repeated and overwhelming evidence of criminal conduct did not spur this management to fundamentally change its behavior," Mr. Spitzer said, adding, "It is now time to begin anew and put in place an entirely different structure to oversee racetracks in New York."

The racing association's president and chief operating officer, Terence Meyocks, did not respond to telephone calls placed to his office and to the racing association yesterday.

The racing association depends on a renewable state franchise that permits betting at its tracks, and generates millions of dollars a year in state parimutuel taxes, although that number has declined in recent years. It employs more than 2,000 people, and oversees a racing season that lasts for more than 10 months. Each racetrack, during its given season, averages $2 million of on-track wagering a day.

The attorney general's report, a copy of which was obtained by The New York Times, says that the racing association has management practices so deficient as to encourage criminal activity, despite recent attempts at internal reform.

This was particularly true, the report says, among the hundreds of tellers who handle the money at the track, and who are known for calling out "shark in the bay" to warn of an approaching supervisor.

The flow of cash was so free and unchecked, with tellers responsible for their own "cash boxes" during racing season at a track, that shortages of more than $10,000 at the end of a day were common. Eventually, the racing association developed a bookkeeping system to deduct shortages from tellers' paychecks.

This deficient system "functionally financed criminal operations, especially allowing tellers to borrow seed money to run money laundering, gambling or loan sharking operations," the report said.

For example, an undercover state police officer, posing as a drug dealer, told tellers at Aqueduct that the small bills he wanted laundered were from the proceeds of cocaine sales, and that he would use the larger bills to buy more drugs. According to the report, he laundered more than $300,000 — with the tellers involved collecting a five percent fee.

Some tellers used the cash to place their own bets, despite a law prohibiting tellers from betting; a few would leave their stations to cheer for horses. Others used their cash boxes to loan money at usurious rates. When state police searched the boxes of tellers at Belmont in September 2000, 17 of the 227 boxes contained papers that appeared to be loansharking or bookmaking records.

Over the past decade, the state comptroller's office and a private consulting firm, among others, have pointed out the management deficiencies at the racing association. Various investigations have also put the association on alert, like the search of the tellers' cash boxes in September 2000, and the arrests of four tellers — including leaders of the betting clerks' union — on money-laundering charges in July 2001.

The State Racing and Wagering Board, which monitors horse racing and parimutuel wagering in New York, has been especially diligent. The attorney general's report lays out how the racing board repeatedly alerted the association about suspect practices, only to be met by what the report describes as a pervasive "see-no-evil" culture.

Edward Martin, the racing board's executive director, said that his agency's inquiries helped to spark the attorney general's examination. "We had noticed betting among tellers, we had noticed tellers removing cash from drawers, we noticed suspicious activity that we believed could have been money laundering," he said.

But Mr. Martin expressed frustration with the racing association's response to his agency's concerns. "In some cases, it was very difficult to get the issues that were being brought to their attention dealt with," he said. "It was extremely frustrating from our standpoint."

In October, the attorney general's report says, the association changed some teller practices "in the face of mounting state and federal criminal convictions." But, it said, those measures were inadequate.

Finally, the report zeroes in on the expenses of Mr. Meyocks, who, it said, earns $375,000 a year as the association's president. The report said that Mr. Meyocks charged more than $140,000 in expenses to his corporate credit card, but has been unable to provide receipts for some expenses, including nearly $14,000 on dining.

Some of his expenses appear "injudicious," the report said. For example, he submitted receipts for a dinner with a man without identifying the man as his father. Mr. Meyocks contended to investigators that his father, a retired jockey agent, was "helping to promote N.Y.R.A. business" — as was Mr. Meyocks's wife when she joined him in expense-paid dinners.

A few of his expenses "bear earmarks of immoderation," the report said. A meal for six at Le Cirque 2000 in Manhattan cost the association more than $1,000, partly because of a $250 bottle of Italian wine. In attendance were Mr. Meyocks and his wife, an association trustee and his wife, and a retiring employee and his wife.

According to the report, Mr. Meyocks justified expenses like these. "Social life and racing life are two sides of the same coin," he is quoted as saying. "I am 24/7 on racing."