With subpoenas expected from the state’s Inspector General and daily calls for his resignation, Governor David Paterson is hedging his bets on the $300 million down payment Aqueduct Racino deal for this year’s budget.
Thanks to Assembly Speaker Sheldon Silver’s decision to withhold his final signature until the state’s Inspector General completes an investigation into winning bidder Aqueduct Entertainment Group (AEG), Paterson made the admission on Monday, March 1.
Reverend Floyd Flake and “rap mogul” Jay-Z (a.k.a. Shawn Carter) who both have involvement in non-gaming aspects of AEG, as well as rap music industry powerhouse Russell Simmons were to be subpoenaed, according to published reports.
Simmons was to serve in a similar capacity to Flake or Carter, providing non-gaming services for losing bidder Penn National Gaming.
Since the January 29 announcement that AEG would get the franchise to operate a 4,500 Video Lottery Terminal (VLT) gaming facility with a 300 room hotel, entertainment venues, restaurants and shops, there has been a firestorm of criticism, much of it originating from losing bidders.
AEG documents reveal that Carter and partners Steven Acevedo and David Rosenberg collectively own 7 percent of AEG as a “passive investor” and will be involved in “entertainment, design of non-gaming amenities [and] community outreach marketing.”
Simmons reportedly said he “received $500,000 to run a philanthropic, social responsible program on behalf of Penn National. We have already funded a pilot program to promote non-violence in my old neighborhood of Hollis and South Jamaica, Queens as well as East New York, Brooklyn.”
Published reports say that Rosenberg is also involved in a collection agency among several being investigated by the Federal Trade Commission. Reports also say that both Acevedo and Carter have pleaded guilty to crimes within the 15-year crime-free timeframe demanded by Silver.
Much of the other criticism of AEG focuses on Flake’s association with Senate President Malcolm Smith, Paterson and other political leaders – and that their bid changed over time.
AEG spokesperson Andrew Frank bristles at suggestions of impropriety.
“Nobody says this process is perfect, but this is same process that resulted in NYRA (the New York Racing Association) keeping the franchise to run the tracks. Did anyone call for an investigation? No. This is the same process that resulted in Delaware North winning a year ago. Did anyone call for an investigation? No,” he said pointedly.
“This wasn’t a regular process – if it was, Delaware North wouldn’t have been allowed to participate after reneging on their offer last year,” Frank asserted. “But this has never been a regular process,” he said.
Frank pointed out that not just AEG but all the participants changed their proposals. “Penn National started at $5 million and wound up at $300 million,” he pointed out.
“When we were all asked to review our numbers we increased our revenue projections per machine because the numbers were going up at Yonkers and other locations,” he said. The weekly figures for all eight VLT gaming facilities in New York are available on the Lottery web site.
“One could assume that the others were reading the same numbers and might do the same,” he suggested.
“It was they who kept looking for more from us,” Frank said of Paterson and the leaders of the Senate and Assembly. “It was Silver who said ‘Match Penn National’s cash offer and I’ll approve your proposal’ and we did,” he added.