NYRA's Schwartz Alleges AG Bungled Report

NYRA's Schwartz Alleges AG Bungled Report
Photo: Anne M. Eberhardt
NYRA Chairman & CEO Barry Scwhartz.
The following is NYRA's Barry K. Schwartz's statement in response to the state attorney general's report alleging improprieties in the association's operations.

As Chairman and CEO of The New York Racing Association Inc. (NYRA), I feel compelled to respond to a Report that was issued to the New York Times on Friday by the New York Attorney General's Office (OAG).  The stated purpose of the Report is to criticize certain of NYRA's policies and procedures for its pari-mutuel and other departments.  While the Report purports to detail a number of alleged deficiencies in the way NYRA has conducted its operations, it does not in any way call into question the integrity of NYRA's races.  Moreover, the Report does not mention that NYRA has cooperated with the Attorney General's investigators for a period of nearly three years, teaching them about the pari-mutuel industry and helping them uncover several instances of individual criminal activity, such as fraud and money laundering.  In short, the Attorney General has issued a Report filled with half-truths, misleading inferences, and inaccuracies.   Despite the Attorney General's best attempts to discredit NYRA, the country's preeminent thoroughbred racing association, the fact remains that NYRA's current management is diligent in its operations and consistently one-step-ahead of would-be criminals who attempt to use the Association for their own illicit profit.

The Report is the result of a nearly three-year-long investigation that was bungled by the Attorney General's investigators from the start.  In the fall of 2000, NYRA's Security Department Investigators, who are depicted in the Report as being incompetent, apprehended the Attorney General's staff attempting to wiretap the Association's phone lines.  From that point forward, NYRA President and COO Terence J. Meyocks ordered every person working for the Association to cooperate to the fullest extent with the Attorney General's investigation.  That cooperation has included making NYRA employees available for countless hours of interviews, the production of hundreds of thousands of NYRA documents, and untold personnel and legal expenses.  The result, after all this voluntary cooperation, is a slanderous Report that is short on truth and long on fiction.  Unfortunately, the real victims of the Report are the taxpayers and citizens of New York, who have had to foot the bill for this three-year debacle, and who will now suffer the likely residual injury of less pari-mutuel taxes from a racing industry that has been so needlessly maligned.

It appears to me that after spending an outrageous amount of time and resources for little or no return, the Attorney General decided to try and salvage his debacle by using his bully pulpit to attack the credibility and integrity of NYRA's President and COO, Terence Meyocks.  While it may be an understatement to say that NYRA disagrees with many of the Attorney General's inferences and conclusions, there are no words that can overstate the esteem with which NYRA, its Board of Trustees, and the entire racing industry holds NYRA's President, Terry Meyocks.  No one who has taken the time to know Terry has ever come away with the impression he is anything other than a person of impeccable character and integrity.  I believe the Attorney General personally knows this to be true about Terry, and I am saddened that he would put his own agenda ahead of the truth about the life and reputation of a man who has never to my knowledge committed a dishonest act.  The Attorney General's investigators know the truth about the travel and entertainment expenses attributed to Terry Meyocks.  In fact, they are the travel and entertainment expenses of the entire Association over a several-year period.  Looked at in the proper context, they are neither extravagant nor abusive.  The criticisms of Terry Meyocks with regard to NYRA's travel and expense reports are malicious, petty, and insincere.  They are what governmental bureaucrats turn to when they have nothing else to make an otherwise baseless Report seem salacious

The truth of the matter is that what little knowledge the Attorney General's investigators have of the racing industry came from Terry Meyocks and the cooperation of NYRA.  Moreover, the shortage policy described by the Report that permitted individual dishonest pari-mutuel tellers to commit tax fraud on their personal income tax statements was eliminated by Terry Meyocks long before the Attorney General's investigation even began.  The Attorney General makes much about the fact that NYRA did not report the suspected crime by its mutuel clerks to the government.  That is simply because NYRA had no evidence that any clerks were actually using the policy to commit fraud on their taxes.  NYRA does not have the ability to subpoena individuals' personal tax returns, even for its employees.  What NYRA did was all that it could do - eliminate the opportunity for employees to commit crimes - and this was done expeditiously and without the need of a Report from the Attorney General.  Prior to the Attorney General's investigation, NYRA had adopted a new "shortages" policy for mutuel clerks, perhaps the most stringent in the country, which strengthened NYRA's cash controls and effectively halted the ability of its clerks to take improper deductions on their personal income taxes.  In 2002, NYRA switched to a daily count-out system for its clerks, which accounts for the money held by each clerk at the end of every day.  These changes were designed to prevent improper conduct by NYRA mutuel clerks, who, by virtue of their jobs, handle substantial sums of cash on a daily basis.  NYRA has also substantially strengthened its mutuel department in recent years by hiring several new managers with years of experience in regulatory compliance and money control procedures.  In addition, NYRA is currently in discussions with a security-consulting firm to conduct a thorough evaluation of it money control and security procedures.

Moreover, the recent indictments of two NYRA mutuel clerks for identity theft and fraud were the result of a NYRA security department investigation that was turned over to the Attorney General for prosecution.  Nowhere in the Report is the fact mentioned that NYRA security uncovered a major fraudulent scam by two individuals while the Attorney General's own investigators were regularly on-site at NYRA's facilities and yet failed to detect it.  The reason is simply because it is embarrassing to the Attorney General. The Attorney General's investigators who wrote this Report are aware of the entire history and the truth behind NYRA's activities to detect and deter criminal activity of all nature at its racing facilities, yet they have chosen to remain silent about what they have learned.  Such unfairness has no proper place in one of our State's highest elected public offices.

The individual instances of inaccuracies contained in this Report are simply too numerous to catalogue in this statement.  Suffice it to say that, conveniently, a court stenographer recorded none of the interviews conducted by the Attorney General's investigators of NYRA personnel so that an accurate record of their statements could be preserved.  As a result, the Attorney General has attributed statements in quotations to certain of NYRA's officers and employees, particularly Terry Meyocks and James Gallagher, that are simply inaccurate but difficult to refute without a transcript of the interview.  This technique of gathering information for what the investigators know will be a critical Report with direct quotes is unethical.  Again, that a public office of this State is being allowed to operate in such a fashion is deeply troubling.
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