Federal prosecutors are preparing an indictment against the New York Racing Association that will allege a corporate conspiracy that permitted corruption to occur at its three racetracks, according to published reports.The Albany Times Union July 17 said federal prosecutors on Long Island intend to seek the indictment. The newspaper said that NYRA's well-connected board members are also seeking to influence the investigation, though it gave no details of the pressure being applied. Federal officials did not confirm the newspaper's report.The federal investigation has been known for more than two years, and state investigators recently said their federal counterparts were still weighing whether to proceed with any further legal steps against NYRA. In all, 16 NYRA clerks have been found guilty of tax evasion over the past several years, and three others were convicted in a money-laundering scheme. Attorney General Eliot Spitzer reported recently that NYRA management has been lax in stopping widespread fraud and cheating of customers by NYRA employees in the pari-mutuel department. It is alleged NYRA allowed tellers to take cash loans out of their pari-mutuel drawer throughout the year. NYRA would then provide an annual statement to the teller indicating how much was owed. Tellers would then count these "losses" to payback the loan as a tax deduction. It is believed the state lost millions in tax revenue through the scheme.After first dismissing Spitzer's report, NYRA has since hired a high-profile security consultant to delve into its internal controls.NYRA has also hired a former Whitewater prosecutor, Denis McInerney, as an outside counsel to represent it in its legal problems; The Times Union, quoting an anonymous source, said NYRA is paying more than $2.3 million on its legal costs. The newspaper said McInerney's firm has written the U.S. Department of Justice predicting the demise of Thoroughbred racing if NYRA disappears.The newspaper also reported a slew of documents being obtained by federal prosecutors from the New York State Thoroughbred Racing Capital Investment Fund, a quasi-government entity that has battled with NYRA repeatedly over the years.Officials with CIF have not returned calls for comment. But sources said CIF officials have been discussing with members of Gov. George Pataki's administration about CIF taking over NYRA's operations if NYRA were to disappear because of the investigations. By law, if NYRA collapses, CIF would move in to run its franchise until a new group was brought in. NYRA Chairman Barry Schwartz last week said he had no knowledge of any such talks involving CIF, but called the idea of CIF taking over NYRA's duties "a joke.''