State Audit Details Questionable Spending at Capital Investment Fund

State Audit Details Questionable Spending at Capital Investment Fund
Photo: File
Hevesi questions agency spending practices.
The former chairman of the now-defunct New York State Thoroughbred Capital Investment Fund tapped into the agency's budget to foot expenses for a bed and breakfast and Mexican restaurant he owned, while CIF funds were used to pay for such personal items as overnight mailings to watch repair stores, gasoline and entertainment, New York State Comptroller Alan Hevesi said in an audit released Dec. 5.

"The Capital Investment Fund was created to aid the horse racing industry, but in fact its two principals turned it into a base for their own business and personal interests," Hevesi said. "In addition to the gross violation of the public trust by these two individuals, this review is yet another example of how corruption and wrongdoing occur when no one is watching, board oversight is lax and internal financial controls are not in place."

The audit came out three days after CIF's former chairman, William Levin, pleaded guilty in a Manhattan courtroom to grand larceny charges. He agreed to $180,000 in restitution payments and a $25,000 penalty, and he avoided jail or probation time. Levin, 83, also resigned following the guilty plea from his chairmanship of the New York State Thoroughbred Breeding & Development Fund Corp., the state's regulatory body of the breeding industry.

The state comptroller's audit findings were the basis of the charges brought by the Manhattan district attorney's office against Levin, Hevesi said.

The Capital Investment Fund was created in 1983 to provide low-interest loans for capital improvements at New York Racing Association tracks. Hevesi said Levin, who ran CIF for two decades and is a former Thoroughbred owner and breeder, regularly ran his private business operations out of his state office, running up charges and staff resources for his bed and breakfast and restaurant. An administrative assistant at CIF spent hours each day, the audit said, doing work on behalf of Levin's B&B.

The audit said CIF's former executive director, James DePasquale, was involved with Levin in running up thousands of dollars in "inappropriate or improperly documented expenses.'' DePasquale died earlier this year.

Hevesi said auditors could find no justification for nearly $9,000 in gasoline purchases made by Levin and DePasquale on two oil company credit cards issued to CIF. One third of the $5,000 in office supplies purchased during the audit period were for "questionable items,'' such as paper to print ads for Levin's B&B. Packages were shipped via Federal Express to gift shops connected to DePasquale's wife.

The audit found evidence of questionable travel expenses to Belmont and Aqueduct; DePasquale received $10,170 for travel to the tracks during a five-month period, though CIF officials could document no capital-related projects involving CIF at the tracks during the time. Auditors also found $6,261 in entertainment expenses by DePasquale, though no receipts could be found and Hevesi questioned the need for an agency involved in capital projects to spend on entertainment.

The audit questioned the wisdom of spending nearly $300,000 on outside legal work for which there was no contract. Moreover, the audit said the law creating CIF limited the total staff salaries at CIF to $250,000 per year; CIF paid out $460,000 in salaries in 2003, the audit said.

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