NYRA Monitor Issues Report; MEC Talks With State

The court-appointed monitor that oversees New York Racing Association operations has moved into NYRA racetracks and conducted briefing sessions with everyone from board members to hot walkers.

In its first report to a federal judge, Getnick & Getnick, the Manhattan law firm appointed as the NYRA monitor, gave a broad outline of its work during its first 60 days on the job. If it found any serious irregularities, they weren't detailed in the 22-page report submitted June 7. The firm submitted a separate, secret 44-page report and other information under seal to federal court Judge Arthur Spatt.

The report, signed by Neil Getnick and Margaret Finerty, painted a picture of a team of investigators just getting started on its 14-month mission. The firm was appointed by Spatt upon the recommendation of the U.S. Attorney's office after NYRA was indicted and fined $3 million for its role in a tax-fraud scheme by employees, and investigators uncovered widespread abuses.

The report came out on the same day top management from Magna Entertainment Corp. met with officials at the state capital to continue to position itself as the entity best equipped to run racing in New York.

"They want to take over," said one lawmaker with whom MEC officials met. The MEC team, which included president James McAlpine, pitched a willingness to work with NYRA. But if NYRA's franchise to operate Aqueduct, Belmont Park, and Saratoga ends, which it's slated to do in 2007, MEC is more than qualified to run the facilities, MEC representatives told sources. McAlpine couldn't be reached for comment.

MEC earlier this year hired a number of well-placed lobbyists to block NYRA's request to have its franchise extended until 2010 or 2011. It also pitched a plan to partner with NYRA, a bid that was rejected by NYRA's board of trustees. NYRA chairman Barry Schwartz recently indicated the two racing powerhouses continue to talk.

The NYRA monitor, with a presence at NYRA tracks seven days a week, said it has written letters to all NYRA workers, horsemen, and others to let them know of its presence. Schwartz, the monitor said, wrote letters to workers urging them to cooperate with the monitor. The monitor has set up a 24-hour-a-day "integrity hotline" and received an initial 10 calls from tipsters.

In the report that covers March and April, the team spent much time on a learning mission. Members met with several top board members, horsemen, backstretch workers, as well as state investigators and auditors. Also, with one of the court's requirements that NYRA move ahead with its plans for video lottery terminals at Aqueduct, the monitor has met with MGM Mirage, NYRA's VLT partner, as well as officials from the Nevada Gaming Control Board.

The monitor reports to state Comptroller Alan Hevesi, and said Hevesi has begun the first of four audits of NYRA that will look into NYRA's travel and reimbursement policies, contracting and procurement, the franchise fee, and backstretch operations.

The monitor said NYRA has--abiding by a deal with prosecutors--already replaced a number of top managers. It also has requested but not received an opinion it agreed to seek from the Internal Revenue Service to determine whether NYRA was entitled to deduct from its taxable income the interest on debt to the Thoroughbred Capital Investment Fund.

The monitor, which has vast investigative powers over NYRA, said it's looking for cooperation and transparency from NYRA.

"This change in culture must come from the top," the report said. "NYRA's officers and trustees must acknowledge the need for change, and work hard to identify and achieve the reforms needed to ensure that NYRA not only complies with the (court) agreement, but also serves the best interests of the state in an ethical and fiscally responsible manner."

The monitor said it also "expects NYRA to be open to the suggestions the monitor makes for improvement, and consider proposed changes in a serious and thoughtful manner."

In a statement, Hevesi said NYRA, under the terms of a deal that will let it avoid prosecution if it makes the needed reforms and stays out of trouble, has been presented with a unique opportunity. "We hope that the NYRA will take advantage of this opportunity and carefully scrutinize all aspects of its operations with an open mind to making necessary changes and improvements," Hevesi said.