New York Mayor Rudolph Giuliani postponed announcement about off-track betting corporation sale.

New York Mayor Rudolph Giuliani postponed announcement about off-track betting corporation sale.

Associated Press

NYRA Employees Indicted; Giuliani Cancels News Conference

Four New York Racing Association employees have been indicted as part of a sweeping probe by state investigators into an alleged money laundering operation at NYRA's three racetracks.

In a separate matter, meanwhile, less than an hour before the event, New York City Mayor Rudolph Giuliani canceled an 11 a.m. news conference Thursday at which he was to announce that a group led by Magna Entertainment had won the purchase rights to the lucrative New York City Off Track Betting Corp.

Magna officials were in Manhattan for the event, and NYRA executives were ready to blast the deal, but it was abruptly cancelled. A spokesman for Giuliani declined to give a reason. Sources said there were still some unresolved financial issues, but that Giuliani was also concerned about announcing the deal at the exact same time state officials in Albany were unveiling indictments against NYRA officials.

"Deals are never done until they're done," Giuliani said. "When they're done, we'll announce it."

The indictments involving money laundering did not include any senior NYRA management, though Attorney General Eliot Spitzer said the alleged illegal activities raise serious questions about oversight at Saratoga, Belmont and Aqueduct.

"For a cut of the action, these defendants were willing to transform their $2 betting windows at Saratoga, Aqueduct and Belmont Park into a money laundering shop," Spitzer said. During a six-month period, more than $300,000 in cash was laundered via undercover agents. Officials believe the scam was going on at least for several years.

The four were indicted on 46 counts; three were arrested Wednesday afternoon and arraigned before a judge in Saratoga County. The fourth has not yet been arrested.

Undercover State Police, who were part of a probe that began March 2000, observed tellers receiving cash payments without providing betting slips in return. The tellers, according to Spitzer, received a cut of up to 10% of money given to them by undercover police. They converted small bills into large ones, which Spitzer said is the means often used to reduce the number of bills money launderers then ship out of the country.

All four were tellers, including the current chairman of the tellers union and the union's vice chairman. Those arrested were Robert Ladati, chairman of the tellers' union; Robert Marshall, vice chairman of the union; and Joseph Rabito. All three were in jail this morning. The fourth defendant, Pete Oster, has not yet been arrested.

Spitzer said the investigation is continuing, leaving open the possibility of more arrests. "This was an elaborate scam in which the crowd, commotion and cash flow of the race track was used to conceal criminal activity. The tracks must be purged of criminal activity and this case should help begin that process," Spitzer said.

In a written response to the indictments, NYRA said it has been fully cooperating with Spitzer's office "into certain isolated illegal acts allegedly committed by three or four rank and file NYRA employees. The alleged crimes did not affect in any way the orderly running of NYRA's Thoroughbred races or the proper operation of our pari-mutuel wagering pools.

"For 46 years, the New York Racing Association has taken whatever steps necessary to ensure the integrity of our Thoroughbred races and our parimutuel wagering operations. We will continued to do that here," the NYRA statement said.

Spitzer, during an 11 a.m. press conference Thursday, said the scheme involved drug dealers looking to launder money from the sale of narcotics. The money was to be transferred to foreign countries. He said the money laundering was "brazenly" done out in the open, and that many tellers were aware the money was being switched on behalf of drug dealers.

Spitzer said the indictments "expose, at a minimum, serious operational problems at the three major Thoroughbred tracks operated by NYRA." If the problems aren't addressed, he said, "the integrity and viability of the racing industry will be questioned."