The United States Moves to Dismiss Indictment Against the New York Racing Association
ERIC O. CORNGOLD, Acting United States Attorney for the Eastern District of New York, and ALAN HEVESI, New York State Comptroller, today announced that, pursuant to the terms of a deferred prosecution agreement, the United States has filed a motion to dismiss the December 4, 2003 indictment against the New York Racing Association Inc. ("NYRA"). NYRA and the United States Attorney's Office (the "Office") entered into the deferred prosecution agreement following the return of an indictment charging NYRA, two former directors of NYRA's Pari-Mutuel Department, and four former pari-mutuel tellers with participating in a scheme by which pari-mutuel employees fraudulently deducted millions of dollars from their federal and state taxable income.
Pursuant to the terms of the deferred prosecution agreement, NYRA accepted responsibility for the conduct alleged in the indictment and agreed to, among other things, (1) the restructuring of its senior management; (2) the appointment of an independent monitor to supervise NYRA's compliance with the deferred prosecution agreement, including its compliance with all federal, state and local laws; and (3) the payment of $3 million in fines and costs of prosecution over a thirty-six month period. United States District Judge Arthur D. Spatt subsequently appointed the law firm of Getnick & Getnick to serve as the NYRA monitor and ordered that the monitor be subject to the oversight and supervision of the Office and the Comptroller.
As reflected in the public report filed today by the court-appointed monitor, NYRA has complied with the terms of the deferred prosecution agreement with the Office and also, as a result of that agreement, has implemented numerous reforms and remedial measures. These reforms and remedial measures include:
. the appointment of new management, including two co-Chairmen of the Board of Trustees and a new Chief Executive Officer;
. the imposition of new rules to promote the integrity and oversight of pari-mutuel clerks, including rules for the counting of funds collected by such clerks, and rules prohibiting pari-mutuel clerks with excessive shortages in their cash drawers from working in positions especially vulnerable to theft, fraud and abuse;
. the establishment of "monitoring barns" at which competing horses are stabled on race day, under the supervision of NYRA security, in order to prevent the administration of illegal performance-enhancing substances and unauthorized medications;
. the requirement that selected horses undergo state-of-the-art pre-race testing designed to combat "milkshaking," a practice by which alkalizing agents are secretly administered to a horse in order to slow the onset of fatigue and improve the horse's performance;
. the termination of NYRA's simulcast agreements with "rebate shops" (i.e., gambling businesses located off-shore or on Indian reservations), which frequently are involved in tax evasion, money laundering, and other illegal schemes;
. the adoption of an anti-money laundering policy that includes mandatory training in anti-money laundering procedures and the establishment of a customer identification system for all NYRA customer accounts; and
. the approval and adoption of a comprehensive Code of Ethics that applies to all NYRA trustees, officers and employees.
NYRA has also fulfilled its obligation to make $2 million in payments to the government under the terms of the deferred prosecution agreement, and has filed confessions of judgment for the remaining $1 million payment that will come due in December 2006.
As reflected in the monitor's report, NYRA has "brought itself into conformity with the law," has "fully cooperated with the monitor," and has "taken steps to rid the tracks of criminal activity and pledged its commitment to taking whatever action necessary to achieve this goal."
In announcing the filing of the motion to dismiss the indictment against NYRA, Acting United States Attorney CORNGOLD stated, "Two years ago NYRA was a broken and corrupt organization that sanctioned the extensive tax evasion scheme for which it was indicted. Today, having been subjected to the stringent conditions of the deferred prosecution agreement, and having been supervised by the Court and the independent monitor, NYRA emerges as a substantially improved organization. We are pleased with NYRA's progress and that the deferred prosecution agreement has had its intended effect." Mr. CORNGOLD thanked the New York State Comptroller's Office, Getnick & Getnick, the Internal Revenue Service, and the Federal Bureau of Investigation for their participation in this matter.
New York State Comptroller ALAN HEVESI stated, "Two years ago, the New York Racing Association was the poster child for mismanagement and corruption. I am gratified that the Office of the United States Attorney for the Eastern District agreed with my recommendation for the imposition of an outside monitor in the context of its criminal prosecution of NYRA, because I believed it was the only way to ensure reform at NYRA, support the New York horse racing industry, and preserve this important asset for taxpayers. While much still remains to be done, the result has proven that reform of even a very poorly managed and corrupt agency is possible. I thank the Office of the U.S. Attorney for the Eastern District, the monitor, Getnick & Getnick, and the new leadership of NYRA for their important and effective efforts."
The government's case was prosecuted by Assistant United States Attorneys Robert M. Radick, Richard T. Faughnan and Burton T. Ryan.
The Department of Justice believes that it is important to keep victims/witnesses of federal crime informed of court proceedings and what services may be available to assist you.