2010-02-12 / Top Stories

Controversy Grows In Aqueduct Double-Deal

Criminal AEG Partner Showed The Door
By Howard Schwach

A controversial Aqueduct Entertainment Group (AEG) investor with a criminal past has been dumped by the other investors because his participation could well have jeopardized the company’s Racino deal.

Darryl Green, a former business partner of State Senate President Malcolm Smith, abruptly announced this week that he will no longer be associated with the project or with AEG.

Green, who had a minor stake in the deal, was forced out, insiders say, because of his 1999 conviction for stealing $500,000 from city agencies. His participation would have disqualified AEG from getting a license from the state’s Lottery Commission, experts say.

Green had close ties to Smith, Congressman Gregory Meeks and the Reverend Floyd Flake, an AME minister who is one of the partners through his community development corporation.

Meanwhile, several of the other bidders and Albany groups have called for an investigation into how AEG was chosen for the Aqueduct deal. The decision was made by Governor David Paterson, Assembly Speaker Sheldon Silver and leaders in the State Senate, including Smith and conference chief John Sampson.

All of those men have close ties to Flake, and opponents of the decision claim that the vetting process was skewered to give Flake and his partners the Racino deal from the first. Last weekend, Peter Kiernan, Paterson’s top attorney, admitted to Daily News reporters that politics was a key factor in choosing AEG for the Racino project.

“It’s not a typical bidding process,” Kiernan told reporters. “It is not governed by procurement laws. It is a political process because you have three political leaders that have to make the decision.”

Just days before the decision was made, the Daily News story says, Flake, one of the major Democratic power-brokers in the city as an ex- Congressman and the pastor of one of the largest churches in the state, talked about backing Andrew Cuomo for governor in the next election.

Paterson reportedly called Flake to the executive mansion after the decision was made, and Flake later announced that he had not yet made up his mind as to whom he would back for governor.

“That smacks of pay for play,” one insider said. “That is the way things are done in Albany.”

On Monday, several of the bidders who lost out to AEG said they planned to bring suit against both Paterson and the state.

In addition, a number of good government groups in Albany have asked federal investigators probing a Katrina charity with ties to Smith and Meeks to also take a look at the ties those politicians have to the Aqueduct deal.

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