Casino Operators Mulling Lawsuits Over Aqueduct Shenanigans

Casino operators who lost out in their bid to build a casino/hotel at the Aqueduct race track in Queens are contemplating lawsuits against the state for improper conduct in the bidding process. The winning bid, by AEG Group, was apparently lower than other bids, including by Penn Gaming, but was allowed to increase its bid to match the Penn Gaming bid. Moreover, only yesterday the AEG group took steps to alter its management group to remove a convicted felon from the mix.

The Aqueduct Entertainment Group announced yesterday that the Darman Group -- headed by convicted criminal Darryl Greene -- would be removed as a key partner in the project.

Greene has closes ties to AEG partner Floyd Flake, the influential Queens preacher and former congressman, and such politicians as state Senate President Malcolm Smith (D-Queens).

One of the conditions in the legal "Memorandum of Understanding" for the project bars people with criminal records from obtaining a gambling license. Green had been convicted of misappropriating $500,000 in government funds in 1999.

A rival bidder, Penn National Gaming, had already complained that it was passed over after offering a $300 million up-front license fee -- $100 million more than AEG. But AEG was then allowed to match the higher bid, the rival company said.

Allowing AEG to remove a tainted partner is another example of favoritism, fumed Penn National senior vice president Eric Schippers. "We're all exploring all of our options," Schippers said of potential litigation. "The universal sentiment is something stinks in Albany."

Another source involved in the Aqueduct deliberations said, "AEG is being given a chance to raise its bid, change its equity partner team and management and alter its design to meet the required footprint. It's almost like they, and they alone, are getting a chance to rebid." The footprint refers to whether the project complies with the state Environmental Quality Review Act.

This is a contract that needs to be relet and conducted in an impartial manner. Today's Post article also gives some insight into possibly why AEG won the bid; the connections to Flake and Senate Majority Leader Smith (who has other problems to contend with).

Also, did no one notice the criminality clause when putting together the team? Or, did they figure that if they jettisoned Greene before things got out of hand, AEG could continue to work towards winning the bid and starting the work on the casino? It seems that the primary reason Greene was involved was because of his political connections. He was a former business partner to Smith and the Darman Group's client list is a who's who of NYC construction and commerical real estate firms.