06/25/2002 11:00PM

New York clerks plead guilty


NEW YORK - Sixteen parimutuel clerks who worked at New York Racing Association tracks have pleaded guilty to tax evasion, the U.S. attorney for the Eastern District of New York announced Tuesday.

Three tellers entered guilty pleas Tuesday in a court in Central Islip, N.Y. The other 13 pleaded guilty last year, although their cases were unsealed only on Tuesday.

The pleas came two months after three other tellers at NYRA tracks pleaded guilty to charges of money laundering, conspiracy, and falsifying records. Those tellers were caught after a sting orchestrated by undercover police officers posing as drug dealers.

According to U.S. officials, the 16 tellers were participating in a widespread scheme that dramatically reduced their taxes.

Under the scheme, the tellers would pocket money from their cash boxes and report that the boxes were "short" at the end of the day. The tellers would then pay back NYRA, either through cash payments or payroll deductions, and record the payments on IRS forms as "unreimbursed employee expenses," even though the tellers had paid the money back with the money from their cash boxes.

The scope and complexity of the scheme indicated that the cheating had been occurring for some time, officials said.

"This had been going on for years and years," said one official with knowledge of the investigation. "It was something that these people did, like a perk."

The official, who spoke on the condition of anonymity, said that the amount of money reported as short at the end of the year reached as high as $2 million. Some tellers, who typically make $50,000 a year, were reporting $20,000 a year in unreimbursed expenses, wiping out their entire tax liability for the year.

Barry Schwartz, NYRA's chairman, said the scheme was uncovered in 1999 after an audit by Ernst and Young. Schwartz said NYRA then put in place rules to discourage the underreporting while investigators proceeded to build a case against the cheaters.