06/23/2003 11:00PM

NYRA and Spitzer spew criticism at each other

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NEW YORK - The dispute between the New York Racing Association and New York Attorney General Eliot Spitzer intensified on Tuesday when the two sides traded sharp criticisms over a report by the attorney general's office last week that suggested NYRA be overhauled to root out corruption.

In a 15-page, sometimes-detailed document that he read at a press conference in Albany, Denis J. McInerney, an attorney for NYRA, said that the conclusions in Spitzer's report should be all but dismissed because its recommendations were inaccurate and obsolete.

"There are numerous assertions, inferences and conclusions in the AG's report that are inaccurate, misleading, out-of-date, or the product of a fundamental misunderstanding about NYRA's operation," McInerney said, calling the report "unfair and its conclusions unfounded."

But Spitzer did not back down.

"I stand by the report and its conclusions," Spitzer said in a written rebuttal, charging that McInerney was misrepresenting the attorney general's report and NYRA's own role in the investigation that produced it.

The report, released last week after a three-year investigation, alleges that corruption was rampant in NYRA's mutuel department, and it singled out NYRA's president, Terry Meyocks, for failing to address crimes that were committed by mutuel employees. The report also criticized NYRA's controls over money handled by mutuel workers.

Much of the report focuses on various criminal convictions of NYRA mutuel tellers obtained by Spitzer's office over the past three years, including 19 guilty pleas by mutuel tellers for tax evasion or money laundering and two recently unsealed indictments for forgery.

Fallout from the report has included charges from NYRA board members that Spitzer, a Democrat, is intent on smearing the reputation of NYRA, which has close ties to many Republicans, in a bid for higher office. Spitzer, who is expected to run for governor in 2006, has denied that charge.

Spitzer said in his statement that McInerney's "version of events contrasts dramatically with the understanding of investigators from my office, the state police, and the state inspector general."

Investigators for the attorney general also disputed McInerney's contention that NYRA officials cooperated with the investigation, and said that the NYRA response fell short of attacking any of the facts uncovered by the investigation, but rather attacked its "tone."

The press conference at which McInerney read the statement is a regularly scheduled event in which NYRA normally promotes the Saratoga meet, which begins on July 23. McInerney did not take questions.

McInerney said that NYRA will address any concerns in the report that officials believe to be "legitimate," and that NYRA is in discussions with security consulting firms to evaluate its procedures. But he also described the frustration of NYRA officials, who believe that most of the concerns were either frivolous or had already been resolved by the time the report was released.

For example, McInerney said that NYRA, on the advice of Meyocks, implemented new cash-control procedures in both 2000 and 2002 that prevent mutuel tellers from borrowing money from their cash boxes and engaging in the common practice of "10 percenting," which is a way of avoiding income taxes on large payoffs to bettors.

The new procedures grew out of the convictions of mutuel tellers described in the report, and included a new procedure in which tellers have to account for all the cash in their box at the end of each day, rather than the end of the meet, McInerney said.

"In short, the problem of clerk shortages - which the AG's report devotes much attention to - was in fact virtually eliminated as a result of Terry Meyocks's action 3 1/2 years ago," McInerney said. "And again, these actions were taken before NYRA learned of any government investigation."

An official in the attorney general's office who participated in the investigation agreed in part with McInerney's statement, but he ultimately faulted NYRA for not going far enough by requiring a daily count for the employees who handle the tellers' money at the end of the day.

"It's not that they didn't do anything, it's that what they did was inadequate," said the official, who declined to be identified.

McInerney also faulted the attorney general's contention that NYRA has posted "disappointing financial results" due to "waste and mismanagement."

While acknowledging that tax receipts for NYRA fell over the past decade, McInerney said the decrease was due to legislative changes that directed more of NYRA's revenues to horsemen instead of the state and a reduction in the association's takeout on wagers. NYRA lobbied for the takeout reduction.

McInerney and the attorney general clashed on a lengthy section of the report that described various ways in which mutuel tellers can cheat customers out of money. McInerney criticized the office for describing the schemes without arresting any of the tellers, but the attorney general's office official said that they were not able to prosecute the crimes because of legal complications involved in gathering the information.