09/12/2005 11:00PM

NYRA indictment is dismissed

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Federal prosecutors have agreed to dismiss an indictment against the New York Racing Association stemming from tax fraud in the association's mutuel department, the authorities said Tuesday.

The decision was expected after Neil Getnick, the managing partner of a New York law firm that had been appointed to monitor NYRA's business activity, said last month that the racing association had instituted many reforms.

On Tuesday, Eric O. Corngold, acting United States Attorney for the Eastern District of New York, and Alan Hevesi, the New York State Comptroller, issued a statement, saying that NYRA had met the conditions of a deferred prosecution agreement entered into in December 2003. Under the agreement, NYRA had to pay a $3 million fine and reform its management and operating practices.

In the statement, Corngold said: "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 reformed organization."

The decision resurrects the political fortunes of NYRA at a time when it hopes to launch an aggressive lobbying effort to retain its franchise to conduct racing at Aqueduct, Belmont, and Saratoga. The franchise expires in 2007 and is coveted by a number of politically connected racing and gambling companies. NYRA expects to open a casino with 4,500 video lottery terminals, or slot machines, at Aqueduct next year.

NYRA will still be monitored by a new five-member oversight panel that was created by the New York legislature and was supported by Governor George Pataki.