Updated on 09/16/2011 9:39AM

Stage set for criminal case


NEW YORK - The United States attorney for the Southern District of New York, James B. Comey, has taken over the investigation into the suspicious, winning wager made on the Breeders' Cup pick six, authorities said Friday.

The investigation, which has so far targeted three former Drexel University fraternity brothers, was launched by the New York State Racing and Wagering Board Oct. 27, the day after one player accounted for all six winning $2 pick six tickets worth $3.1 million. Payment on the bet has been withheld, and no charges have been filed.

The U.S. attorney's office will be assisted by the New York State Police and the F.B.I., officials said. Stacy Clifford, a spokeswoman for the New York State Racing and Wagering Board, said that the board made a "collaborative decision" to involve the United States attorney's office.

The U.S. attorney's office entered the investigation on the same day that the racing industry made several announcements about its attempts to close security gaps in the national totalizator network that processes the sport's bets. Those gaps, officials have said, have left pick six bets vulnerable to manipulation by someone with access to the tote system.

The involvement of the U.S. attorney's office signals the beginning of a criminal investigation and suggests that there is enough evidence to bring charges, which could include tampering with a sporting event or a variety of fraud charges, according to law enforcement officials.

Comey was appointed the U.S. attorney for the Southern District of New York on Jan. 7, 2002, succeeding Mary Jo White. Earlier this year, Comey charged an alleged Russian mobster with conspiracy for masterminding the judging scandal in the pairs figure-skating competition at the Salt Lake City Winter Olympics.

The three suspects in the pick six case are Derrick Davis, Chris Harn, and Glen DaSilva, all 29. They were members of Tau Kappa Espilon at Drexel University in Philadelphia in the 1990's.

Davis, a Baltimore resident, placed the suspicious bet on the Breeders' Cup pick six on Oct. 26 through a telephone account at Catskill Off-Track Betting Corporation. Harn was fired on Oct. 31 from his job as a software engineer at Autotote, which processes bets for Catskill and is the country's largest totalizator company. DaSilva was already under investigation by Catskill because of suspicious pick six and pick four bets that he cashed in early October for more than $117,000. Catskill officials submitted his name to state investigators as a possible suspect after the New York wagering board had launched its probe.

Investigators said they believe that an insider such as Harn may have been able to alter tickets placed by DaSilva and Davis by gaining access to the Catskill bets from his office in Delaware and changing the tickets after some of the races had already been run.

In an effort to address security concerns in the tote system, officials from the National Thoroughbred Racing Association said on Friday that a task force it set up last week has made three recommendations.

The recommendations are: changing the way that pick six and pick four wagers are transmitted into parimutuel pools; installing audio security systems for account-wagering systems; and reviewing all winning multirace wagers for any suspicious patterns.

The NTRA officials said that all the tracks operated by Churchill Downs, the New York Racing Association, and Magna Entertainment Corp. have agreed to the recommendations. In addition, the country's three largest tote companies - Autotote, AmTote, and United Tote - have also agreed.

Tim Smith, the commissioner of the NTRA, said that the steps were "part of our long-range and ongoing program to guarantee the integrity of our wagering systems."

Separately, Churchill Downs announced on Friday that all betting at its tracks would be closed one minute before the horses are loaded into the starting gate, beginning Wednesday, Nov. 13. Tom Meeker, Churchill's chief executive officer, said the early closing would allow Churchill's tracks to post the final odds on its races before the horses leave the gate.

Churchill is the only company to adopt the early closing so far. The topic has been the subject of an intense debate among racing fans, with some arguing that the early close will only frustrate people trying to make a late wager and others maintaining that the close will erase suspicions about bets being placed after the gates have opened.

Any bet on a horse that is scratched at the gate will be refunded, Meeker said. Currently, many tracks allow horseplayers an additional minute to change their wagers if a horse is scratched at the gate. Meeker said Churchill will have no such policy.

"I don't want to call [these measures] temporary, and I don't want to call them permanent," Meeker said. "They're the best we could come up with right now"

In addition to its flagship track in Louisville, where the Kentucky Derby is run, Churchill owns Hollywood Park, Calder Race Course, Ellis Park, and Arlington Park. It also owns a majority share in Hoosier Park.

Churchill said it has also asked tote companies to review their systems for security flaws and said it will require all its wagering sites to change the way pick six and pick four bets are transmitted, in conjunction with the NTRA task force recommendation.

Concern has grown about pick six and pick four bets because of the way betting information is transmitted into parimutuel pools. Currently, the information that identifies the horses used in the wager is not sent to the national betting hub until after the fifth race, making the bets vulnerable to manipulation for up to 2 1/2 hours after a bet is actually placed, officials have said. In pick four bets, the information is not sent until after the third race.

NTRA officials said that the tote companies are hoping to close that gap in the next 30 days. The intent will be to transmit the pick six information after each race is run, in an attempt to close the window of opportunity to alter the bets. Tote technicians will have to modify the software at more than 50 different sites around the country for the change to become effective, according to tote officials.

Despite the changes, many racing officials remain wary about the security of the totalizator network, which has grown enormously complex over the past decade as simulcasting has become the dominant source of wagers. The network links hundreds of U.S. and offshore betting outlets while processing billions of dollars in wagers every year on Thoroughbred racing and other parimutuel sports.

Some racing officials have criticized the network as being outdated and inefficient. The officials contend that the racing industry would be better off building a new network through a nonprofit company owned by the industry.

Two years ago, the NTRA tried to build support for a project to consolidate all tote and simulcast functions under one umbrella. The plan included buying a tote company, but the plan was eventually scuttled under opposition from racetracks.

The NTRA has hired a security consulting unit of Ernst and Young to evaluate the security of the tote companies' systems. NTRA officials said that the Ernst and Young team will take the next 30 days to examine the systems and then issue reports to members of the task force.

Tote companies have historically rejected any attempts by outsiders to analyze the programming code that makes their systems work. But some racing officials said that the tote companies would be under great pressure to change their policy.

"We are bringing the force of the industry down on them," said Chris Scherf, executive vice president of Thoroughbred Racing Associations, who works closely with tote companies. "They have to cooperate because the industry is saying they have to, and at this point, it doesn't seem like they have any other choice."