Losing bidders are considering filing suit against Gov. Paterson for allowing the consortium chosen to operate 4,500 video slots at Aqueduct Racetrack to clean up its act after the fact, sources said yesterday.
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.
"We are discussing the SEQR issue," said AEG spokesman Andrew Frank. In a statement, Greene said he stepped down as an AEG partner because he did not want to jeopardize "a critical project" for Queens. He held a 0.6 percent investment interest.
AEG potentially has another reason to sever ties with Greene: protecting the Nevada-based Larry Woolf and his Navegante group, the only partner with a gaming license, sources said.
The Nevada Gaming Commission could suspend or revoke the license of a casino operator, like Navegante, that does business with "unsavory" characters in other states. An AEG spokesman insisted Greene’s departure had nothing to do with Navegante’s Nevada’s license.