Hank Sheinkopf (Dan Brinzac)
As the state evaluated the billion-dollar proposals for the Aqueduct Racetrack racino in 2009, principals for the shadiest bidder gave thousands to a political committee controlled by Assembly Speaker Sheldon Silver — money that nobody today can account for.
And months later, just before that scandal-plagued bidder was picked, Silver solicited “campaign dough” from Hank Sheinkopf, a friend who was lobbying for the company, the Aqueduct Entertainment Group.
New details of the tainted bidding process to put slot machines in Queens have emerged in a bombshell series of e-mails and transcripts obtained by The Post from the state inspector general through a Freedom of Information Law request.
Three years later, the machinations that resulted in AEG’s initial victory still mark one of the ugliest chapters in state politics — so ugly that Gov. Cuomo’s newly constituted Moreland Commission has decided to include AEG in its broad public-corruption probe, The Post has learned.
At stake were hundreds of millions of dollars for depleted state coffers and a huge payday for the company chosen to build and operate the gambling palace.
The bidding process was first investigated by the inspector general, who issued a 308-page report in 2010 and referred it to the US Attorney’s Office.
“At each turn, our state leaders abdicated their public duty, failed to impose ethical restraints and focused on political gain at a cost of millions to New Yorkers,” former IG Joseph Fisch said when he released the scathing report.
Two key AEG supporters, state Sens. John Sampson and Malcolm Smith, were arrested this spring by federal authorities on unrelated charges, and more legislators are reportedly in the cross hairs.
The AEG consortium included a mishmash of players with varying stakes, including not only developers but also a judge with ties to Bill Clinton, Queens power broker Rev. Floyd Flake and rap mogul Jay-Z.
Sampson pushed for developer Donald Cogsville to be included in the group at the eleventh hour, and Sampson, along with Flake, stood to make millions of dollars from a successful AEG bid, a source told The Post. Sampson, who was then Senate majority leader, decided who received the racino contract along with Silver and Gov. David Paterson.
The 10 months leading up to the January 2010 decision were marked by a frenzied lobbying effort by six competing companies. It was a selection process later described as “devoid of rules.”
The winning bidder had to pay the state $200 million up front in exchange for a license to run video lottery terminals, or VLTs, at the track.
The AEG team was tainted right out of the gate. Karl O’Farrell, the consortium founder, had already been disqualified in a prior bidding process by State Lottery officials because of concerns over his gaming business in Australia. Documents show O’Farrell tried to hide his involvement in AEG. And one of Flake’s partners was shown to have a criminal record.
The jockeying for political advantage is obvious in e-mail discussions among the AEG principals, who were desperate to get Silver on board in the summer of 2009.
“Rumor has it Shelly and the gov don’t like us for Aqueduct. I’m trying to get to the bottom of it,” according to a July 8, 2009, e-mail from AEG lobbyist Fred Polsinelli to Sheinkopf, a longtime political operative and Silver friend.
A few weeks later, the principals had an opportunity to curry favor with Silver at his “Speaker’s Cup” golf outing, a fund-raiser for the Democratic Assembly Campaign Committee. Silver was the group’s honorary chairman. But there were to be no traces of AEG on the money it donated to the event. “They don’t want the check to come from AEG,” O’Farrell wrote in an e-mail sent on July 17, 2009.
E-mails obtained by The Post show that a foursome of AEG leaders planned to attend the outing at a cost of $8,000. At least one principal did go to the Westchester tourney, later telling state investigators he “believed” his share was $2,000.
But no donation from AEG, its leaders or any of its companies shows up on the DACC’s campaign filings, raising questions about where the money went.
A Silver spokesman said neither the DACC nor Silver’s campaign committee received a donation from AEG or its representatives and suggested they attended the outing at someone else’s invitation.
Although Silver publicly distanced himself from the selection process, maintaining he would go along with Paterson’s choice, AEG did not want to leave anything to chance. Their secret weapon was Sheinkopf.
“I’ve seen Hank Sheinkopf in action. If you want some quality time with Silver, Hank’s your man,” consultant Eugene Christiansen told AEG principal Larry Woolf in an Aug. 19, 2009, e-mail.
A few days later, Woolf e-mailed developer Larry Roman: “if we were to offer Hank a big job or $ he could move Silver to our side.”
A month before AEG was chosen the winner, Silver asked Sheinkopf for “campaign dough,” according to a Dec. 14, 2009, e-mail from Sheinkopf to Roman.
Silver, in his testimony to the IG, denied knowing that Sheinkopf was working for AEG.
Sheinkopf refused to talk to the IG in 2010, invoking the Fifth Amendment. “I have no obligation to be intimidated by him under any circumstances. I’m not a state employee,” Sheinkopf told The Post last week. “It’s none of his f–king business, how’s that?’
AEG was chosen as the racino operator on Jan. 29, 2010. Silver imposed conditions on the consortium and asked for a $300 million upfront payment. But criticism of the bidding process mounted, and Paterson pulled the plug on the deal in March 2010.
Genting, another bidder, opened the racino in October 2011. It has already generated more than $1 billion in revenue.