PIX News has learned that federal prosecutors are investigating Governor David Paterson's awarding of a lucrative contract to a politically connected group to run a gaming center at Aqueduct Raceway.
The embattled Governor who appears to have dodged the bullet of rumors and innuendo that had been circulating over a purported "bombshell" story being prepared by the New York Times, is now part of a probe by the Eastern District U.S. Attorney's office in Brooklyn.
Two reliable sources confirm the investigation is "very fresh," but could not say precisely what it is prosecutors are looking at other than questions about public integrity.
Paterson has been under fire by members of his own staff and legislative leaders for awarding the contract to Aqueduct Entertainment Group, a group that includes former Congressman Rev Floyd Flake, whose political support the Governor had been aggressively seeking.
Flake had said publicly that he was considering endorsing Attorney General Andrew Cuomo for governor, if he decides to run. The loss leading of a black Democratic leader's support would be a serious setback for Paterson. After the contract was awarded to Flake's group, the Governor met with the Queens leader, but Paterson's office denies any endorsement was discussed.
Capitol insiders say the deal was politically motivated. The Governor has defended the decision to grant AEG the right to operate video lottery terminals, saying they are suited for the job and that the decision was a unanimous one made by him, the leader of the State Senate and the Speaker of the Assembly.
As for a probe by the U.S. Attorney, the Governor's office tells PIX News they have not heard anything about it.
Meanwhile, a partner in Aqueduct Entertainment Group says the company is not aware of any investigation and has not been contacted by any law enforcement or regulatory agency of any kind.
"Aqueduct Entertainment Group won because our bid offered the best value for New York's taxpayers and the best plan for the residents of Queens," Jeffrey Levine, CEO of Levine Builders and Partner in Aqueduct Entertainment Group, told PIX News in a statement released Wednesday.
"Like all bidders, we adhered to the bid process as outlined by the State of New York and were selected on that basis. We are continuing to work with the state to finalize an MOU and pay the $300 million licensing fee by March 31st so that we can break ground on this vital job creating project," Levine said.Copyright © 2014, The Baltimore Sun