New York State Thoroughbred Racing Capital Investment Fund
Internal Controls Over Financial Operations The New York State Thoroughbred Racing Capital Investment Fund was created in 1983 to approve and finance capital projects requested by the New York Racing Association (NYRA), a not-for-profit organization franchised by New York State to conduct racing and pari-mutuel wagering at the Stateís three major thoroughbred racetracks (Aqueduct, Belmont Park and Saratoga). The Fund, which has been replaced by the Non-Profit Racing Association Oversight Board, receives a portion of the revenue earned by NYRA.
We reviewed the Fundís internal controls over its financial operations. We identified material internal control weaknesses in the Fundís operations. We also determined that numerous improprieties were committed by the Fundís Chairman and other Fund officials. For example, the Chairman operated personal businesses out of the Fundís offices and made extensive use of the Fundís staff and resources in operating these businesses, while the former Executive Director was reimbursed for thousands of dollars in questionable travel and entertainment expenses. We noted that the Fundís Board of Directors, which met only once or twice a year and had three vacant seats, did not detect the many questionable and excessive expenses that we identified. We further determined the Fundís financial condition had been seriously weakened by NYRAís failure to repay past loans (NYRA reportedly owed the Fund $67.8 million, including $38.7 that was past due). We recommended that the loans to NYRA be formally restructured, internal controls be significantly strengthened, and Board of Director oversight be greatly improved. Our audit findings were used in a criminal investigation of Fund-related activities, and subsequent to our review, the Fundís Chairman pleaded guilty to grand larceny.
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