New York Gaming Commission headquarters on Wednesday, Feb. 9, 2022, on Broadway in Schenectady, N.Y. The Times Union obtained 15 never-before-released reports about the conduct of Gaming Commission employees and two state horse racing funds.
ALBANY — For years, Nicholas Ferriero served as the top judge at Yonkers Raceway and officiated horse races that his family members participated in.
Ferriero, as a state employee, played a key role in determining which horses could race and he had knowledge of state investigations into drug use at the tracks. He also sent thousands of text messages to a few horse racing participants while he was officiating; behavior that a New York inspector general identified as «extremely suspect.»
Then-acting Gaming Inspector General Lisa Lee substantiated the conduct in a 2018 report. The findings, along with 14 other reports detailing misconduct among employees of the Gaming Commission and two state horse racing funds, were never made public by the state, but were recently released to the Times Union.
The reports describe a range of alleged improper activities by Gaming Commission staffers who regulate horse racing, including gambling on the job, workplace sexual harassment and withholding money from racing participants. The reports outlined misconduct that varied in severity.
The inspector general also identified improprieties at two funds that hold races and offer financial awards for horses bred in New York: the Agriculture and New York State Breeding Development Fund, which caters to standardbred horses, and the New York State Thoroughbred Breeding and Development Fund, which does the same for thoroughbreds. Both funds had members in leadership who participated in the programs or benefited from the funds they oversaw; the funds also were subject to influence by horse breeding associations who were their vendors.
The reports, many of which are emblazoned with the label «confidential» on their covers despite being public records, were released to the newspaper as part of a new transparency initiative by the administration of Gov. Kathy Hochul. Some of the records detail the actions of current state employees.
John Kaehny, executive director of Reinvent Albany, a non-profit focused on state accountability, said the reports show the «blurred lines» between the state and the horse racing industry, an arrangement that has produced great benefits for the industry. He said it also raises questions about the ethics in other units of the Gaming Commission.
“The alarming thing is that Gaming Commission has such poor controls as a whole and with the advent of mobile app gambling, they’re regulating billions of dollars in gambling,” Kaehny said. “A little bit of favoritism by the state toward them can be massively lucrative so there is the incentive to bribe government.”
Brad Maione, a spokesman for the New York State Gaming Commission, said the gaming inspector general has regularly conducted training regarding the prevention and elimination of corruption, fraud, criminal activity, conflicts of interest or abuse with employees and commission officers. He also noted that, to the commission’s knowledge, none of the matters described in the newly released reports were referred to federal, state or local law enforcement agencies by the inspector general.
Lee had found that multiple Gaming Commission employees participated in fantasy sports pools and other prohibited gambling, including while at work over the course of at least eight years from 2011 to 2019.
One report described how the Gaming Commission delayed proper administrative action in response to allegations — that were later verified — that Jeffrey Tallarino, former presiding judge at Vernon Downs harness racing track, engaged in inappropriate behavior including giving a «phallic-shaped cake» to another employee. Also, a Gaming Commission employee took what could be considered «retaliatory» steps against a female staffer who came forward about Tallarino’s actions in 2017, the inspector general found.
In addition, Lee found that a former state steward, Steve Lewandowski, who worked at Saratoga Race Course, Aqueduct Racetrack and Belmont Park, improperly withheld race winnings from owners on more than one occasion.
Inspector general reports obtained by the Times Union show misconduct among state officials who oversaw horse racing. In this photo, a horse exercises at the Saratoga Race Course on Thursday, July 15, 2021, in Saratoga Springs, N.Y.
Lee also reported that one Gaming Commission employee improperly sought pay from a racetrack operator and another ran a fantasy sports website. Two Gaming Commission employees improperly let their friends into the backstretch of Belmont Park during the Belmont Stakes in 2015 and 2016, Lee wrote.
Lee also reported that in 2015, the hiring process for state per diem positions at the tracks was based on the recommendations of one individual and therefore was “open to criticism and allegations of nepotism and cronyism.” Lee recommended using a third party and implementing written policies. Maione dismissed those recommendations and said it’s «untrue» that one person can improperly affect the process.
At the Agriculture and New York State Breeding Development Fund, Lee found board members participated in racing and created a perceived conflict of interest. The fund at times, she said, bent the rules on which horses could participate, under influence from its vendor the Harness Horse Breeders of New York State, a sole source provider of promotional services to the fund.
At the Thoroughbred Breeding and Development Fund, Lee reported in 2018 that the fund’s Executive Director Tracy Egan was a thoroughbred breeder and did not voluntarily abstain from receiving awards from the program she oversaw. That was not illegal, Lee found. The fund also gave out scholarships without documentation of the selection process and awarded contracts without a competitive bidding process.
Most notably, the New York Thoroughbred Breeders Inc., a thoroughbred breeding association, was «wholly subsidize[d]» by a contract with the fund for providing promotional services. Lee found that in 2014, NYTB increased its contract with the fund by $185,000 to $400,000. It was said to cover an increase in NYTB’s labor costs although, «there is no indication that the NYTB is providing services as an agent of the fund.» NYTB’s contract was not subject to a competitive bidding process.
New York Gaming Commission headquarters on Wednesday, Feb. 9, 2022, on Broadway in Schenectady, N.Y.
“NYTB is the official authorized representative of the thoroughbred breeding industry in New York state; and the sole organization with the purpose of communicating the advantages and rewards of breeding in New York,» said Najja Thompson, NYTB’s executive director. «This experience makes NYTB uniquely qualified to serve certain promotional needs of the New York State Thoroughbred Breeding and Development Fund, and has been pleased to have long had the opportunity to contract with the fund to provide these services. At all times, NYTB has complied with the terms of the procurement contracts, as well as applicable state law.»
The Times Union found that some of the employees who participated in the misconduct continue to work for the commission.
Maione declined to comment on the details of the employee matters, but noted that any discipline «seeks to balance an appropriate penalty against the level of misconduct.»
Eric Marecki was a judge at various harness racing tracks when Lee reported in March that he’d been participating in interactive fantasy sports since at least 2011, including thousands of times while at work. He also gambled in a fantasy sports pool with other racing officials, from 2014 to 2019.
«It is our understanding that all such other participants were out-of-state or executives of the U.S. Trotting Association,» Maione said, referring to a standardbred horse racing group.
State law prohibits employees of the Gaming Commission from wagering on any gaming activity conducted in the state and that policy is reiterated in the commission’s Code of Conduct. Marecki remains a commission employee, Maione said.
John Jones, an employee who let friends into the backstretch, and Todd Reese, an employee who sought pay from a track operator, also remain commission staffers.
Ferriero, the presiding judge at Yonkers Raceway, left the Gaming Commission in 2017. Lee found his conduct raised serious questions about his «integrity, judgement and suitability,» and recommended in 2018 he should not be considered for reappointment. He has not been rehired by the commission, Maione said.
Inspector general reports obtained by the Times Union show misconduct among state officials who oversaw horse racing at various tracks around the state. In this photo, attendees at Empire City Casino at Yonkers Raceway on May 6, 2017 in Yonkers, New York.
James Kellogg, the commission’s principal accountant for racing, was found to have participated at work in a Major League Baseball wagering pool in 2019 and frequenting online gaming sites. Lee referred the behavior in April 2020 to gaming leadership. Kellogg retired from the commission in May and collects an annual pension of $71,340, according to state records.
“I visited online horse racing ADW sites in conjunction with my duties as a principal accountant in order to license these ADW wagering sites,» Kellogg told the Times Union. «In relation to the pool, it as investigated and I did an interview with the human resources office, acknowledged the mistake that I made and no further action was taken at the time… I did not retire as a result of this.”
Tallarino, a judge at Vernon Downs, engaged in inappropriate behavior including participating in «locker room talk» and watching women in the racetrack stands with binoculars and making comments on their weight, Lee found. Lee also reported that he socialized with track officials giving the appearance that he could be unduly influenced. One employee alleged he was more lenient toward prominent horse racing participants but asserted his authority over lesser ones.
Tallarino told the Times Union that the woman who reported his behavior to the Gaming Commission did so after he confronted her about her work performance. He said they were friends, that she never expressed feeling uncomfortable about the «locker room talk,» and the design of the phallic cake was «her idea.»
After his interview with state officials regarding the accusations, the commission proposed transferring him to presiding judge at Yonkers Raceway.
«I was told that if I transferred to Yonkers Raceway for four months, that this would go away and there would be no record of the incident,» Tallarino said. «I refused because I felt wrongly accused and decided to resign instead.»
Tallarino quit in 2018. Maione characterized the former judge’s statement as «self-serving» and «inaccurate.»
Lewandowski, the former state steward who withheld purses outside the scope of his job, quit in June 2019, seven months after the inspector general revealed his actions at the track. A spokesman for the commission said they struggled to find a replacement to fill the role. Lewandowski denied wrongdoing.
Mike Mullaney, executive director of the New York State Breeding and Development Fund from 2012 to 2014, was found by the inspector general to have allowed ineligible horses to participate in the fund’s programs. Lee also found he mishandled the bidding process for t-shirts and tote bags. Mullaney left the fund voluntarily in 2014.
«The ‘Ag fund’ was a piggy-bank for the (Harness Horse Breeders of New York State) and the Gaming Commission,” Mullaney said in an interview. “I did (err) in quite a few things but my errors were not criminal; I just wasn’t a good bureaucrat.”
Lee, the inspector general, found it was Jean Brown, an HHB board member and vice president and general manager of Blue Chip Farms, who proposed that the ineligible horses should be allowed to participate, and Betty Holt, executive director of HHB, did not dissuade Mullaney from doing so. Holt told the Times Union HHB did not make determinations on the eligibility of horses to race in the program, and she was not aware of any ineligible horses that did.
Peter Arrigenna and Michael Kimelman, past trustees of the fund, no longer serve on it. Arrigenna confirmed that the inspector general report named him and Kimelman as trustees who participated in standardbred racing while overseeing the fund.
Lee’s report said it was unclear at the time whether the fund’s rules permitted their participation in racing; Lee recommended trustees should not. Arrigenna said trustees had participated for years and provided a letter that suggested the complaint regarding his and Kimelman’s participation came from HHB and several other farm owners.
Kimelman, Egan, Marecki, Jones and Reese did not respond to requests for comment or could not be reached. Ferriero declined to comment.
In 2021, Lee’s office was folded in the inspector general’s main office and she assumed the title of deputy inspector general for gaming.
Emilie Munson is a data reporter for the Times Union. She previously covered federal politics in Washington, D.C., for the Times Union and Hearst Connecticut Media. Emilie also has worked as a state capitol reporter for Hearst Connecticut Media and as an education reporter for the Greenwich Time.
