According to documents made public Friday by the New York State Inspector General’s Office, Tioga Down’s Southern Tier harness racing track —which got licensed to become a full-fledged casino in 2016—, has evaded state rules requiring that minority or women-owned businesses be hired for portions of the $44 million casino job.
Inspector General Lucy Lang stated that, on paper, some minority-owned companies were paid to provide the casino in Nichols with electrical products and food supplies, The Buffalo News reports. However, these were actually provided to the casino by companies owned by white people, while minority businesses did little more than submit invoices.
The first allegation took place in 2017, when the Inspector General received a complaint about possible WMBE non-compliance regarding electrical work on the project to turn a “racino” into a casino, now called Tioga Downs Casino Resort.
Non-certified as MBWE Matco Electric of Vestal was hired to perform more than $900,000 of electrical work on the project. To help reach the minority business requirement, Matco hired MBWE BSV Metal Finishers to supply all of the electrical products needed for the job. However, state investigators claim another non-minority business, Kaman Automation, was the one that actually supplied the goods.
According to a letter written by state investigators, BSV reported supplying over $700,000 in electrical goods that were actually provided by Kaman Automation, and BSV was paid $34,074 for this pass-through activity.
The second “pass-through” scheme involved the purchase of food on the same project. The inspector general said Tioga Downs “improperly claimed” approximately $3 million in MWBE utilization credit by hiring Mil-Ray Food Company, a New Jersey company that is certified as a minority- and women-owned business in New York State. However, the state said Mil-Ray acted as a “pass-through” while much of the food was provided by two companies that did not fall under the required category.
In an email obtained by the inspector general, a representative for one of the third-party companies that actually provided the food wrote: “I am headed to Tioga today and will be asked yet again the status of Milray. They have been requesting since January that we do all billing through Milray so that they can hit the NY state mandated sales percent of MWE”.
Even though the inspector general recommended that the state’s economic development agency Empire State Development reviewed whether the minority and women-owned businesses cited in this investigation should be removed from the MWBE program, she did not recommend any sanctions against the white-owned companies.
As reported by Buffalo News, Aries Dela Cruz, a spokesperson for the inspector general, said: “By misrepresenting and enlisting minority- and women-owned subcontractors to act as pass-throughs in order to meet MWBE utilization rates, these contractors potentially undermined our state’s goal to provide an even playing field in industries where these populations are under-represented”.
The Inspector General also cited the state Gaming Commision for its regulation of MWBE requirements, saying its compliance team rarely contacted the companies on the list and never conducted MWBE site visits or background checks.
Spokeperson for the Gaming Commission, Brad Maione, said in a written statement that the Commission will “keep developing procedures that include expanded review” to avoid these issues.
Tioga Downs casino project manager was LPCiminelli’ CEO, Louis P. Ciminelli, who was convicted of fraud after the Buffalo Billion investigation. However, investigators found “no evidence” that LPCiminelli officials were aware of the pass-through schemes, according to a spokesperson for the inspector general.
The Tioga Downs MWBE investigation comes on the heels of the inspector general’s office finding evidence of MWBE requirements being evaded on three major Buffalo-area projects, none of which have resulted in criminal charges.
New York Gov. Kathy Hochul is currently being urged to introduce full casino licenses in Queens and Yonkers, following the same path Tioga Downs took. Officials for MGM Empire City Casino claim the venue could live up to its full potential if it gets a full-scale license, which would also financially benefit surrounding areas, according to Westchester County Executive Goerge Latimer.
Original article: https://www.yogonet.com/international/news/2022/02/18/61465-new-york-tioga-downs-casino-project-accused-of-minority-business-fraud-by-state-inspector-general
