Federal grand jury to investigate OTB

State gambling arm, long in the shadows, facing increased scrutiny for a number of questionable practices and policies

A federal grand jury is investigating possible corruption at the Western Regional Off Track Betting Corp.

Sources told Investigative Post and the Niagara Gazette the grand jury is looking into issues previously reported by the two news organizations, including the:

  • Provision of free health insurance to the board’s part-time board members.
  • Awarding of vendor contracts to businesses with political ties to OTB President Henry Wojtaszek and Chairman Richard Bianchi.
  • Possible distribution of tickets purchased by OTB to Sabres and Bills games to friends, family members and political associates of OTB executives and board members.

In addition, the state comptroller has started a previously announced audit and sources said the state Gaming Commission is engaged in some sort of review, as well.

OTB is charged with running state-sanctioned gambling operations in Western and Central New York and returning a portion of it profits to the 15 counties and the cities of Buffalo and Rochester. It operates a race track and casino at Batavia Downs and 15 betting parlors and 30 betting kiosks in restaurants and bars across the region.

The OTB’s board and executive ranks are dominated by Republican partisans. Wojtaszek is the former chairman of the Niagara County Republican Committee. Bianchi is a member of the Monroe County Conservative Party’s executive committee, which is aligned with the Republican Party in the Rochester area.

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OTB, a state public benefit corporation, operated in relative obscurity until last December, when Investigative Post reported on the health insurance provided board members despite an opinion from the state Attorney General that appeared to have prohibited the practice. The AG and state comptroller subsequently reaffirmed that opinion, as did private attorneys retained by the OTB board.

The board has refused to act, however, and continues to enjoy the benefit, described as the “richest plan available.” OTB self-insures, and the health, dental and vision insurance provided board members costs between a quarter and a half million dollars a year, month that could otherwise flow to the 17 counties and cities.

In February, former state Sen. George Maziarz accused OTB officials of giving tickets to suites it leases for Bills and Sabres games to family, friends and political allies. Wojtaszek denied the charge, but OTB has refused requests made by the Gazette and Investigative Post to release the names of ticket recipients under the state Freedom of Information Law. The OTB subsequently announced it had revised the frequency and method of ticket giveaways.

A third area of interest to federal investigators is OTB’s contracting practices, in particular a deal with Growth Marketing Group to place advertising for Batavia Downs. Growth Marketing is one of OTB’s largest vendors, receiving payments of $533,162 last year and $601,381 in 2017, according to OTB records. The OTB board recently extended the contract, after Investigative Post and the Gazette reported the FBI was investigating the contract.

The company is headed by Arnie Rothschild, who is active in Republican and Conservative party circles. Since 2012, his Growth Marketing Group has been paid nearly $3.5 million by party committees and candidates for elected office in New York State. Most of the payments involved television and radio advertising he purchased on behalf of Republican candidates and party committees. Another of his firms, Normal Communications, has been paid nearly $1.3 million for similar work since 2012.

The grand jury examining these issues is working out of the Robert H. Jackson Courthouse in downtown Buffalo. A grand jury, typically comprising 16 to 23 citizens, is authorized to investigate potential criminal conduct. It can subpoena evidence or a person to testify. Its proceedings are conducted in secret.

Grand juries work with a prosecutor to determine whether to indict or otherwise bring criminal charges, usually serious felonies, against a potential defendant. In this case, the grand jury is working with the FBI and U.S. Attorney for the Western District of New York.

The innocence or guilt of a defendant would be determined in a criminal trial before a judge and separate jury.

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“We do not confirm or deny investigations, nor do we comment on grand jury proceedings,” said Barbara Burns, public affairs officer for the U.S. Attorney’s office.

While federal investigators have been looking into the OTB for months, the office of State Comptroller Thomas DiNapoli began work on an audit last month. DiNapoli, in announcing the audit in July, said, “Questions have been raised about the Western Regional Off-Track Betting Corporation that warrant a deeper look.”

Nearly two months later, Jennifer Freeman, the comptroller’s director of communications, confirmed “the audit process is underway.”

Freeman said audits typically take six months to a year to complete. She would not comment on whether the comptroller’s office was working with federal prosecutors or the state Gaming Commission.

Officials from the Gaming Commission declined to comment. But sources said Gaming Commission officials from its New York City office are asking questions. Sources said investigators are scrutinizing OTB’s lobbying contracts and health insurance benefits, as well as the distribution of sports and entertainment tickets to its luxury suites, including the use of other perks related to the private boxes.

Wojtaszek, the OTB president, declined an interview request for this story. But he has steadfastly denied any wrong-doing by OTB.

Phil Gambini is a reporter with the Niagara Gazette, which is publishing this story Thursday.