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Aqueduct deal loses big name backers

The controversial Aqueduct slots contract that began the governor’s recent spiral of scandals was dealt another blow Tuesday when two of its highest profile investors backed out of the deal.

The Rev. Floyd Flake — a former congressman whose investment in the company that won the bid prompted criticism because of his political influence —and the rapper Jay-Z both ended their involvement in the Aqueduct Entertainment Group.

“My ongoing participation in Aqueduct Entertainment has become a distraction that has taken me and my attention away from the community projects I created and nurtured,” Flake, a Queens pastor, said in a statement.

The awarding of the contract to run slot machines at the Queens racetrack is being probed by state and federal officials, and its political support has eroded. Both Flake and Jay-Z had small financial stakes in the project.

The AEG bid drew criticism because it initially promised less money up front than other bidders and anticipated raising less revenue than its competitors before revising its proposal three months after submitting it.

Tuesday was the deadline for members of AEG to submit applications to the state for gaming licenses.

Jeffrey Levine, a partner in AEG, said in a statement that all applications had been sent and that the company planned to break ground on the project “as soon as possible.”

“Aqueduct Entertainment Group is continuing to move forward to complete the (memorandum of understanding) so that we can pay the state $300 million by March 31,” said Levine.

Gov. David Paterson, who on Friday sent a letter to AEG threatening to withdraw his support if the deadline wasn’t met, revealed Tuesday that he had recused himself from all discussions surrounding the deal, though he would not say why.

“I was recused on the advice of my lawyer,” Paterson told reporters. “It had nothing to do with the process or my role.”

Assembly Speaker Sheldon Silver, who along with Paterson and Senate President Malcolm Smith approved the contract, has asked that the state hold off on finalizing the deal until a state Inspector General’s investigation is complete.

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