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Paterson says no outside influence in Aqueduct deal

ALBANY - Gov. David A. Paterson said Thursday that Aqueduct Entertainment Group wasn't his first choice to install slot-like gambling machines at Aqueduct Racetrack in Queens.

Paterson and leaders of the legislature's Democratic majorities have come under fire for awarding the lucrative contract to AEG, a consortium in which the Rev. Floyd Flake has a small stake. Flake, a former congressman, could help Paterson's election bid this year.

But the governor recalled Thursday a 2008 deal that he struck with lawmakers to give operation of 4,500 video lottery terminals at Aqueduct to Buffalo-based Delaware North Cos. However, the group backed out in March 2009 after failing to raise the $370-million upfront fee required by the state.

"All the people I'm supposed to have helped I rejected [in 2008] in favor of Delaware North," Paterson told WOR radio in Manhattan.

AEG won the second round of bidding on Jan. 29, receiving the required endorsement of Paterson, State Senate Democratic chief John Sampson and Assembly Speaker Sheldon Silver. Delaware North was among the four losing bidders.

After a request from Silver, state Inspector General Joseph Fisch has begun an investigation of the bidding process, Fisch's spokesman confirmed.

The U.S. attorney's office declined to say whether a probe was under way. Aides to Silver and Sampson said no federal requests for documents about AEG and the bidding process had been received. Paterson's top lawyer, Peter Kiernan, has said federal prosecutors haven't contacted him about Aqueduct.

Asked if AEG had been given preferential treatment, Paterson told reporters, "No, not at all."

He denied seeking Flake's backing in return for AEG's selection. "I never sought or was interested in his endorsement because he had already said he was neutral" in a possible Democratic primary for governor.

Still, Paterson and Flake have confirmed they met three days after AEG's selection to talk politics, though a formal endorsement of Paterson wasn't discussed. AEG spokesman Ken Frydman noted Flake owns less than one percent of AEG. Frydman also said AEG "was not aware of any [federal] investigation" of its selection by state leaders.

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