ELMONT - A shuttered horse hospital near Belmont Park is at the center of an alleged Ponzi scheme investigation.

A Long Island-based group investors, led by horse owner Michael Iavarone, received a 10-year tax break for a new equine care facility near the racetrack. The break, which came from the Hempstead Industrial Development Agency, resulted in more than $500,000 in lost tax revenues, especially after the hospital was shut down.

However, a federal indictment shows the financial source funding the project was not Iavarone, but rather one of his associates. In February of this year, investigators accused that associate, James Tagliaferri, of using the group as part of a pyramid operation to defraud investors.

An attorney representing a Dix Hills investor who lost $2 million in the apparent scam has filed a civil suit against Tagliaferri and Iavarrone.

Tagliaferri has pleaded not guilty and is awaiting trial.

Meanwhile, critics say Hempstead officials should have done a better job of checking the horse firm's financial backers before giving the project such a large tax break.