*Rapper Jay-Z and Rev. Floyd Flake have reportedly pulled out of a bid from Aqueduct Entertainment Group (AEG) to run video lottery terminals at Aqueduct in Queens, according to the Web site Crain’s New York.

The move comes after weeks of controversy and federal and state investigations involving Gov. David Paterson’s selection of AEG to develop the Aqueduct racino, which would update the Aqueduct Race Track venue with 4,500 video slot machines.

Under new rules, the pair had to submit detailed information about their personal finances, and that of their spouses. The two felt the confidentiality surrounding their personal information could not be maintained, according to a source.

Jay-Z, according to sources, had a small stake amounting to 2% in AEG through an entity called Gain Global Investments Network.

Flake had a 0.6% stake in AEG (worth $625,000), and insisted last month that his role was strictly limited to consulting on the community affairs and affordable housing aspects of the project.

News of the withdrawal came an hour after AEG founder Jeffrey Levine issued the following statement on Tuesday: “Aqueduct Entertainment Group is continuing to move forward to complete the MOU, so that we can pay the state $300 million by March 31st and break ground on this vital job-creating project as soon as possible. All applications have been submitted to Lottery in full compliance with the State’s instructions.”

Last week, subpoenas were issued to Jay-Z and fellow rap mogul Russell Simmons regarding the deal. Simmons served as an advisor to Penn National Gaming, one of the five losing bidders for the contract. He spoke out about Gov. Paterson’s decision to award AEG the contract.

“I’m not knocking Rev Flake or anyone else associated with any other project. But their’s just wasn’t the best deal for New York,” Simmons wrote in February on his GlobalGrind.com Web site. “Speaker Silver, Senator Abrams and Governor Patterson, can any of my dear friends in NY government tell me where and when did it all go wrong? At time of great financial stress for the State, when programs for the poor are being cut, I backed what I thought was the best deal for the region, the city and the community. Why didn’t the leadership just take the best deal for the people of New York State? I did.”