Aqueduct Entertainment Group, which emerged late last month as the surprise — and controversial — winner of a drawn-out bidding process to develop the Queens racino, is moving to smooth things over with the public by cutting ties with Darryl Greene, the partner who pleaded guilty to stealing $500,000 from city agencies in the 1990s. AEG will absorb the 0.6 percent stake in the project that was to be otherwise held by Greene and his firm, the Darman Group, and will not seek other investors to replace him. Upon offering the project to AEG, State Assembly Speaker Sheldon Silver had said everyone affiliated with the bid would need to pass a Division of Lottery criminal background check. Greene is also the former business partner of Senate President Malcolm Smith, who chose AEG for the project alongside Silver and Governor Paterson. Rumors have been circulating in recent weeks that Smith’s pick was personally and financially motivated, but in a statement today, AEG attempted to put an end to them. “We can unequivocally state that Senator Smith nor any government official involved in this process will ever be employed by Aqueduct Entertainment Group or any of its partners, investors or affiliates,” Jeff Levine, CEO of Levine Builders, a partner in the bid, said in a statement.