An obscure upstate theater group that receives far more state aid than any of New York's world-renowned cultural institutions is rife with corruption, mismanagement, nepotism and possibly illegal conduct, according to a scathing report released on Tuesday by the state inspector general's office. The 127-page report accuses Patricia Snyder, the longtime artistic director of the group, the New York State Theater Institute, with improperly using state money to enrich herself and her family, while the institute's board and its chairman, David W. Morris, looked the other way or claimed ignorance. The report charges that Snyder treated the group as a personal fiefdom -- routinely doling out acting roles, directing jobs, production work and other benefits to herself and her family members. Snyder steered a total of more than $700,000 in payments to her husband, her two sons, her two daughters-in-law and to herself, the report said. Snyder hired E. Stewart Jones, one of Albany's most prominent criminal defense lawyers, to represent her in response to the investigation. 'This report is mean-spirited and monumental nonsense,' Jones said. 'It reflects a significant misunderstanding of the theatrical arts, and it does not give credit to Patricia for the remarkable job she's done to make this organization recognized not just across New York, but nationally.' The state inspector general, Joseph Fisch, referred the case to Attorney General Andrew M. Cuomo and the state's Commission on Public Integrity to review whether either civil or criminal charges were warranted. The findings by Fisch came four years after a New York Times article detailed nepotism and questionable spending practices by the institute, which is based in Troy, N.Y., and was established as a state authority. The report also described nearly $500,000 in questionable expenses and a long list of improper perks, deception and potentially fraudulent practices -- from extravagant international trips for the Snyder family to a Manhattan apartment that was leased by the institute but appears to have been reserved largely for the family's use. The institute also spent $38,317 on limousines and thousands of dollars on lavish meals, many with no discernible business purpose, the report said. Snyder was also accused of arranging for the institute to buy the theatrical rights to 'Miracle on 34th Street,' then quietly transferring them to herself and one of her sons. Each of them reaped $38,000 in royalties, according to the report. Snyder, in interviews with the investigators that were included in the report, defended her actions and swept aside concerns about her hiring practices. 'You are getting into very dicey waters, artistically,' Snyder told investigators. 'I will tell you, the arts community will be up in arms with this line of questioning. We are talking about artists.' 