The on track money on a real longshot reduces the show odds on the longshot. This in turn increases the show odds on the other horses in the race. The person manipulating the pool wants his horse bet, usually the favorite or second favorite, to pay much more for show than normally would be expected.
The offshore $ arent part of the parimutual wagering - they have no impact on odds.
So in this example, if the manipulators horse paid $4.00 to show (when it normally might pay $2.10) and the manipulating gambler bet a $1000, he'd make $500 if the favorite he bet was in the top three.
Not that uncommon but offshore folks are on to it. And sometimes limit wagers at these tracks with tiny pools where it's easier to manipulate a pool. I doubt most offshore sites would allow someone to get away with it for long. And, in this example, it likely blew up on the fool manipulator.