It’s worse

She’s going to put cat poop in his shoes tonight.

I said in my post yesterday about Eliot Spitzer’s revelation that he was a patron of a prostitution ring that I hoped he hadn’t been so stupid as to pay with a credit card. Client 9, however, insisted on paying cash.

But Spitzer may have been too clever by half when it came to moving that much cash around.

There, in the Hauppauge offices of the Internal Revenue Service, investigators conducting a routine examination of suspicious financial transactions reported to them by banks found several unusual movements of cash involving the governor of New York, several officials said.

The investigators working out of the three-story office building, which faces Veterans Highway, typically review such reports, the officials said. But this was not typical: transactions by a governor who appeared to be trying to conceal the source, destination or purpose of the movement of thousands of dollars in cash, said the officials, who spoke on condition of anonymity.

The money ended up in the bank accounts of what appeared to be shell companies, corporations that essentially had no real business.

The transactions, officials said, suggested possible financial crimes — maybe bribery, political corruption, or something inappropriate involving campaign finance. Prostitution, they said, was the furthest thing from the minds of the investigators.

Soon, the I.R.S. agents, from the agency’s Criminal Investigation Division, were working with F.B.I. agents and federal prosecutors from Manhattan who specialize in political corruption.


BDBlue, in a comment at Corrente, has a good and detailed explanation of Suspicious Activity Reports, which banks are required to generate whenever there’s a transaction, or series of transactions, that meets the criteria for a suspicious transaction. And since rich guys like Spitzer have plenty of money but rarely carry around that kind of cash, a bank will be involved somehow.

And he probably didn’t want to just be withdrawing money straight from his savings account in amounts, on dates and in locations very close to those that might be reflected in the records of an escort service. Thus the shell game with the shell corporations set up by the service so that clients could cover the nature of their payments.

There’s a problem with that, though:

Mr. Spitzer has not been charged with a crime. But one law enforcement official who has been briefed on the case said that Mr. Spitzer’s lawyers would probably meet soon with federal prosecutors to discuss any possible legal exposure. The official said the discussions were likely to focus not on prostitution, but on how it was paid for: Whether the payments from Mr. Spitzer to the service were made in a way to conceal their purpose and source. That could amount to a crime called structuring, which carries a penalty of up to five years in prison.

This, and not the prostitution, is what’s going to do him in. People can rationalize hookers — and aside from the fact that he went after prostitution rings as a prosecutor, he’s not anti-sex by any means, so there’s no two wet suits/diapers/wide stance kind of schadenfreude about the sex part, as opposed to the illegality part — but financial improprieties from the guy who was the terror of Wall Street?

As attorney general, his ambition, intelligence and energy were palpable. And his timing was impeccable. A gilded, stock-fed decade was winding down, and a torrent of too-easy cash had eroded the financial controls inside many investment banks, brokerages and insurance companies.

Mr. Spitzer cast himself as Wall Street’s new sheriff and took off at full gallop after his quarry. To his young lawyers, he offered his standard advice: “If you’ve got it, do it.” If they could turn old laws to new, even unintended purposes, so much the better.

His mastery of this style of justice was evident. Employing aggressive tactics, threatening to crush his opponents, his office extracted vast civil settlements from defendants eager to avoid criminal indictment.

But his style wed toughness to what looked to some like bullying. He hurled curses at the targets of his investigations, and sometimes at colleagues perceived as too slow or too questioning of his tactics.

During an argument at a conference, he nearly came to blows with the California attorney general, according to a magazine article. And Wall Street rank left him largely unimpressed.

John C. Whitehead, the former chairman of Goldman Sachs, wrote in The Wall Street Journal of taking a phone call from Mr. Spitzer. The attorney general, Mr. Whitehead said, had launched into a tirade, threatening him with “war” over his public criticism of a case.

“I was astounded,” Mr. Whitehead wrote. “No one had ever talked to me like that before. It was a little scary.”

Few on Wall Street expressed much sorrow at Mr. Spitzer’s predicament on Monday. In particular, friends of Richard A. Grasso, the former chairman of the New York Stock Exchange and a favorite Spitzer piñata, recalled that Spitzer aides had circulated allegations, never substantiated, that Mr. Grasso had had an improper relationship with his secretary.

But in his own view, Mr. Spitzer was a warrior in wartime. He had come to symbolize public revulsion with Wall Street’s excesses, and most voters seemed willing to extend him the benefit of the doubt.

People can be very unforgiving of moral crusaders who are caught with their hands in the cookie jar. And money laundering is a far more serious crime for a government official than paying for sex. He might have been forgiven for an affair or even being caught with a prostitute after some time spent with family, a few stiff and tearful press conferences with his wife standing grimly at his side. It’s easy to cast that as a private matter. But when you make a career of fighting financial improprieties and then get caught in some of your own, it’s not easy to be forgiven for that.

But he hasn’t resigned yet, so stay tuned. I did hear this morning that he’d lawyered up.


Similar Posts (automatically generated):

28 comments for “It’s worse

  1. Betty Boondoggle
    March 11, 2008 at 9:54 am

    But when you make a career of fighting financial improprieties and then get caught in some of your own, it’s not easy to be forgiven for that.

    True. He also crusaded against other prostitution rings, and was caught frequenting one. It makes me angry that it will only be his financial improprieties that will do him in.

  2. B.D.
    March 11, 2008 at 10:38 am

    I am rather unforgiving of the sanctimonious who get caught in hypocrisy. In my view, prostitution should be legalized and regulated as it’s a losing battle. Much like the so-called drug war, the criminal element is attracted to it in part due to big rewards which are inflated thanks to it’s criminalization.

    Spitzer prosecuted those laws and even sounded outraged at the people who ran and used prostitution rings. Now he’s caught using them himself. On top of it, as you note, he’s caught possibly flouting financial laws of the sort he used to prosecute Wall Street types for flouting. Indeed, he built his career on that.

    So, the man gets caught in a double hypocrisy. I don’t feel sorry for him any more than I feel sorry for Craig or Vitter.

  3. prefer not to say
    March 11, 2008 at 10:52 am

    Given how desperately the country needs someone to be a watchdog on Wall Street, this is an unmitigated disaster.

    It’s just not that hard to keep it in your pants while your governor. It’s just not.

  4. March 11, 2008 at 11:05 am

    It’s just not that hard to keep it in your pants while your governor. It’s just not.

    No kidding. And how is it that so many people who are so successful and (supposedly) so smart manage to convince themselves, “Sure, I’ll screw a prostitute, just because I hold one of the biggest political offices in the country doesn’t mean anyone will ever find out about it”?

    Blows. My. Mind.

  5. March 11, 2008 at 11:27 am

    This sucks. Sucks! He was so badass and I loved him for it. Now his credibility is in the crapper and even if he stays on as Governor, he won’t get anything accomplished. So much for that career.

  6. March 11, 2008 at 12:01 pm

    How long will Spitzer’s enemies use this non-story to distract the public from his fearless crusade against federal pre-emption of the state regulation of bond insurers?

  7. human
    March 11, 2008 at 12:26 pm

    That poor woman. The look on her face just yells out, “I can’t believe I have to stand here next to this fucking dumbass.”

  8. March 11, 2008 at 12:40 pm

    human: It does doesnt it. ‘
    It just shows the kind of inflated ego you need to run for a political office..imagine the kind of inflated ego were going to get for president.

  9. Jasi
    March 11, 2008 at 12:46 pm

    @ B.D.: I agree. They should just legalize and regulate the sex industry.. OR educate and empower women so that a life like that isn’t as appealing (lucrative). I have ideals but I’m not opposed to any improvement at this point. That profession is too dangerous on a dozen levels.

    @ human: I feel sorry for his wife, having been cheated on and perhaps being put in harms way if he was unsafe. But she doesn’t have to stand with him. Screw going down with the ship. He fucked up, let him walk the plank alone.

    It’s a shame but it’s not surprising anymore. A well-recognized politician cheating, whoring and committing fraud. Isn’t it more shocking when they lead noble lives?

  10. March 11, 2008 at 1:04 pm

    I’m honestly wondering why Spitzer’s hanky-panky is getting more coverage in a 72-hour period that David “The Shitter” Vitter’s has the whole time he’s been in office.

  11. Betty Boondoggle
    March 11, 2008 at 1:13 pm

    I’m honestly wondering why Spitzer’s hanky-panky is getting more coverage

    he successfully prosecuted prostitutions rings, and is now revealed to be a customer of one. And, the “terror of wall street” is now revealed to have committed financial improprieties.

    I don’t know anything about Vitter – did he do these things as well?

  12. Manju
    March 11, 2008 at 1:20 pm

    Spitzer has long abused his power to suppress the constitutional rights of his opponents.

    When John Whitehead, the former head of Goldman Sachs (and a wall st saint), dared exercise his 1st amendment right by complaining about this to the WSJ, the then attorney general personally threatened him: “I will be coming after you,” Spitzer said, “You will pay the price. This is only the beginning, and you will pay dearly for what you have done.”

    There are legions similar stories all over Wall Street about his thuggish behaviour. He went after dick grasso by threatening to reveal a non-existent sexual encounter with his secretary (forcing the secretary to go under oath). He used an obscure law (martin act) to deny people called in for questioning the right to counsel or a right against self-incrimination.

    In a just world, this would be the headline:

    “Prostitute Admits Link to Eliot Spitzer; Resigns From Escort Service in Disgrace”

  13. Three Dollar Bill
    March 11, 2008 at 1:22 pm

    Vitter went to prostitutes in the late 1990s, maybe up until 2000-2001; his name got published in 2007 but it had been at least six years since he had contacted the prostitutes in question. So he’s a user and a hypocrite, but it wasn’t a super current story when it came out. Big surprise, Congressman has sexual hypocrisy in his background.

    Spitzer’s use of prostitutes appeared to be current and ongoing, and it seems he was moving public money around in connection with his dalliances. And, as noted, busting prostitution rings was one of his signature elements.

    The moral crime is the same but the difference in media/public interest seems pretty reasonable.

  14. March 11, 2008 at 1:23 pm

    When he gets a tough question, does he pull the ring off of her finger, activating her like a grenade, and tossing her at members of the press while he dives behind a row of sandbags?

  15. zuzu
    March 11, 2008 at 1:31 pm

    it seems he was moving public money around in connection with his dalliances.

    I didn’t get that impression at all. I think the reason he was targeted was that the transactions looked like they might be a result of bribes, but I think he used his own money to pay for the prostitutes.

  16. March 11, 2008 at 1:55 pm

    OR educate and empower women so that a life like that isn’t as appealing (lucrative)

    Rings like this have nothing to do with women’s disempowerment or lack of education. If you could live comfortably or even lavishly on a few hours of work per month, and you didn’t mind sex work and relatively low-risk law-breaking, wouldn’t you sign up?

  17. March 11, 2008 at 2:17 pm

    What an utter disappointment.

    Spitzer seemed like one of the few politicians out there who was willing to take on Wall Street and the moneyed interests in this country. He was even pretty successful at it. The level of sheer stupidity and arrogance of thinking he could get away with something like this while standing up to some of the most powerful people in America is hard to imagine. Of course he was going to be targeted, and that meant he needed to keep his nose exceptionally clean.

    http://harpers.org/archive/2008/03/hbc-90002589

    It sounds like the escort service got busted for dealing with him, not the other way around.

  18. Shankar Gupta
    March 11, 2008 at 4:25 pm

    I’m not going to share my schadenfreude over the fall of Eliot Spitzer here, since I doubt it would be appreciated, but I did want to take issue with this part of the post:

    And money laundering is a far more serious crime for a government official than paying for sex.

    Money laundering isn’t really a “serious crime”–it was invented in the 1970s to try to find more reasons to fine/imprision people who had even the most slight connection to the drug trade. They’re very popular among law enforcement, because they usually get to seize the “proceeds,” which means more money and bigger budgets for them, but very rarely are the big bad guys caught by money laundering laws.

  19. bmc90
    March 11, 2008 at 5:49 pm

    Hot, um – no, I would not sign up. I guess your premise is “you don’t mind sex work,” and I do personally so perhaps I’m too biased to pretend to accept your premise. However, even if in theory some sex work nirvana with great working conditions actually exists, I doubt this call service was it. The wiretap conversation sounded like Spitzer was negotiating to not use a condom. Once a prostitute is alone with him, what exact recourse does she have if he refuses to do so then? He doesn’t get his damage deposit back? Call the cops? If he’s with a lot of prostitutes I’d consider this a one way ticket to an incurable disease. If someone with his power gets angry at you, it seems incredibly likely you’d just disappear one day and again, who is going to go looking for you or even know of your connection with your johns until you have been very dead for a long time and his tracks have been well covered. Your pimp is not going to run file a mission persons report or bother to come see you in the ICU (I take that back – pimps do that at the hospital where my husband works – he has caught them having sex in bathrooms with their girls – glamorous, huh – and after one of her johns RAN OVER HER WITH A CAR). If this call service generally delt with the super powerful and rich who are used to getting what they want and have no compunction about doing something illegal, I’d be afraid. Very afraid. To go to work.

  20. March 11, 2008 at 6:25 pm

    Since this hasn’t been linked to already, I just wanted to provide a link to Bound, Not Gagged, which is having some pretty excellent blogging on the Spitzer scandal and the issues surrounding it. In depth, and a refreshing break from the Great Morality of Sex Work Debate typical of the feminist blogosphere.

  21. March 11, 2008 at 7:12 pm

    I’m still shocked that a man who is the terror of Wall Street didn’t realize that the second a teller put a suspicious activity flag on the account, that was going straight up to management and then over to the government. It’s not just the moral issues that blow my mind. It’s the appalling lack of judgment.

  22. Marksman2000
    March 11, 2008 at 10:04 pm

    I feel for his wife.

    Not only does she deal with the disappointment and anger–she’s publicly humilated.

    My sister married a piece of shit like Spitzer. Cocky, arrogant, Holier-than-thou asshole is what he is. And I’m happy he’s sinking. I just hope that all people who live this way ultimately get what they have coming to them.

  23. March 12, 2008 at 12:28 am

    If someone with his power gets angry at you, it seems incredibly likely you’d just disappear one day and again, who is going to go looking for you or even know of your connection with your johns until you have been very dead for a long time and his tracks have been well covered.

    Oh, come on. This is not a Law & Order: SVU episode.

    As for who will go looking for you — I don’t know, maybe your family, your friends, your (non-paying) lovers, your regular clients who are fond of you? Sex workers aren’t all isolated, powerless, and disposable. The high-end ones especially.

    If you actually care about the wellbeing of sex workers, you might want to learn more about them. They aren’t all victims. And understanding that will help you focus on helping the ones who are.

  24. nina
    March 12, 2008 at 1:36 am

    <What a disaster. The prostitutes that take the money will be prosecuted because the greedy government wont get there share of tax money, put the public servant who is totally immoral, and probably used tax money to pay the prostitutes will get away with it because for a john is it only a misdemenor. This country has no fiber left, no morals. Our laws and government stink. If it is against the law to be a prostitute, someone who knows the law and is a public servant, should also be prosecuted. ITS A CRIME, but the politicians get away with crimes all the time. Look how many people died because of Bush s neglect.

  25. bmc90
    March 12, 2008 at 1:05 pm

    Hot, I can go talk to my husband’s patients any time and I certainly hear plenty about their lives. Your question was would YOU sign up and my answer is no. If you are saying I should go interivew women who turn one trick a month with George Clooney and live on Fifth Avenue before I make my decision, I think I can just go rent Pretty Woman instead. Both are equally far afield from how most sex workers live and work.

  26. Jasi
    March 12, 2008 at 2:39 pm

    @Hot: I get that sex work sounds like an easy way to make a lot of money, but for lots of people it’s not worth it. As for education and empowerment, I see stories everyday, hear about girls dragged and lured into the sex industry. A good bit see that there’s no option out once you’re in, and even more are runaways with no where to go. Granted, some may be debs or just in it for the fun, but most are exploited. I think educating these particular women gives them more options. I think overall empowering women to feel as though they are not a commodity couldn’t hurt either.

  27. March 12, 2008 at 2:49 pm

    If you could live comfortably or even lavishly on a few hours of work per month, and you didn’t mind sex work and relatively low-risk law-breaking, wouldn’t you sign up?

    Not if it means that the job is short-term and completely dependent on my continuing at a certain level of youth and physical fitness. It’s the same reason I wouldn’t be a professional athlete: you have a very short window in which to make a living, the risk of injury is quite high, and once your playing days are over, you have very few other ways to make a living, so you’d better hope you saved every penny of what you made. And being a professional athlete is completely legal, so you don’t even have to worry about being arrested for doing it.

Comments are closed.