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Spitzer Resigns

by on March 12, 2008

New York Governor Eliot Spitzer will be giving a statement at 11:30 a.m. ET. I’m hearing that the resignation will take effect on Monday. There is a lot of speculation about a possible deal with prosecutors in return for his resignation…

The hypocrisy of this whole situation is astounding. The sex aspect is nothing in the big picture:

As attorney general, he once broke up a call-girl ring and locked up 18 people on corruption, money-laundering and prostitution charges. He ruthlessly investigated the pay packages of Wall Street executives and was so familiar with shady financial maneuvers that he rose to become the top racketeering prosecutor in Manhattan.

But in the end, it appears that Spitzer may have been done in by the same behavior he built a career out of prosecuting.

In fact, it seems he was tripped up by some of the very financial accounting methods he used so successfully against multibillion-dollar Wall Street firms.

For one thing, the governor initially drew the attention of federal investigators because of cash payments to an account operated by a call-girl ring, according to a law enforcement official who spoke on condition of because of the sensitivity of the case.

Banks are required to file Suspicious Activity Reports to the government whenever they observe something they fear may be a crime.

In court papers, Client 9—identified by another law enforcement official as Spitzer—hurried to get more than $4,000 in cash to pay a call girl at a Washington hotel.

That kind of activity, repeated over time, is just the kind of thing that would set off alarm bells with a bank’s compliance officer, who is trained to be on the lookout for what is called structuring or “smurfing”—a pattern of transactions aimed at hiding the nature or purpose of certain money.

There is a lot more to this story, particularly since, as Rep. Peter King has noted, the link between prostitution rings and organized crime:

At least a dozen New York members either didn’t return calls or gave variations on “no comment” or “we’re monitoring the situation” when Capitol Briefing asked for a reaction. One of the few exceptions so far was the always media-friendly Rep. Peter King (R), who passed along his thoughts right before sitting down for a CNBC interview on the subject.

“I was absolutely shellshocked,” King said of the Spitzer news. “I’ve never heard any rumors, any whispers, anything at all.”

King added that he believed Spitzer should resign, since “prostitution rings are invariably linked to organized crime” and the governor’s behavior “leaves himself and the state susceptible to blackmail.”

The question remains what is the ultimate fate of Spitzer? Will he avoid prosecution and jail time?

UPDATE 11:45 am.: Spitzer resigns with his wife at his side.

UPDATE: Robert Stacy McCain hits the nail on the head:

In many ways, Spitzer’s resignation statement was classy, and notably lacked the kind of “accuse the accusers” tactic that Bill Clinton taught us to expect from Democrats caught red-handed.

However, Spitzer’s repeated use of the phrase “my private failings” was a dishonest evasion. What would Spitzer, as a former prosecutor, say about an accused dope dealer who spoke of his crime as a “private failing”?

In patronizing prostitutes, Spitzer was engaged in a criminal act. Crime is an offense against the citizenry, which is why the prosecution of Spitzer for federal money laundering charges — if such a prosecution is indeed pursued — will be called “United States vs. Spitzer.” And no crime can be more public than a crime committed by a powerful public official, such as the governor of New York.

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