by Frank James
Ever since the whiplash-inducing revelation that Gov. Eliot Spitzer's involvement in a prostitution ring was exposed after he was caught up in a federal wiretap net, many have asked why federal prosecutors were involved in a prositution case?
Prostitution is normally a matter for state law enforcement unless there's a Mann Act violation in which someone was taken across state lines against her will for the purposes of sex.
It appears the Feds who stumbled onto the prostitution ring were actually trying to understand some curious financial transactions in which Spitzer was involved. The Feds were obeying the adage that became so famous during Watergate: Follow the money.
The New York Times, which broke the initial story yesterday, has a terrific story today that explains how the Feds got onto Spitzer. Banks reported to federal authorities some unusual movements of money by Spitzer to sham companies.
This, in turn, got the Internal Revenue Service all perky. Then the Federal Bureau of Investigation joined in the fun.
As the Times reports:
There, in the Hauppauge (Long Island) 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.
This is just another surprising aspect of the case. As a former New York attorney general, Spitzer must've known better than most of the ability of federal investigators to pick up the unusual transactions when banks and other financial institutions are used.
So did he think his money transfers wouldn't be noticed and, if so, why? It makes no sense, especially as a New York's former top law-enforcement officer, he should have known how much such money transfers would interest federal investigators who target public corruption.
The NYT story continues:
At the outset, one official said, it seemed like a bread-and-butter inquiry into political corruption, the kind of case the F.B.I. squad, known internally by the designation C14, frequently pursues.
But before long, the investigators learned that the money was being moved to pay for sex and that the transactions were being manipulated to conceal Mr. Spitzer’s connection to payments for meetings with prostitutes, the official said.
Then, with the assistance of a confidential informant, a young woman who had worked previously as a prostitute for the Emperor’s Club V.I.P., the escort service that Mr. Spitzer was believed to be using, the investigators were able to get a judge to approve wiretaps on the cellphones of some of those suspected of involvement in the escort service.
The wiretaps, along with the records of bank accounts held in the names of the shell companies, revealed a world of prostitutes catering to wealthy men. At the center was the Emperor’s Club, which arranged “dates” with more than 50 beautiful young women in New York, Paris, London, Miami and Washington.
But its finances moved through the shell companies — the QAT Consulting Group, QAT International and Protech Consulting — which held bank accounts into which clients wired their payments, according to court papers in the case.
Again, it was all about following the money. Until it turned out to be about sex, too.
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Comments
The IRS was doing its job and analyzing his tax returns and if governor law and order wasn't spending so much on high-priced hookers he wouldn't've needed to hide so much in shell companies and never would've been caught.
This shows that this was much more than a "one-time sting" and that Spitzer must've been frequenting the emperor's club VIP for years.
This portion is particularly troubling: "50 beautiful young women in New York, Paris, London, Miami and Washington."
This illegal enterprise was operating in New York when Spitzer was attorney general! Why didn't he bust them like the other prostitution rings? Was he helping his favorite call girl ring eliminate its competition?
Spitzer needs to step down yesterday. His hypocrisy has already publicly humiliated his wife and three daughters. I've lost any capacity to feel sorry for him because of his gigantic hubris.
Mr. Governor it's time to step down!
Posted by: Jeff | March 11, 2008 11:41 AM
Shows that his little brain wasn't talking to his big brain.
Posted by: Ellie | March 11, 2008 12:44 PM
So Jeff, since you believe that all public officials income spent is technically using public funds do you think a regulatory body should be set up to review all financial transactions to ensure public funds are not used for immoral purchases?
Posted by: john | March 11, 2008 12:54 PM
Jeff,
Why are you manufacturing outrage over this story? He's not your governor so this does not concern you in any way. Just another distraction to talk about I guess since McCain has no new ideas to move America forward.
Posted by: jethro | March 11, 2008 12:55 PM
Did you know that Spitzer is a DEMOCRAT? Not if you read Mr. James' article. And did you read the quotes about the Democrats' "culture of corruption?" Not in this article in spite of the antics of Bill Clinton, Barney Frank, the past governor of New Jersey, the congressman from Louisiana and now the "party-less" governor of New York. And did you know Spitzer is a super delegate for Hillary? Not from this article. The door-mat wife role is not the only thing Hillary has in common with this situation. What a difference in the coverage of Foley et al, but of course, they were Republicans.
Posted by: Derrick | March 11, 2008 12:56 PM
Hey, Derrick, I think you'll find that information in the other 8 posts about Spitzer on the Swamp front page alone.
Posted by: Luke | March 11, 2008 1:07 PM
March 10: "Client 9 was having a bit of a credit problem with the service, the court filing shows. "
March 11: "Fed Announces Further Steps to Ease Credit Crunch."
Co-incidence? I think not.
Posted by: Amber M | March 11, 2008 1:09 PM
Spitzer should submit his resignation 2 minutes after 'diaper' Dave Vitter submits his.
And I believe 'diaper' Dave's was due more than a few months ago. Same sin. Same penance.
Posted by: thomas | March 11, 2008 1:13 PM
I can't believe how much press this scandal is getting and how little press the former Attorney General Alberto Gonzalez received for his misuse of power and crimes against US citizens. Something is wrong with our priorities.
Posted by: Julie | March 11, 2008 1:23 PM
So by "congressman from Louisiana," you must be referring to Senator David Vitter,R-La. confessed purveyor of prostitutes, and noted Republican. What's he up to these days? He must have resigned over that, since no "family values" Republican would ever visit a prostitute. Oh wait, he didn't resign. He just chaired Guiliani's failed presidential campaign, in between earmarking $100,000 in federal tax dollars to preach against evolution and banning federal funding of breast cancer screening. Clearly the Democrats have the "culture of corruption." Speaking of which, what are Mssrs. Ted Stevens, Mark Foley, Tom Delay, and Randy Cunningham (all R) up to these days?
Posted by: Fred | March 11, 2008 1:58 PM
Gov. Spitzer's (D), is probably more ticked off because he got caught.
Moving money around in fake companies, cheating, lying to his wife and daughters, using false names, putting people who worked for him in difficult situations. I could gone but......
I wonder if he thinks his daughters should work for the same prostitution ring. They are some ones daughters.
You tell me why he shouldn't be prosecuted to the full extent of the Law, like he did to others. Why should he be given a break and cut a deal to stay out of prison, keep his LAW license and not be held to a felony.
He knew what he was doing many times (being a PROSECUTOR) , spent $10,000's, lied to many people but got caught breaking the LAW.
Posted by: PG | March 11, 2008 2:05 PM
Its 3am and Hillary needs to answer the Spitzer question - after all....SHE IS THE ONE WITH ALL THE EXPERIENCE in this situation! LOL!!!!!
Posted by: Keith Lifetime Southsider | March 11, 2008 2:09 PM
"GOP DECLARES TODAY "SPITZER DAY"
"GOP DECLARES TODAY "WATERBOARDING DAY"
"GOP DECLARES TODAY, "WALTER REED" NO COMMUNICATION WITH THE CIVILLIAN WORLD DAY.
"GOP DECLARE TODAY" AT&T GIPHONEHOME DAY" all calls will be recorded and datamined for future use in any "WHISLEBLOWING" cases brought before ANY 9TH OR 10TH CIRCUIT COURTS.
"GOP DECLARES TODAY" KBR / HALLIBURTON DAY.
"GOP DECLARES TODAY" RENDENTION DAY ON FOREIGN SOIL WITHOUT FOREIGN GOVERNMENT ACKNOWLEDGEMENT!
"GOP DECLARES TODAY"
VITTER DAY IN THE PARK!
LARRY CRAIG DAY IN THE MENS STALL!
AND FOLEY DAY IN THE ROSE GARDEN"
"GOP DECLARES TODAY" CHINA TORTURED DAY"
"GOP DECLARES TODAY" TWO-FACED CORRUPT DAY.
"GOP DECLARES TODAY, WITHOUT IMMUNITY, IT'S VETO, FILLIBUSTER, PROVISIONAL BALLOT DAY IN AMERICA, $5.50 IN EUROS FOR GAS WHICH IS $9.00 A GALLON.
IMMUNITY AND PROTECTION FROM LIABILITY IS THE KEY TO "GOP DAY IN AMERICA"
Posted by: Roger Morris | March 11, 2008 2:55 PM
"Derrick", "Danforth", "Donovan"...
I wonder if they're all neighbors of Geographically Ignorant Dumb Dumb Little Johnnie Dyslin, "the Joseph Stalin of Streamwood", in the Elgin mental hospital that John D calls home. Or are they fake identities of Little Johnnie's multiple personalities?
Posted by: BC | March 11, 2008 3:16 PM
Whenever a public official so blatantly betrays his constituents it concerns everyone.
Don't be ridiculous, John. The system worked in this situation. A public servant was using his salary to buy prostitutes and then tried to conceal where the money went on his tax return. The IRS recognized and found out where the money went. No more big government necessary.
"Manufactured outrage" Jethro? Please. The man made his name as a law and order, no nonsense top cop. His hypocrisy is so blatant that no manufacturing is necessary.
Posted by: Jeff | March 11, 2008 3:34 PM
Why do these jackasses hijack these threads? The guy should just go away he broke numerous state and federal laws.
Posted by: cv | March 11, 2008 3:57 PM
I wonder what the other democrat governors think of Spitzer? Or the democrats of New York? Are national democratic leaders like Nancy Pelosi and Harry Reid going to make a statement? Do a majority of democrats think he should step aside?
I would hate to think they would be silent to a culture of corruption or anything...
Posted by: Jeff | March 11, 2008 3:58 PM
What kind of idiot pays for hookers with anything other than cash?!?!
Posted by: CDM | March 11, 2008 4:35 PM
Congratulations to the Feds for doing their job!!!I wanna know about all the other "Clients" by name, I can hardly wait to see what other politicos got caught. Did they party on drugs the night before he spoke to Congress? What gall this guy had to then show up before Congress the next day. Politicans seem to believe they are above the law and its nice to remind them with scandels like this they aren't. What a Jeckle/Hyde or is it Jerk and Hide. And to put his wife on TV to stand by her man. Disgusting. I noted in article pictures that the NJ Governor, another yoyo, and Spitzer had on similar colored striped ties, ah,the ties that bind. How soon can we jail this jerk?
I always marveled at strong performance on corruption and wondered if one day he'd be President. He played me for a fool.
Posted by: tom | March 11, 2008 4:38 PM
What kind of idiot pays for hookers with anything other than cash?!?!
Posted by: CDM | March 11, 2008 4:35 PM
Former Mayor of Cincinnati, Jerry Springer. Yes, that Jerry Springer.
Posted by: Robert | March 11, 2008 4:47 PM
Jeff,
Once again, this man was not your governor so your outrage is manufactured. I don't care what any governor, Senator, or Congressman from any other state does with their salary in their spare time. The only reaction this story should produce is a yawn.
Posted by: jethro | March 11, 2008 5:14 PM
What's the thinking there? That if you just pick one up in Vegas that they might sell their story to the tabloids? So you go with the more expensive call girl service which you know will be discreet?
The going rate in Vegas or New York City can't be that high. Looks like he couldn't buy silence like he wanted to.
Posted by: Jeff | March 11, 2008 5:31 PM
I certainly don't think the IRS routinely performs investigations into State Governors financial transactions. I also don't think the FBI normally gets involved in investigating escort services. Smells like a smear job to me. Your tax dollars at work, a bunch of baloney.
Posted by: Eddie | March 11, 2008 8:27 PM
Eddie, did you even READ the story? The IRS agents were looking at shady transactions going into known shell companies reported to them by the banks. Shady transactions of hundreds of people, not just Spitzer.
When they figured out what the shell company payments were for and that they were Spitzer's they brought the FBI in.
I, for one, am glad the IRS is looking into these transactions and not just Spitzer's.
If you think that Spitzer is innocent and the call girl he hired is lying, and the agents that observed his movements are lying, and the hotel personnel who saw her entire his room are lying, then the "smear job" is the big squishy sponge that the democratic party has used to replace your brain.
p.s. Jethro, you're a moron if you think that the story of America's biggest law and order governor and attorney general being a hypocrite is only worth a yawn. The American people and every front page in the nation disagree with you. If he'd done the right thing and stepped down immediately you wouldn't have to deal with people like me asking the obvious questions such as "did he use his powers as AG and governor to protect the emperor's club?"
Posted by: Jeff | March 11, 2008 11:28 PM
Jeff,
What two consenting adults do in there spare time does not concern me. Especially when it is the governor of a state I've never visited.
PS Where was this outrage towards Vitters? He obviously used his position to protect the brothel he frequented in diapers.
Posted by: jethro | March 12, 2008 12:05 PM