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How Spitzer Was Caught:
Of all the ironic aspects of the Elliot Spitzer scandal, I think the most remarkable is how he got caught. Based on stories like this and this, it looks like Spitzer got caught because the prostitutes he hired were so expensive that he needed to shuffle several thousands of dollars around each time. Spitzer knew that banks report suspicious money transfers to the IRS to combat financial frauds and money laundering, so he tried to structure his money transfers to avoid suspicion. But the banks thought his activity was still suspicious, so they reported him and the IRS opened an investigation under the assumption that Spitzer was trying to launder money he had obtained from bribes. But he wasn't laundering money — he was paying prostitutes. So Elliot Spitzer, aggressive former white collar crime prosecutor, was brought down because he couldn't outsmart banks looking for evidence of white collar crimes.
George Weiss (mail) (www):
sure-thats clearly the most ironic thing here..don't loose the forest through the trees
3.11.2008 1:27am
Dick King:
So if I want to buy a legal luxury from someone for ten thousand dollars the IRS will necessarily find out even if I'm not doing anything wrong or taxable?

Yuck!

-dk
3.11.2008 1:32am
Thoughtful (mail):
Just heard about the Spitzer story...Wow! There IS a God...
3.11.2008 1:41am
Dave N (mail):
Elliot Spitzer reminds me of Richard Nixon without the warmth.
3.11.2008 1:55am
UW2L:
Wow, you'd think he'd know how to avoid a structuring offense. And here I'd assumed he just got caught on a wiretap installed on a pimp's/madam's (or whatever you get to call yourself instead when your ladies cost that much) phone line.

I have my White Collar Crime final exam next week. I'm really, really hoping this story gets turned into the hypo. Maybe that's mean, since I really respected Spitzer, but it's eerie how these scandals do have such perfect timing with regard to law school exam season.
3.11.2008 1:56am
CDU (mail) (www):
So if I want to buy a legal luxury from someone for ten thousand dollars the IRS will necessarily find out even if I'm not doing anything wrong or taxable?

I think they'll only find out if you're doing something squirrelly with the financing. If you just write a check, nobody's going to report anything. If you're paying for your legal luxury with bank transfers through the Cayman Islands and Lichtenstein, expect some scrutiny.
3.11.2008 1:57am
George Weiss (mail) (www):
UW2l- what school gives finals in the middle of march?
3.11.2008 2:03am
Cornellian (mail):
Is anyone going to help us out here with a link to pictures of this "Kristen" who is supposedly worth $4300 per night? I need to be fully informed before reaching any conclusions on this issue.
3.11.2008 2:04am
unhyphenatedconservative (mail):
For once Cornellian makes sense.

Scary.
3.11.2008 2:05am
Dave Hardy (mail) (www):
I'd assume all such transactions get reported ... but how many of those does an agency investigate? Probably most get modest attention ... any info that the recipient is involved in the drug trade? If not, move on. On the other hand, a bank reports that it has some suspicious activity relating to a governor, you might just do some inquiry as to who is getting the money. Hmmm... they seem to be a cover for someone else? Maybe some more investigation, funny transactions to some manner of cover organization.

Altho I've got to wonder why you'd suspect bribery from the target's *expenditures*. Wonder if there might be a possibility that State funds were involved? Or perhaps some question as to where a holder of public office, which doesn't pay extraordinary wages, is getting the funds to pay thousands per tryst?
3.11.2008 2:06am
Fub:
The problem I see with making "structuring" a crime is that almost any series of withdrawals or transfers which total to the statutory limit can be construed as structuring, regardless of what the real purpose was.

It's not unlike civil forfeiture in that respect. Just having an entirely arbitrary quantity of cash in one's possession (the amount is whatever some cop says is suspicious) can result in seizure, and you must become a plaintiff and affirmatively prove you didn't obtain the cash from illegal sources.

Faint praise for "structuring" crimes is that at least the defendant must only convince a judge or jury that there is reasonable doubt.

Both should be anathema to any government that claims to value liberty.

That said, it couldn't have happened to a more deserving guy than Spitzer.
3.11.2008 2:10am
OrinKerr:
Fub writes:
The problem I see with making "structuring" a crime is that almost any series of withdrawals or transfers which total to the statutory limit can be construed as structuring, regardless of what the real purpose was.
Really? Why?
3.11.2008 2:14am
2Hard4U2C:
Wow, this is why prostitution, drugs and gambling should all be legalized - victimless crimes in which we are ALL engaged - even those judges, politicians, prosecutors, lawyers and legal scholars among us. I mean, come on already. The best part is that, although this is outrageous, it is still only a distant second, at best, to Jim "I'm a Gay American" McGreevey's press conference and Mr. Restroom Sex McGee (who shall remain nameless), both of which were similarly amazing. And this is why I can't take anybody seriously. We are all hypocrites. Let us take a moment and reflect upon our own perversions. A moment of silence please...
3.11.2008 2:18am
Jim at FSU (mail):

Spitzer knew that banks report suspicious money transfers to the IRS to combat financial frauds and money laundering, so he tried to structure his money transfers to avoid suspicion.


Isn't willfully structuring your transactions to avoid the reporting amount a crime?

Spitzer is going to have a might difficult time arguing he was unaware of this statute. He might be headed to yale soon. Yust kidding.
3.11.2008 2:20am
djh5:
Um -- does anyone think that this was just a routine investigation that happened to ensnare the governor of New York? Since when does any politician pay bribes? How exactly would one cover up a bribe by paying it out, or taking a large amount of cash out of the ATM? This is about as plausible as Mark Furman claiming that he went into OJ's house because there might be more victims. Why were they looking at the governor's financial transactions? Don't you think the feds might have had an idea what would be the end result of their investigation and started at a spot that would seem neutral and not be potentially subject to the exclusionary rule?

If the FBI was interested in busting escort services, they could start with craigslist and the back of the Village Voice -- this place had a fully functioning website that was pretty open about the services on offer. If the FBI was looking at financial transactions - wouldn't they more likely end up starting with one of the hundreds of other johns of this place who are not the sitting governor of New York? And if they really started with Spitzer,

This is like Murder on the Orient Express -- the real question is who put the feds on his trail - Joe Bruno? Dick Grasso? Sheldon Silver? Langone? Whitehead? Hank Greenberg? The Seneca Nation of Indians? Mafiosi recently caught up in the recent roundup?

Maybe we'll never know, but I would bet the rent money that this was no accident.
3.11.2008 2:20am
gattsuru (mail) (www):
Well, for starters, the law doesn't seem to care what the purpose is, only that you made sufficiently sketchy transactions without following the paperwork. Of course, most of section 31 is a bit too hard for me to follow.
3.11.2008 2:21am
Jim at FSU (mail):
Well Spitzer did go around pissing in a lot of people's cheerios lately. You can't get caught digging up dirt on the state senate majority leader and get away with a "sorry." He had to expect some sort of payback, assuming that is what this is.
3.11.2008 2:26am
Bill Sommerfeld (www):

I've got to wonder why you'd suspect bribery from the target's *expenditures*

The news articles referenced don't actually say he was suspected of *receiving* bribes.
For instance:

The federal investigation of a New York prostitution ring was triggered by Gov. Eliot Spitzer's suspicious money transfers, initially leading agents to believe Spitzer was hiding bribes, according to federal officials.

and

The transactions, officials said, suggested possible financial crimes — maybe bribery, political corruption, or something inappropriate involving campaign finance.

Large outgoing transfers to sketchy organizations could be the payment of bribery.
3.11.2008 2:28am
unhyphenatedconservative (mail):
"How exactly would one cover up a bribe by paying it out, or taking a large amount of cash out of the ATM?"

See Sheriff Mike Corona and his boat deal,
3.11.2008 2:32am
LM (mail):
UW2L,

I'm really, really hoping this story gets turned into the hypo. Maybe that's mean, since I really respected Spitzer[...].

That would be meaner if you didn't respect him.
3.11.2008 2:37am
LM (mail):
Cornellian,

Huffington Post has archived pages of the website (the site itself has been taken down), but Spitz's girlfriend isn't shown.
3.11.2008 2:42am
Visitor Again:
I do not care if Spitzer gets his rocks off on the side; that's an issue for him and his wife to hash out.

That he got caught in flagranto delicto with a prostitution ring, however, reflects poorly on his judgment. What was he thinking?

But what really does tick me off is that he has zealously prosecuted prostitution rings, making public statements that harshly condemned them, and now it turns out he himself personally makes use of them. It reminds me of the old days when prosecutors would by day send kids off to prison for five years for smoking pot and then by night light up at home themselves.

Still, any schmuck ought to be able to squander five grand an hour on satisfying his lust without having banks, the IRS and the FBI climbing all over him. I hate banks in general. I hate intrusions on privacy. I hate anti-prostitution laws, indeed, all laws that impose moral views that are not shared by a large proportion of the population. Get off our backs.
3.11.2008 2:44am
Fub:
OrinKerr wrote at 3.11.2008 1:14am:
Really? Why?
Not sure what the question refers to.

Why do I think government shouldn't require banks to report anything they think is structuring?

Same reason I think mandatory reporting of cash transfers is bad policy or law.

Because banks can't read their depositors' minds, shouldn't pretend to, and certainly shouldn't be legally required to pretend to.

Because government performing financial colonoscopies on citizens without any probable cause besides "he moved some money in excess of $10 grand, or we think he might have" is bad policy or law. It makes perfectly ordinary transactions grist for any old Spitzer's (in the law enforcement bureaucracy) crusade.

One might withdraw $9 grand one week to buy a car, then $1 grand the next to buy a camera. One might do that because one hates credit cards, or because the bargains just happened to appear and the perfectly legitimate sellers were not prepared to accept anything but cash. Why should one have to answer to the government for those decisions?
3.11.2008 2:47am
Oren:
More shocking to me is that these banks willingly violated their duty of trust and voluntarily reported personal transactions to the IRS/FBI. I naively expected that my bank would do the right thing and not disclose a single iota of information until they see an order from a judge. Since when did banks consider themselves appendages of the FBI anyway?

I understand that the 4A is useless in this case (no REP in transactions conducted by a third party) so is there anything that we can do to keep our personal business out of the Feds hands? Are there any banks that will pledge not to report except as absolutely required by law? You can't keep cash, it's subject to seizure. . .
3.11.2008 2:50am
Jim at FSU (mail):
I think there is more than just the structured financial transactions business. Since he enticed the girl from NYC to DC to engage in sex for pay, he also violated 18 USC 2422 (a) as well.


18 USC 2422(a) Coercion and enticement: (a) Whoever knowingly persuades, induces, entices, or coerces any individual to travel in interstate or foreign commerce, or in any Territory or Possession of the United States, to engage in prostitution, or in any sexual activity for which any person can be charged with a criminal offense, or attempts to do so, shall be fined under this title or imprisoned not more than 20 years, or both.


Because of this, there will be a sentence enhancement, as per 31 USC 5324(d)(2), which kicks in whenever you structure your transactions to have the bank fail to file a report while committing another crime. Under these circumstances, violating 31 USC 5324(a)(1) is punishable by up to 10 years 31 USC 5324(d)(2).

And considering how high profile this is, I can't imagine a federal prosecutor not going forward with at least an indictment.
3.11.2008 2:57am
OrinKerr:
Fub,

When I blockquoted your sentence and then wrote "really? why?", I meant to ask that with respect to the blockquoted sentence. Sorry if that was unclear.
3.11.2008 3:01am
George Weiss (mail) (www):
theoretically you can add in conspiracy to commit 2422a also (since conspiracy and the actual offense don't merge?)

OTOH its only the pimps that are charged..not the customers..even though they can be hit with such charges

of course there's probably a backroom deal going on right now whereby spritzer resigns in consideration on not being indicted either locally or federally....
3.11.2008 3:03am
OrinKerr:
Oren writes:
I naively expected that my bank would do the right thing and not disclose a single iota of information until they see an order from a judge. Since when did banks consider themselves appendages of the FBI anyway?
Well, federal law has required them to do this for many years. Given that, yes, you were indeed naive.
3.11.2008 3:05am
LM (mail):

But what really does tick me off is that he has zealously prosecuted prostitution rings, making public statements that harshly condemned them, and now it turns out he himself personally makes use of them.

It's just Foley/Vitter redux (their hypocrisy turning on legislation rather than prosecution). Unfortunately for my Democratic preferences, this should pretty squelch any advantage the Dems derived from that argument in '06, and presumably would have again to some lesser extent in November.
3.11.2008 3:07am
Harry Eagar (mail):
Any of you lawyers think he might be prosecuted under the Mann Act? The last famous person I remember doing time on that was Chuck Berry, nearly 50 years ago.

Sure sounds like all the elements are there, though.
3.11.2008 3:08am
George Weiss (mail) (www):
harry-the mann act was what made section 2422a that we are talking about the possibility of him being prosecuted under.
3.11.2008 3:10am
OrinKerr:
Harry,

18 U.S.C. 2422 is in fact the Mann Act. And if the allegations are true, the only apparent element in question is whether the government needs to show knowledge of travel in interstate commerce and whether Spitzer had that knowledge.
3.11.2008 3:13am
Guest12345:
So, why isn't he in jail right now? If I solicited a hooker on the street the cops would have me in handcuffs and before a judge right away. I wouldn't have the opportunity to consult with my attorneys, break it to my family, and give a speech. Isn't there a 14th amendment issue here? If I was a John in New York City right now, that's what I'd be arguing.

And given that he has more or less admitted to the act, does he now get to be placed on the sex offender lists?
3.11.2008 3:15am
OrinKerr:
Guest12345,

I gather you aren't a lawyer? To fill you in, federal investigations take time; they usually unfold over months, and the government brings charges when it's ready. The fact that other types of cases might work differently does not create some kind of constitutional violation.
3.11.2008 3:18am
A. Zarkov (mail):
I condemn Spitzer for gross stupidity. First of all he seems to have overpaid for sexual services. A charge of about $1,000 per hour seems pretty excessive to me. Not enough bang for the sexual buck. What did this girl look like anyway, and what did he have her do? Then why did he have to make her travel arrangements? The news report says, "Client 9 also is alleged to have paid for the woman's train tickets, cab fare, mini bar and room service, travel time and hotel." The prostitution ring should front loaded all these costs to the customer for obvious reasons. Finally why didn't he use a prepaid cell phone so the call can't be traced back to him? They sure don't teach you very much at Princeton and Harvard. Of course Spitzer is easily recognizable so he exposed himself to blackmail. Why didn't he simply pay cash at the point of sale?
3.11.2008 3:21am
Jim at FSU (mail):
Since he was apparently privy to all her travel arrangements and coordinated them so that she would arrive at a specific time, I don't see how he can avoid the knowing interstate travel portion of the 2422.

By the elements:
Whoever knowingly
-persuades, induces, entices, or coerces: agreeing to pay money for sexual services in a hotel room in DC is an enticement to travel
-any individual: the prostitute "kristen" whom he arranged to meet
-to travel in interstate or foreign commerce, or in any Territory or Possession of the United States: he discussed the travel plans and paid for various tickets and fares. I suspect that they may have done this so he would be on the record as knowing about it.
-to engage in prostitution, or in any sexual activity for which any person can be charged with a criminal offense: this is a pretty classic act of prostitution, a plain exchange of money for sexual services
-shall be fined under this title or imprisoned not more than 20 years, or both

So yeah, he is done, put a fork in him.
3.11.2008 3:31am
George Weiss (mail) (www):
orin-

according to what you told guest12345..there is still no reason he hasnt been brought in on local prostitution charges.

i think the real reason is that is wouldn't be prudent to have charged him and none of the other customers...especially since these sorts of investigations don't generally target the customers.
3.11.2008 3:32am
Oren:
Orin wrote
Well, federal law has required them to do this for many years. Given that, yes, you were indeed naive.


Quoting from 12CFR21
Violations aggregating $25,000 or more regardless of potential suspects. Whenever the national bank detects any known or suspected Federal criminal violation, or pattern of criminal violations, committed or attempted against the bank or involving a transaction or transactions conducted through the bank and involving or aggregating $25,000 or more in funds or other assets where the bank believes that it was either an actual or potential victim of a criminal violation, or series of criminal violations, or that the bank was used to facilitate a criminal transaction, even though there is no substantial basis for identifying a possible suspect or group of suspects.


Orin, I may be naive but I'm not stupid. All of these transactions are 100% automated and so no human being ever needs to look at these transaction. The lack of any awareness of the transactions should (if I'm reading it right) be an absolute defense against any violation of 12CFR21. The wise bank, therefore, will simply not look and therefore not have any reason to go snitching to the feds.

Since the banks could have left all these transactions well enough alone in the computer but chose not to, my original scorn for their breach of duty remains.
3.11.2008 3:39am
Oren:
Why didn't he simply pay cash at the point of sale?
Carrying that much cash is, defacto, criminal. As for overpaying, some people have a bit more class, shall we say.
3.11.2008 3:40am
EIDE_Interface (mail):
The issue isn't that he paid for sex. The issue is the unmistakable, blatant, stinking hypocrisy. This FEELS so good!
3.11.2008 3:41am
A. Zarkov (mail):
"Carrying that much cash is, defacto, criminal. As for overpaying, some people have a bit more class, shall we say."

Carrying $4,300 is criminal? As for class, I don't think you much of that if you carry on with prostitutes.
3.11.2008 3:51am
A. Zarkov (mail):
How about paying with gold coins? The one-ounce South African Krugerrand coin closed today at $999.37. Thus he could have paid his bill with 5 coins. Buying gold coins can't be a crime, at least I hope not as I once went to a coin store at bought a bunch (when they were much cheaper).
3.11.2008 3:58am
Mike& (mail):
I condemn Spitzer for gross stupidity. First of all he seems to have overpaid for sexual services. A charge of about $1,000 per hour seems pretty excessive to me. Not enough bang for the sexual buck.



You're also paying for discretion - something that's very important to a governor. Note that it was his bank rather than the escort agency that got him into trouble.
3.11.2008 4:07am
John Herbison (mail):
Someone in Governor Spitzer's position is likely concerned now with matters other than balls-to-the-wall defense of what is alleged to be his conduct, but I have doubts that criminalizing prostitution (or at least consensual acts of adult prostitution, occurring within private premises) comports with Lawrence v. Texas. Justice Scalia'a dissenting opinion in Lawrence suggests that the majority's reasoning would call into question the constitutional validity of prostitution statutes.

The opinion of the Court in Lawrence unfortunately fails to specify clearly what standard of review the Court was there applying. There is, however, a zone of privacy and personal autonomy regarding sexual conduct among adults in their own home* which may be gleaned from Lawrence, Griswold v. Connecticut and Eisenstadt v. Baird. Even under a rational basis standard, Lawrence would seem to indicate that a generalized governmental interest in morality would not suffice to save the statute. Absent morality, what governmental interest is served by criminalizing adult, consensual prostitution behind closed doors?

This line of reasoning has recently gotten some traction in the U.S. Fifth Circuit's Texas dildo shop case, although the Eleventh Circuit ruled to the contrary with regard to Alabama's sex device statute.

As an aside, I have tried to think of any service other than human sexual activity that may be lawfully given away but not lawfully sold. The only services I can think of are voting and organ donation.

______________________
*As a paying guest in a hotel, the Governor would have an expectation of privacy in the room that he occupied.
3.11.2008 4:07am
George Weiss (mail) (www):
is voting really a service?
3.11.2008 4:09am
Mike& (mail):
By the way, the AUSA Manual (something Spitzer is undoubtedly familiar with!) on structuring.

Spitzer, of course, will not be able to argue that his transactions weren't willfully structured.

Oh, and here's a brief discussion of the Mann Act.
3.11.2008 4:12am
Mike& (mail):
Sadly, a lot of you missed the memo about Know Your Customer. The Wikipedia entry is pretty good.

Yes, you are being watched.
3.11.2008 4:17am
OrinKerr:
Oren,

Can you cite some cases for that? Your reading of the reg seems nonobvious to me.
3.11.2008 4:23am
A. Zarkov (mail):
"As an aside, I have tried to think of any service other than human sexual activity that may be lawfully given away but not lawfully sold."

How about legal advice? A non-lawyer can give away, but he can't charge for it. I can cut someone's hair for free in California, but if I want to get paid I need to be licensed. Of course you can't get a license to charge for sex so the analogy is somewhat flawed.
3.11.2008 4:25am
George Weiss (mail) (www):
"As an aside, I have tried to think of any service other than human sexual activity that may be lawfully given away but not lawfully sold."

political appointments
3.11.2008 4:28am
Jim at FSU (mail):
Thank you for posting that structuring guide. I knew about Ginsburg's opinion in Ratzlaf but I couldn't remember the name of the case. I came across it while doing research for a migratory bird treaty paper and it somehow stuck in my mind. In any case, proving that Spitzer knew about his legal duty to not avoid the filing should be incredibly easy.
3.11.2008 4:34am
Milhouse (www):
Dave N wrote:

Elliot Spitzer reminds me of Richard Nixon without the warmth

Really? I don't remember Nixon, but I've been saying for many years that the person Spitzer most reminds me of is Rudy Giuliani. I would never vote for either one of them; they're both bullies, who think nothing of whom they hurt in order to advance their own careers. The notion that other people have rights just doesn't cross their minds.
3.11.2008 4:35am
A. Zarkov (mail):
"You're also paying for discretion - something that's very important to a governor. Note that it was his bank rather than the escort agency that got him into trouble."

I don't see how discretion raises the escort agency's costs very much. As such I don't think the high price is justified. Moreover for a $1,000 per hour they should have picked up the room fee and her travel costs. He took on extra risk by making those arrangements himself. I don't think he was a wise consumer.
3.11.2008 4:35am
Jim at FSU (mail):
Ratzlaf is apparently superseded by congress anyway so the willful requirement is gone again.

So much for Spitzer's vision of progressive politics.
3.11.2008 4:37am
Visitor Again:
And given that he has more or less admitted to the act, does he now get to be placed on the sex offender lists?

If this offense subjects him to a sex offender registration requirement, then it's plain that the registration requirement has become meaningless.

If it is to serve its purpose--alerting the public to dangerous sex offenders--then the registration requirement has to be limited to people who commit dangerous sexual offenses. Otherwise you overwhelm the registration rolls with, for example, the names of people who solicit prostitutes or of minors who engage in entirely voluntary sex with other minors.

In California those who are convicted of the misdemeanor offense of annoying a minor are required by law to register for the rest of their lives as sex offenders. There is no discretion in this although the offense of annoying a minor might involve conduct that by no stretch of the imagination can be said to constitute a dangerous sex offense or even a nondangerous sex offense.

In some states minors who engage in entirely voluntary sex with other minors are subjected to lifetime sex offender registration.

In some areas, touching a female lap dancer is a criminal offense even if the dancer agrees to the touching. Are you going to put the guy who touched a dancer on her legs or her buttocks or breasts on the sex offender list for the rest of his life? Ridiculous.

How does one know who to watch out for if every Tom, Dick and Harry who offends the puritans is put on the sex offender lists?
3.11.2008 4:54am
Oren:
You're also paying for discretion - something that's very important to a governor. Note that it was his bank rather than the escort agency that got him into trouble.
It's a sad state of affairs when hookers have more discretions than banks.

Orin, I'll look up some citations tomorrow but, as a general matter, the repeated uses of the word "believe" and "suspect" lead me to conclude that a bank does not have a positive duty to scrutinize every transaction for criminality. The workability of the contrary interpretation, in which the bank is required to examine billions of transactions and find the proverbial needle in the haystack, is at best questionable.
3.11.2008 5:03am
Mike& (mail):
The issue isn't that he paid for sex. The issue is the unmistakable, blatant, stinking hypocrisy. This FEELS so good!


Where is the hypocrisy?

I'm at hateful as anyone, but I don't see the hypocrisy here. I don't see how defrauding investors (what Spitzer went after people for) = having sex with prostitutes (what Spitzer allegedly did).

In a sense, one could say that the federal investigation was Spitzer in converse: The Feds investigated otherwise local activity. But as press reports have indicated, the investigation was initiated to probe violation of federal bribery statutes. So there isn't any slice of delicious irony on my plate.
3.11.2008 5:04am
Visitor Again:
"As an aside, I have tried to think of any service other than human sexual activity that may be lawfully given away but not lawfully sold."

political appointments


Any public official's official conduct--introduction of a bill, for example, or a vote on a bill, a veto of an act passed by the legislature, and so on.

Losing a sporting contest deliberately.
3.11.2008 5:05am
dom35:
As an aside, I have tried to think of any service other than human sexual activity that may be lawfully given away but not lawfully sold.

Kidney donation
3.11.2008 5:07am
Mike& (mail):
The workability of the contrary interpretation, in which the bank is required to examine billions of transactions and find the proverbial needle in the haystack, is at best questionable.


Not really. I'm self-employed, so some months are better than others. But my deposits are generally in a given range.

My wife gets direct deposit from her employer. Every two weeks approximately the same amount (from the same source) is deposited into her account.

You could go into our accounts and roughly track what we should deposit over the year. Since we've been at the same bank for several years, you could even create nice charts projecting income for next year. Plenty of programs can do this.

So it's really not that hard to "find" (a computer program does this) a suspicious transactions.

Granted, there are the occasional deviations. I might have a really good month, and my wife might get a nice annual bonus. But an occasional deviation from the norm is something banks expect. It's when there are several deviations that alerts are triggered and reports are filed. I would encourage you to read the "Know Your Customer" entry that I linked to, above.

In any event, it's not that hard to "know your customer."
3.11.2008 5:11am
Visitor Again:
Where is the hypocrisy?

I'm at hateful as anyone, but I don't see the hypocrisy here. I don't see how defrauding investors (what Spitzer went after people for) = having sex with prostitutes (what Spitzer allegedly did).


As I pointed out in a message above and as nearly every story on the matter has reported, Spitzer himself prosecuted and procured the convictions of at least two prostitution rings and harshly condemned them in public statements he made at the time. In this regard, he's a hypocrite whether one hates him or not. Even his former law professor Alan Dershowitz, who has come to his defense, has stated there is a good deal of hypocrisy evident here.

I'm very far to the left, I don't think Spitzer should have to resign over this, I don't hate him, but he's a hypocrite, like so many other public officials.
3.11.2008 5:13am
John Herbison (mail):
Most public officials draw a salary, which is paid for their exercise (or non-exercise) of official acts. While a particular decision or transaction is not sold, a salaried office holder's service in the aggregate is sold.

In the case of offices where the office holder serves gratis, it is at least lawful in the ordinary case for the government to create a salary for such office.
3.11.2008 5:15am
Mike& (mail):
Spitzer himself prosecuted and procured the convictions of at least two prostitution rings and harshly condemned them in public statements he made at the time.



If that's the case (I have no idea), then I am indeed pleased with yesterday's revelation.
3.11.2008 5:19am
Oren:
Spitzer himself prosecuted and procured the convictions of at least two prostitution rings and harshly condemned them in public statements he made at the time. [citation needed]


If what you say is correct, than I just lost a lot of respect for Spitz. I really liked him too.
3.11.2008 5:32am
Oren:
So it's really not that hard to "find" (a computer program does this) a suspicious transactions.
Assuming you were looking at your wife's deposits instead of, you know, minding your own business.

Granted, there are the occasional deviations. I might have a really good month, and my wife might get a nice annual bonus. But an occasional deviation from the norm is something banks expect. It's when there are several deviations that alerts are triggered and reports are filed. I would encourage you to read the "Know Your Customer" entry that I linked to, above.
Again, deviations that, in the absence of any evidence of malfeasance, are your own damned business.

In any event, it's not that hard to "know your customer."
Of course it's not hard! It's easy to abuse the trust of people that

Look, I'm all for banks cooperating with the FBI and IRS when asked to do so. It is an altogether different matter, however, for the bank to go reporting to the FBI and IRS on its own accord - they are not charged with enforcing the law nor policing the money (and if they were, they'd at least be subject to the strictures of the 4A!).

Now, if you want to argue that the IRS is chronically understaffed and can barely keep up its current duties, let alone go investigating people on its own volition (mostly true) then that's a good reason to simplify the tax code code and augment the IRS's enforcement arm. What it does not call for, however, is for law enforcement to co-opt private institutions into their plans thereby doing an end-run around the Constitution.
3.11.2008 5:46am
KG2V:
Mike

Where is the hypocrisy?

I think others have pointed it out, but before he was NY AG, and was in NYC, he went after Prostitution rings big time.

MY dislike if Spitzer is in his idea to use Government CIVIL suits to go after companies. Using the infinite deep pocket of the state to sit there in a civil suit till the defendant HAD to settle.
3.11.2008 6:23am
Visitor Again:
Me in an earlier message:

Spitzer himself prosecuted and procured the convictions of at least two prostitution rings and harshly condemned them in public statements he made at the time.

Mike&:

If that's the case (I have no idea), then I am indeed pleased with yesterday's revelation.

Oren:

[citation needed]

If what you say is correct, than I just lost a lot of respect for Spitz. I really liked him too.


Well it's in virtually every story appearing on the web. But since you insist on a citation, here is one.

"Spitzer Is Linked to a Sex Ring as Client" by DANNY HAKIM and WILLIAM K. RASHBAUM in the New York Times. The link is to third page of story on which the following appears:


When he was attorney general, Mr. Spitzer's signature issue was pursuing Wall Street misdeeds. But he also oversaw the prosecution of at least two prostitution rings by the state's organized crime task force, which reports to the attorney general.

In one such case in 2004, Mr. Spitzer spoke with revulsion and anger after announcing the arrest of 16 people for operating a high-end prostitution ring out of Staten Island.

"This was a sophisticated and lucrative operation with a multitiered management structure," Mr. Spitzer said at the time. "It was, however, nothing more than a prostitution ring."


The same information appears in reports appearing in the web editions of other newspapers, but I'm not going to take the time to go through them again. I will tell you that in other stories, including another in the New York Times, Alan Dershowitz has quite a bit to say about Spitzer's hypocrisy and expressed disappointment that Spitzer wasted public resources on this sort of thing, although he generally came to Spitzer's defense.
3.11.2008 8:57am
Richard Aubrey (mail):
It's been suggested that the initial alert to this was an automatic or semi-automatic dingding regarding structuring.
Money laundering laws have been around for some time. Any field in what might be called financial services requires attention to the possibility of money laundering. Most institutions require their employees and even independent agents with whom they are contracted to complete a (simple)money laundring course from time to time.
The primary lesson has to do with suspicious transactions of varying type.
In the commission sales field, for example, a customer who wants to put money in and take it out of a vehicle without regard for early withdrawal penalties is a possible money launderer.
And the companies think the employee or agent has a positive duty under the law to report.
That is POSITIVE duty to report.
Are they wrong?
Beats me. But there is always the problem of letting something go and ending up in about as much trouble as you ever wanted if it gets out. Then you're a business partner of the bad guy.
3.11.2008 9:09am
Krahling (mail):
Echoing KG2V, I first came to dislike the man when he announced that he was investigating the Smith and Wesson boycott.
3.11.2008 9:09am
dearieme:
Thew silly beggar should have used the old Cattle Futures trick.
3.11.2008 9:15am
Visitor Again:
What the hell, here's a couple more citations:


Spitzer Allegations Send Wave of Shock by JAMES BARRON in the New York Times. The link is to the second page of the story, which states:


Among those who know Mr. Spitzer, some made much the same point. Alan M. Dershowitz, a law professor at Harvard for whom Mr. Spitzer was once a research assistant, said he felt bad "even knowing about it."

"Men go to prostitutes — big deal, that's not a story in most parts of the world," Mr. Dershowitz said.

But he also said he had been surprised when Mr. Spitzer prosecuted a prostitution ring in 2004.

"I always thought he was somebody who would come down on crimes with real victims," Mr. Dershowitz said. "Prostitutes aren't victims — they're getting paid a thousand dollars an hour, and the johns aren't victims. What upset me the most was that they wiretapped thousands of e-mails and phone calls. In an age when terrorism needs to be stopped, they're devoting these kinds of resources to a prostitution ring?"


For more entertaining stuff on hypocrisy and men's sexually driven stupidity from the Dersh, the world's foremost expert on everything, see Early MSNBC Pundits Defend Spitzer, Lash Out at Prudish America by Tim Graham
3.11.2008 9:19am
Orielbean (mail):
Structuring is a part of laundering and is considered part of the crime. Other aspects include layering - transferring to a holding company or cash business like a bar/eatery. Can't remember the third off the top of my head. Banks report a certain deposit amount, and structuring involves multiple transfers just under that threshold to avoid the reporting. But the banks also report suspicious multiple transfers due to the structuring aspect of laundering.
3.11.2008 9:36am
Temp Guest (mail):
Oren: As Richard Aubrey points out, the law requires that financial institutions proactively look for and report suspicious financial transactions. Mobbed up bankers have gone to prison when they're defense has been "I was unaware these suspicious transactions were occuring." As another example, think of the terrorist financiers who've been sent to prison over the past five years after using this same defense. Although I cannot cite case law, I assert that anyone who's read the NYT regularly over the past ten years or regualrly watched "Law &Order", where an actual case regarding the Russian mob was dramatized, should know that financial institutions in this country have a legal responsibility tp proactively report suspicious transactions.
3.11.2008 9:42am
recovering former law student (mail):
UW2l, if you're still here, I recommend "Understanding White Collar Crime," in the Lexis-Nexis "Understanding" series, as an excellent treatise in preparing for your exam. (Don't count on the Spitzer scandal appearing on the exam - it's too obvious.)
My WCC class was very difficult (especially for only 2 credits!) and the Understanding book really helped me figure out the main federal statutes. It was an open book exam, so I had the main points highlighted and tabbed. Good luck.
3.11.2008 10:12am
anti-Dersh (mail):
For Dersh or anyone to say that prostitutes aren't victims shows a lack of humanity. He needs to get out more and find out how they are really treated. Yeah, they can make a lot of money, but they live a horrible life, and are used and manipulated both by the pimps and the johns.
3.11.2008 10:14am
Porkchop:
Speaking from experience in reviewing Suspicious Activity Reports and Currency Transaction Reports for the government, the great irony is that had he simply taken out $10,000 or more, no one would have paid any attention. The CTR would probably not have raised any eyebrows.

When you do training on the Currency and Bank Retrieval System (CBRS), which is adminstered by FinCEN (Financial Crimes Enforcement Network) and maintained on the IRS computer system for the federal banking agencies, they make the point that there are lots of people who transact business in cash and that it is not remarkable without other evidence.

If Spitzer had withdrawn $10,000+ on a few occasions, the CTR's probably would most likely have gotten lost in the system. Instead, he showed up in the SAR system, and those are much more likely to be seen by human eyes.
3.11.2008 10:22am
Gaius Marius:
Elliott Spitzer is above the law.
3.11.2008 10:25am
hawkins:
Are these suspicious financial transactions, by themselves, sufficient probable cause for a wire tap on Spitzer's phone? I sure hope more evidence that suspicious looking withdrawals and deposits is required to tap someone's phone.
3.11.2008 10:32am
A. Zarkov (mail):
Too bad for Spitzer that his name isn't "Kenndedy," then he wouldn't have to resign, and the whole thing would blow over.
3.11.2008 10:46am
Sedgequill:
I hope that Orin Kerr's "looks like" applies to all the statements that follow it. I admit to being a stickler for qualifying language where legal suspicions and accusations are concerned—which is another matter from whether or not I consider reported evidence compelling.
3.11.2008 10:49am
Cornellian (mail):
It's interesting to think about how things would play out if in the past Spitzer had publicly refused to prosecute any prostitution related offenses, declaring them victimless crimes and a waste of prosecutorial resources.
3.11.2008 11:08am
Javert:
Prostitution between consenting adults should not be a crime, but I'm sure glad it is.
3.11.2008 11:13am
Smallholder (mail) (www):

"As an aside, I have tried to think of any service other than human sexual activity that may be lawfully given away but not lawfully sold."



Raw milk.
3.11.2008 11:17am
Adam J:
anti-Dersh - being used and manipulated is a part of any job- that's what we get paid for. Do you really think that a prostitute who rakes in over a thousand an hour is mistreated by her "pimp"? I suspect the Emperors Club treated its girls like royalty. I almost never agree with Dersh about anything, but I'm mostly in agreement here. I wouldn't have even cared if it wasn't for the hypocrisy of it all.
3.11.2008 11:20am
Dan Weber (www):
I first became aware of Eliot (one L) Spitzer's hypocrisy when he used his reputation as being "tough on Wall Street" to extort encourage protection money campaign contributions:
The person from Spitzer's office said, with a chuckle, that it wasn't a "regulatory matter," but that Spitzer wanted to chat. Later Spitzer asked for a contribution, about $25,000 each from Druckenmiller and his wife, to the "Spitzer 2006" committee for his likely campaign as a Democrat for New York governor. The call worked--campaign-finance records show that Druckenmiller, who typically supports Republicans, and his wife, Fiona, each contributed $25,000.
http://www.newsweek.com/id/54098

Spitzer's career should've ended right then and there. But because the people he was destroying (businessfolk) were unpopular at the time (just after Enron), no one gave a hoot. After all, they probably did something wrong anyway.

To find out that he was prosecuting prostitution rings while using one himself? That's just the cherry of arrogance on this giant hot-fudge hypocrisy sundae.

(Again, one "L" in his first name.)
3.11.2008 11:23am
An0n:
Ah, glorious schadenfreude.
3.11.2008 11:26am
Visitor Again:
For Dersh or anyone to say that prostitutes aren't victims shows a lack of humanity. He needs to get out more and find out how they are really treated. Yeah, they can make a lot of money, but they live a horrible life, and are used and manipulated both by the pimps and the johns.

Of course prostitutes can be and are victims, but of what? They are victims of abuse and exploitation, but not of the mere act of prostitution. Make the crime the abuse and exploitation, not prostitution. If prostitution were legal, there would be much less abuse and exploitation.

Law enforcement also argue that prostitutes and their pimps subject johns to theft, robbery, assaults and so on. But that's no reason to make the mere act of prostitution unlawful. Again, there would be much fewer theft, robbery and assault offenses associated with prostitution were it legal.
3.11.2008 11:37am
Dan Weber (www):
Are these suspicious financial transactions, by themselves, sufficient probable cause for a wire tap on Spitzer's phone? I sure hope more evidence that suspicious looking withdrawals and deposits is required to tap someone's phone.

I don't think that should be cause for a random Joe. But when the person in question is a powerful politician who has been given significant power by the populace, checking on suspicious financial transactions should be standard.

I'm a little concerned that the US Attorney's office might not have investigated had Spitzer had a (R) after his name, but that doesn't give me one more iota of pity towards Spitzer himself, a man who has never displayed pity when crushing others.
3.11.2008 11:40am
lurker-999 (mail):
Too bad it wasn't a male prostitute, that way he could still run for the US Senate from Idaho. .... Or, for that matter, it's too bad he didn't take the girl out and drown her afterwards: that way he could run for the US Senate from Massachusetts.
3.11.2008 11:42am
iowan (mail):
I am truely sorry for this but I have to ask. If I contact this same girl and want to meet her in a hotel room and bring along a camera and a consent form, and $4300, cant I just make a movie?
3.11.2008 11:45am
Cato (mail):
Someone from my law firm was in NY Supreme yesterday when the news broke. Apparently, judges were high-fiving each other. This was more than shaudenfrau (sp?), they really hated the guy.
3.11.2008 11:50am
hawkins:

I am truely sorry for this but I have to ask. If I contact this same girl and want to meet her in a hotel room and bring along a camera and a consent form, and $4300, cant I just make a movie?


Im not an expert, but I believe you could (as long as you have any necessary license).
3.11.2008 11:59am
therut:
He is NOT Richard Gere and this is NOT "Pretty Woman".
3.11.2008 12:04pm
Eric @ New York Personal Injury Law Blog (www):
Why would the bank report this unless it exceeded at least $10,000? All I see is that $4,300 number, but it seems that it could be much, much higher...

Eliot's Mess: Did The Payments Exceed $10,000?
3.11.2008 12:10pm
LAS:
In the words of a VC poster I admire...

"Everyone with the title that includes either the words affirmative action Attorney at Law or diversity Lawyer should be fired immediately. These people are leeches hipocrites and deserve no sympathy."
3.11.2008 12:14pm
33yearprof:
I am truely sorry for this but I have to ask. If I contact this same girl and want to meet her in a hotel room and bring along a camera and a consent form, and $4300, cant I just make a movie?


Yes. THAT'S protected by the First Amendment (but only if you make bona fide efforts to distribute it).
3.11.2008 12:14pm
just me:
In response to


"As an aside, I have tried to think of any service other than human sexual activity that may be lawfully given away but not lawfully sold."



This is a slight variation, but states routinely take this approach to unlicensed activity in professions that require licensing. If you don't have a license, you can give free medical advice or free massages or many types of services, but if you charge money, it's illegal unless you have a license. That differs from the prostitution example in that the license is totally unavailable for prostitution, but it's still a scenario in which you can give it away but not charge for it.
3.11.2008 12:23pm
wuzzagrunt (mail):
Dan Weber wrote:

I'm a little concerned that the US Attorney's office might not have investigated had Spitzer had a (R) after his name, but that doesn't give me one more iota of pity towards Spitzer himself, a man who has never displayed pity when crushing others.

Who investigated/prosecuted Duke Cunningham? [Connecticut Gov.] John Rowland?

There's a certain cosmic symmetry to the fact that Gov. Spitzer is being raked over the coals for allegedly commiting acts that are illegal (but shouldn't be), when he made is reputation, in large part, for raking people over the coals for things that aren't illegal (but should be).

PS: please don't point out where my vision of the Karmic wheel falls off the wagon. I'm enjoying the moment too much.

PPS: somebody should investigate Spitzer for kidnapping/unlawful imprisonment. His poor wife look like she was his hostage.
3.11.2008 12:29pm
Anderson (mail):
Spitzer himself, a man who has never displayed pity when crushing others

I really haven't followed Spitzer's career -- would someone please give me an example of someone meriting "pity" who was "crushed" by Spitzer?

If Spitzer broke the law, he should get what's coming to him. But I don't see why I should feel sorry for anyone he busted. Please explain?
3.11.2008 12:39pm
An0n:
"somebody should investigate Spitzer for kidnapping/unlawful imprisonment. His poor wife look like she was his hostage."

She looked a little catatonic at the press conference, but she'll wake up soon. And I expect that when she does, Eliot's life will get even worse. Hell hath no fury.
3.11.2008 12:40pm
An0n:
Anderson, here's a quick summary.
3.11.2008 12:42pm
HipposGoBerserk (mail):
"I am truely sorry for this but I have to ask. If I contact this same girl and want to meet her in a hotel room and bring along a camera and a consent form, and $4300, cant I just make a movie?


Yes. THAT'S protected by the First Amendment (but only if you make bona fide efforts to distribute it)."


Please educate me - why do you need to make an effort to distribute it? Art is still art even if privately held.

Even if you'd have to distribute, couldn't you make a form agreement where it would be agreed that the editing process would remove any identifying images. Splice all that together and you could market it safely. Besides, couldn't you keep a file of statements from the girls saying "we reviewed the rushes; didn't like them; deleted the scenes; set an appt to reshoot"? How hard is it to make a fact pattern that would allow you to survive the initial press reaction (no crime was committed) and have a real chance at having someone on the jury unwilling to convict for such a silly crime as high-end prostitution.
3.11.2008 12:46pm
Gaius Marius:
Elliott Spitzer's wife is going to get one hell of a diamond ring in the next few days. Anyone remember the rock Kobe Bryant's wife was sporting on her finger at the press conference where he addressed the allegations of rape?
3.11.2008 12:53pm
Aultimer:

Cornellian: It's interesting to think about how things would play out if in the past Spitzer had publicly refused to prosecute any prostitution related offenses, declaring them victimless crimes and a waste of prosecutorial resources.



Those are four words not in Spitzer's vocabulary. His whole schtick became unleashing vast government resources to investigate the judgments of business people and extort high nuisance value settlements that made him look like he was standing up for the little guy.
3.11.2008 1:00pm
Adam J:
Come on Aultimer, I mean the guy was a bit of a bully and occasionally overreaching as attorney general, but he also uncovered ALOT of fraud by companies.
3.11.2008 1:09pm
Temp Guest (mail):
Adam J. : Give one example where a jury convicted a Spitzer victim of any crime. By victim I mean any major Wall street figure that Spitzer hounded. Some of these did cost benefit analyses and agreed to plea bargains to save themselves money. There's no crediblevevidence they committed any crime or tort. Those that stood up to Spitzer inevitably won in court.
3.11.2008 1:13pm
Temp Guest (mail):
Adam J. : Give one example where a jury convicted a Spitzer victim of any crime. By victim I mean any major Wall street figure that Spitzer hounded. Some of these did cost benefit analyses and agreed to plea bargains to save themselves money. There's no crediblevevidence they committed any crime or tort. Those that stood up to Spitzer inevitably won in court.
3.11.2008 1:13pm
Anderson (mail):
An0n, thanks, but I'm underwhelmed.

(1) Spitzer enforced NY laws that the author dislikes.

(2) Analysts' sunny forecasts for now-busted tech companies, Spitzer's office discovered, were influenced by the client and investment-banking relationships. Sounds bustable to me.

(3) Whatever economists think about payola, it doesn't pass the smell test. You could probably find an economist to support abolishing tort law.

So, while I'm happy to see Spitzer go down (ahem) for his wrongs, I am not seeing how anyone he went after didn't deserve it.
3.11.2008 1:17pm
Temp Guest (mail):
Anderson: I repeat the challenge I made to Adam J.
3.11.2008 1:23pm
M. Simon (mail) (www):
Why do some "ladies" get paid thousands an hour for sex services? Supply and demand.

It is not just about sex. It is also a social occasion. You might actually want to have a conversation with the lady between "jumps".

Now how many upper middle class well educated good looking ladies do you find who are willing to have sex for money? Well, you find more of them if you are willing to pay more money.

Some one who can do a discounted cash flow on a wasting asset is going to be a rarer find than a lady who can barely balance her checkbook.
3.11.2008 1:30pm
Adam J:
Temp Guest- ah yes, multi-billion dollar companies settled and admitted guilt because of no credible evidence. You obviously don't know anything about cost-benefit analysis if you think that's the case. One doesn't save money by settling "nuisance suits"- which is why nuisance suits almost never settle- companies don't want to look like easy targets. Also, in most cases, Spitzer had caught the companies red-handed by subpoening emails thru the Martin Act which had admissions of guilt.

Also, if you are so concerned about cases not going before a jury, you should be far far more concerned with ordinary criminal cases, where 95% of suspects settle before trial- perhaps because of cost benefit analysis?
3.11.2008 1:36pm
Cornellian (mail):
Someone from my law firm was in NY Supreme yesterday when the news broke. Apparently, judges were high-fiving each other. This was more than shaudenfrau (sp?), they really hated the guy.

No one likes a puritanical, holier-than-thou bully. You'd think other politicians would take that lesson to heart.
3.11.2008 2:17pm
Oren:
As Richard Aubrey points out, the law requires that financial institutions proactively look for and report suspicious financial transactions.
Your reading of 12CFR21 is beyond belief to me. Then again, I'm an idiot.
3.11.2008 2:21pm
happylee:
djh5 raises an interesting question: was this a "routine" bust as a result of some SAR by a bank...or did someone put a "hit" out on Spitzer. In the end, the guy got what he deserved, so it doesn't matter, but the story would be fascinating...."Sammy, this is Bruno, are we on" "yes" "did our little friend in DC set things up?" "yes" "it will look clean, right?" "yes"

Somewhere in DC, clients 1-8 and 10 are voting in favor of generous funding increases for FBI and other agencies...
3.11.2008 2:30pm
Brad Ford (mail):
Sequence:
1) Torment banks;
2) Use your bank for shady transactions;
3) Bank finds shady transactions and reports them. Having been tormented, it seems to me the banks might have been itching for a chance at payback.
3.11.2008 2:33pm
titus32:
ah yes, multi-billion dollar companies settled and admitted guilt because of no credible evidence. You obviously don't know anything about cost-benefit analysis if you think that's the case. One doesn't save money by settling "nuisance suits"- which is why nuisance suits almost never settle- companies don't want to look like easy targets.

I don't know anything about the merits of Spitzer's suits against the investment banks, but this statement is just wrong--and aggravating in that it pretends to know how things actually work. As for nuisance suits, companies often settle just to avoid the huge cost of discovery or other litigation costs. In cases with little evidence but potentially huge liability, companies often settle because they are risk averse and if they were found guilty (even though there is a small chance of that) they would be financially ruined.
3.11.2008 2:41pm
autolykos:
Adam J - This...


One doesn't save money by settling "nuisance suits"- which is why nuisance suits almost never settle- companies don't want to look like easy targets.


simply isn't a true statement. Please come back to us after you've graduated law school and have a little bit of experience in the real world.
3.11.2008 2:42pm
Adam J:
Titus32- Your statement is the one that is wrong. Companies are repeat players when it comes to litigation &the risk of nuisance suits. If companies only faced the risk of a nuisance suit once, they would indeed have an incentive to settle. However they don't risk facing one nuisance suit, so they know they must fight them in order to deter future nuisance suits. Every company knows its best to fight nuisance suits, otherwise they risk looking like a target. Companies frequently, FREQUENTLY, spend far more in litigation then they would have spent settling, just to acquire this reputation. Companies just don't make those settlements unless they know they have a loser... and even then they frequently fight anyways.
3.11.2008 2:48pm
SeaDrive:

It's not unlike civil forfeiture in that respect. Just having an entirely arbitrary quantity of cash in one's possession (the amount is whatever some cop says is suspicious) can result in seizure, and you must become a plaintiff and affirmatively prove you didn't obtain the cash from illegal sources.


It's amazing what Americans put up with for the convenience of law enforcement. Our forefathers never should have stood still for license plates on cars. If you move your day's pills into a different container, you're a druggie. If you carry a pry bar onto your neighbor's property, it's a burglary tool. Etc, etc.

I'm sure there are situations where if you fool a particularly dim-witted law enforcement officer, it's your fault, and you could be in trouble.
3.11.2008 2:52pm
Adam J:
autolykos- pathetic and incorrect ad hominem attack... please come back when you want to actually make an argument that explains why I am wrong.
3.11.2008 2:58pm
r78:
Given the Bush administrations willingness to use US Attorneys for partisan political purposes, I would not be surprised in the slightest if Spitzer was targeted for investigation and the "structuring" was just a ruse to get into his financial affairs.
3.11.2008 2:58pm
Elsy (mail) (www):
are we really surprised??

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3.11.2008 3:00pm
Thorley Winston (mail) (www):
I don't know anything about the merits of Spitzer's suits against the investment banks, but this statement is just wrong--and aggravating in that it pretends to know how things actually work. As for nuisance suits, companies often settle just to avoid the huge cost of discovery or other litigation costs. In cases with little evidence but potentially huge liability, companies often settle because they are risk averse and if they were found guilty (even though there is a small chance of that) they would be financially ruined.


True and if I would add a couple of additional points:

1) Oftentimes (depending on the industry and what sort of policy coverage they have) companies will take out an insurance policy to cover their liability costs and the insurance carrier will influence the decision whether to settle or fight a suit.

2) State Attorneys Generals have become the springboard for the political ambition of a lot of would-be governors and Senators particularly in a fawning media culture that loves stories about the "crusading public servant protecting the common person from the evil corporate special interests." A company just doesn't have to consider the costs of litigation but the damage to their reputation by an AG that wants to climb the political ladder with press conferences publicly trashing their good name.

3) Fighting a nuisance suit by a private party is different than fighting one by the government. I'm not sure what the extent of the powers of the NYAG but in MN our AG is also is in charge of regulating nonprofit industries (i.e. pretty much the entire health care sector except for drug and device companies) and hasn't been above threatening to shut down a company or hospital while he or she is "investigating" them unless they cooperate and like Spitzer has used the threat of shutting down an entity to get them to agree to a "settlement" that amounts to little more than the AG making policy that the legislature rejected (similar to Spitzer's frivolous lawsuits against the firearms industry).
3.11.2008 3:05pm
Milhouse (www):
AdamJ, they couldn't fight the threatened indictments, however bogus. An indictment alone would probably ruin a financial company, and it certainly couldn't risk even the possibility of conviction. Remember Arthur Andersen? Its conviction on a made-up crime was overturned, but that didn't do it any good. It had already been killed dead. The prosecutors who destroyed that company ought to be ruined and thrown into homeless shelters, but they still have their jobs. And Spitzer's victims knew that was the fate they faced if they defied him. He had bottomless pockets with which to pursue them, and the ruthlessness to do so, unless they paid their blackmail. So they paid.
3.11.2008 3:06pm
Milhouse (www):

autolykos- pathetic and incorrect ad hominem attack... please come back when you want to actually make an argument that explains why I am wrong.

He's already explained why you're wrong. The statement you made — that nuisance suits almost never settle — simply isn't true.
3.11.2008 3:10pm
Toby:
Some decades ago, the local branch of a bank annoyed my brother. A lot. He was going to withdraw all his funds, and place them in another bank. He knew that would not even be noticed, and he wanted the bank to understand that the behavior of the local manager was bad.

So he asked for his withdrawal in cash, figuring that getting the cash would cause som attention.

Boy did it. Just not from the bank.
3.11.2008 3:10pm
Adam J:
Thorley- I agree, the lawsuit against the firearms industry was a frivolous one... remind me again, what terms did the industry settle too? Ohh yeah... none. Spitzer dropped the lawsuit, in fact he dropped several lawsuits when he overreached- strange that they weren't in a rush to settle these nuisance suits while the other suspects were.
3.11.2008 3:11pm
titus32:
Your statement is the one that is wrong.

What is your profession Adam J? Do you have any real world experience? I can't believe anyone who practices commercial litigation would believe what you believe.
3.11.2008 3:16pm
Temp Guest (mail):
Adam J.: There is an extensive literature on the game theory behind the settling of nuisance suits and a large amount of empirical research testing the theory. Do a little reading in the area and you will find that your assertions are wrong. It is frequently the case that defendants who would most likely prevail over plaintiffs in such areas as, e.g., anti-trust, personal liability, etc., settle out of court because it saves money. Large corporations are more likely to adopt this strategy, since they are less likely to be financially broken by it. That is why small businesses and moderate income individuals are unlikely to be targeted by "ambulance chasers" like Mr. Spitzer. You are just plain wrong in your assertion. A bit of searching on the Internet should convince you of this.

Now that that is settled, I won't respond further unless you meet my original challenge.
3.11.2008 3:17pm
Dan Weber (www):
Please don't defend Arthur Andersen in your rush to pillory Spitzer. They can easily both be assholes. (Same goes for Blodget. He deserved everything he got, which is unfortunate because Spitzer used that as a springboard.)

AA was dead regardless of what prosecutors did. They sold one thing: legitimacy. They lost that with Enron. Clients were fleeing from them long before any prosecutor got around to them.


Spitzer is what Mike Nifong would've been if Nifong came from old money.
3.11.2008 3:19pm
Aultimer:
Adam J. - I think you must have a different definition of "nuisance suit" than the rest of us. The context is unusual, so I'll define it as "a prima facie valid, but likely to lose on the merits case advanced to force the defendant to settle to the plaintiff's advantage." The idea is that the defendant would rather settle than win, based on the costs.

Private nuisance suits are usually about money - Spitzer's were more about power and image.
3.11.2008 3:21pm
Richard Aubrey (mail):
Brings up a point I didn't think about the first time.
My father, getting ready to buy a car, was told he needed a cashier's check.
The bank wouldn't give him one until the next day for some made-up reason. Probably didn't want to lose a day's interest.
So my father demanded cash instanter.
He got the check, with some glowering from the manager.
Now, if he'd been given the cash, $10k+ ?
3.11.2008 3:26pm
Adam J:
Milhouse - Saying you are wrong is not an explanation. I agree that indictments cause alot of unintended consequences. However I find it baffling that you think Arthur Anderson shouldn't have faced any consequences. That's just giving a blank check for companies to continue to commit wrongdoing. Anyways, I don't know of any Spitzers cases where companies were at risk to loss a accounting license (what did in AA) or other consequence as a result of an indictment- do you? Do you really think the Banks weren't guilty? Spitzer released several smoking guns publicly (a move I disagreed with since it tainted the jury pool).
3.11.2008 3:26pm
Adam J:
Temp Guest- indeed there is extensive literature, most of it based on the flawed assumption that nuisance suits are a single event game for large corporations. Large corporations face the risk of a plethora of nuisance suits, especially if they have a tendency to settle, which is obviously what the plaintiff wants.

Let's put it this way, suppose you an attorney with a prediliction for bringing nuisance suits- you have the resources to bring only one suit- one against company A, who has a prediliction to settle after wisely assessing its costs versus benefits. The second is against company B, who has a bulldog reputation for litigating every lawsuit endlessly with its 5000 attorney outside counsel lawfirm capable of putting off the lawsuit endlessly. Which lawsuit does the attorney bring? The "irrational" company B gets a pass, while company A suddenly finds itself having to fight another nuisance lawsuit.

Why do you think big companies like big firms for litigation? Gee... could it be to scare potential plaintiffs off by the boundless resources that could be brought to bear against their potential lawsuit?
3.11.2008 3:37pm
autolykos:
Adam - I don't hear you answering my question. I'll admit that it goes to your qualifications, but I find it absolutely impossible to believe that anyone with any appreciable experience in litigation or securities work would make such a statement. That's it.

If you want an example of a company that settles a suit for the nuisance value, just read any large manufacturing company's 10-K. There are a number of suits (such as brake pad-asbestos litigation) that companies decide to settle for strategic purposes even if they think they'll ultimately prevail. There are countless other examples in the fields of securities litigation, commercial litigation and products liability that any person with experience can point you to.

Thorley- I agree, the lawsuit against the firearms industry was a frivolous one... remind me again, what terms did the industry settle too? Ohh yeah... none.


As for this - you're providing an example of the converse of the argument, which any college kid studying for the LSAT will tell you is invalid.
3.11.2008 3:40pm
Blue Sun (mail):
There are still several unanswered questions about this case. First, was undue attention being paid to Spitzer and his finances by the IRS or anybody else for political reasons? Not to say he was or was not in the wrong - only that he may have been in somebody's gunsights (so to speak) because he is a major player in a presidential candidate's campaign - a candidate of the party hoping to dethrone the current administration.

Second, I'm interested that such a wealth of detail about Spitzer leaked out so quickly. It seems to me that somebody wanted this story out and wanted it out quickly and in as much detail as possible. It is quite unusual, to say the least. Was that, too, politically motivated?

As to the Mann Act, it seems much more likely that the strongest case can be made against the madam or manager of the escort service. In addition, it would have to be proven that the prostitution element was premeditated - most escort services have, I believe, a disclaimer that they are supplying escort services only, and that what transpires between the escort and the client is a private matter. Everybody knows this is just a fig leaf, but is it enough of one to give him a defense?
3.11.2008 3:41pm
Christopher Cooke (mail):
As a liberal Democrat, I say good riddance to Mr. Spitzer's political career. And, I say that even though some of his AG work was timely and well brought. My problems with him are

1) he was a bully and a prosecutor, who holds so much power, of all people should not be a bully. A prosecutor doesn't have to tell people "I can ruin your life" or "I can destroy you" and he or she never should. A prosecutor should just do his or her job of investigating and prosecuting crimes, if the evidence supports such prosecutions.

2) he took actions to aggrandize himself, at the expense of what should be a prosecutor's primary ethic: to ensure that justice is served. Justice, in my view, is not served by leaking confidential investigative information to the press, that harm people's reputations. If you have case, bring it in court. Don't leak stuff to the press to grab headlines. Just indict/file suit, etc. With Spitzer, it was all about the press, to advance his career, and not about justice. He is Guiliani, but without Rudy's charm.

A fairly recent article in Vanity Fair, in which Spitzer is depicted as screaming obscenity filled rages at others ("I will rip your f--ing throat out, I will destroy you) with whom he had political disagreements confirms for me that he is an egomaniacal bully. As I said, good riddance.

By the way, I think he is toast on the Mann Act charge, unless there is some constitutional challenge to the statute. Ditto on the illegal structuring charge. He should have just used PayPal, without the shell company shenanigans.
3.11.2008 3:52pm
Gaius Marius:
"Maya" and "Renee" look pretty hot on the website in question. I can see why Client No. 9 aka Governor Elliott Spitzer would go to such lengths to make personal arrangements for the transport of "Kristen" across state lines to Washington DC for some "personal consulting" on the night before Valentine's Day.
3.11.2008 3:55pm
Kazinski:
Anderson,
If that left you underwhelmed how about using state resources to get manufacture dirt on a political rival.
3.11.2008 3:57pm
Adam J:
autolykos- You didn't have a question. I am a practicing litigation attorney however. Regarding the firarm lawsuit, Thorley was the one bringing up something clearly irrelevant- which a lawsuit by Spitzer which was in fact dropped is, so I'm not sure why you're attempting to give me an LSAT pointer. Do you honestly believe a 10-K is an accurate measure of the merit of lawsuits- that's like hearing only one advocates side. Sure there are weak lawsuits that are strategically settled, but I've only really seen that to happen when the "victims" seem particularly sympathetic, creating additional risks of bad p.r.
3.11.2008 4:01pm
Dan Weber (www):
Christopher Cooke, a problem with Paypal is that PP was yet another company that Spitzer tried to harangue. They settled for some pittance and Spitzer got his headlines.

I'm sure they would've loved to turn over evidence to the state.
3.11.2008 4:05pm
Kevin P. (mail):

Christopher Cooke:
By the way, I think he is toast on the Mann Act charge, unless there is some constitutional challenge to the statute.


The Mann Act does seem to fit Spitzer's conduct, doesn't it? It would be particularly fitting that an obscure statute would be used to get Spitzer, the master of using obscure statutes to get other people.
3.11.2008 4:05pm
Kazinski:
Blue Sun:
First, was undue attention being paid to Spitzer and his finances by the IRS or anybody else for political reasons?

When a political figure shows up in a report about potentially shady financial transactions, undue attention should be paid. Whether it is Spitzer or Duke Cunningham, public officials are repositories of the public trust and if their are questions they should be answered if possible.

Second, I'm interested that such a wealth of detail about Spitzer leaked out so quickly.

The story didn't break until Spitzer told his staff.

As to the Mann Act, it seems much more likely that the strongest case can be made against the madam or manager of the escort service. In addition, it would have to be proven that the prostitution element was premeditated - most escort services have, I believe, a disclaimer that they are supplying escort services only, and that what transpires between the escort and the client is a private matter. Everybody knows this is just a fig leaf, but is it enough of one to give him a defense?

No. Obviously he was a repeat customer, first time it may have something that just came up (no pun intended), but even that doesn't explain why he made reservations in a hotel rather than a restaurant or theater, if she was just an escort.
3.11.2008 4:17pm
ChrisIowa (mail):
Not mentioned so far is that the state police are investigating how Spitzer slipped security. So was security there to protect Spitzer from the public, or the public from Spitzer?
3.11.2008 4:17pm
Kevin P. (mail):
ChrisIowa, obviously it was to protect the hooker from Spitzer!
3.11.2008 4:27pm
Liberty Exterminated:

Utterly Wrong ! (what a poster wrote):

"So if I want to buy a legal luxury from someone for ten thousand dollars the IRS will necessarily find out even if I'm not doing anything wrong or taxable?"
"I think they'll only find out if you're doing something squirrelly with the financing. If you just write a check, nobody's going to report anything."


The degree of government intrusiveness (owning to the Patriot Act, and other subsequent acts) is so pervasive, that even fans of these acts have no idea just how all-encompassing the intrusions are.

The operative device is called an "SAR" (suspicious activity report), which the financial institution (VERY broadly defined, example: even a diner can qualify)
which they are forbidden to reveal to you has been filed.
EXAMPLE:
If you buy two money orders at 500 ea., say to buy your wife earrings for her b-day (&you have to give deposit ahead, then pick up later), and dont want it to show up on your jointly accessible accounts prior to her b-day,

It WILL be reported !

You will NOT know about it - and it is kept in a data file, along with other "suspicious" activity.
You wont be called in, but subsequent similar 'innocuous' activity will trigger an examination of OTHER, unrelated transactions - the DOJ manual explicitly makes it clear, that these are in fact perfect vehicles for 'Fishing' expeditions, and agents are exhorted to perform same.
"CI" criminal investigators, are to be brought in where a wider array is believed to exist.
THIS IS EXACTLY WHAT HAPPENED TO SPITZER.

I have ZERO sympathy for this jerk of a human being - he deserves everything he is going to get. But he actually did NOTHING ILLEGAL !
Morals, ethics, matrimonial vows, - all are external issues to what is spiralling vortex is government supremacy &impunity over the individual.
3.11.2008 4:28pm
autolykos:

Regarding the firarm lawsuit, Thorley was the one bringing up something clearly irrelevant- which a lawsuit by Spitzer which was in fact dropped is, so I'm not sure why you're attempting to give me an LSAT pointer.


An LSAT pointer? It's basic logic. I don't care who brought up the lawsuit.


Do you honestly believe a 10-K is an accurate measure of the merit of lawsuits- that's like hearing only one advocates side. Sure there are weak lawsuits that are strategically settled, but I've only really seen that to happen when the "victims" seem particularly sympathetic, creating additional risks of bad p.r.


If you think the 10-K disclosure is false or omits information necessary to make the information presented not materially misleading, I suggest you file a lawsuit, especially since you're such a big, bad doc. reviewer, I mean litigator.
3.11.2008 4:38pm
Adam J:
Liberty Exterminated- But, the guy is an elected official, and clearly his privacy protections should be something less then the average blokes. We have an interest in transparancy for elected officials- keeps them from putting their fingers in too many pies (I mean bribes- not what Spitz was doing by the way) and helps us determine if we want to keep electing them.
3.11.2008 4:47pm
Adam J:
autolykos- so Thorley is okay to bring up something irrelevant, but I'm ignoring basic logic when I mention its irrelevance... You're advocating a little too hard when you're not willing to concede anything there champ.

Also- thanks for more ad-hominem, it really strengthens your argument. If I had to guess you are a mid-junior big firm lawyer, indoctrined to think that your big corporate clients are always rights, but I'd rather try to make my argument on facts, something you avoid.

I also find it baffling that you don't think a 10-k, a document written by the Defendant, to help inform investors (okay really only to satisfy 1934 act requirements- but written with the knowledge that sophisticated investors will be reading closely), won't be extremely optimistic in its assessment of the defenses merits. All the company has to do is couch it in some cautionary language and their basically immune from the lawsuit you claim I should be bringing.
3.11.2008 4:58pm
Client No, 10 (mail) (www):
Yesterday in Dershowitz' "No big deal" speech, I heard something like "If every politician who did something like this had to resign, we'd have nobody in office." It seems to me that if this happened to every politician who violated these kinds of laws, the laws would get changed.

M. Simon wrote:
It is not just about sex. It is also a social occasion. You might actually want to have a conversation with the lady between "jumps".

Now how many upper middle class well educated good looking ladies do you find who are willing to have sex for money? Well, you find more of them if you are willing to pay more money.


They can be found on Craigslist (and that's one of the lower rungs for on-line escorts) at the $200 to $300/hour range. These are women who can carry on a conversation quite well; many are attractive, well-educated, well-groomed, pleasant, and discreet.

I'm enjoying the schadenfreude as well. The police in my city don't have enough crimes with unwilling first-order victims[*] (like car theft, GPS theft, bicycle theft, the occasional murder) to keep busy, so they are setting up stings and surveillances at local hotels. I understand the issues with streetwalkers, same as any other vendor, but this is getting into the range of the little old lady with a stepladder and binoculars complaining about a neighbor exposing himself.

[*]Someone (here?) disputed Dershowitz' claim that prostitution is victimless, and mentioned the wife of a john, but no man is an island - any action we take can have a negative externality, but it's hard to call anyone negatively impacted a victim.
3.11.2008 5:00pm
loki on the run (mail):
I guess he's probably wondering what the difference is between him and Kilpatrick in Detroit.

Oh, yeah, he's not black.
3.11.2008 5:08pm
Christopher Cooke (mail):
Here is the article in Vanity Fair about Spitzer. Kind of ironic that he talks about a "new day" dawning on the Empire State and that he is a "steam roller" about to roll over you.
3.11.2008 5:12pm
Thorley Winston (mail) (www):
Thorley- I agree, the lawsuit against the firearms industry was a frivolous one... remind me again, what terms did the industry settle too? Ohh yeah... none. Spitzer dropped the lawsuit,


Not quite, both Colt and Smith &Wesson entered into settlement agreements and it was after some of the smaller companies refused to enter into a tying agreement that Spitzer filed his suit on the grounds of a "public nuisance" theory. The judgment was overturned on appeal (like pretty much every one of the few times that the Plaintiffs won at trial), the State's supreme court (I forget that NY calls their highest State court) unanimously rejected his "public nuisance" theory and the lower court's judgment vacated and the suit dismissed. Dropping it at that point was pretty much a forgone conclusion.
3.11.2008 5:34pm
Richard Aubrey (mail):
loki
To be fair, Kilpatrick is a bumbling oaf who didn't make enemies deliberately the way Spitzer did. Except for the cops wrongfully discharged, and, possibly the family of the dead dancer (eighteen shots, didn't hit the other person in the car, police and drug dealer favorite caliber), the city out $9mill for said wrongful discharge, the city council and at least one judge due to lies and perjury.
Just the normal stuff.
Not like Spitzer.
3.11.2008 5:35pm
Harry Eagar (mail):
Do none of you guys own securities or you just don't care that Wall St. money managers skimmed off your assets in backscratchng deals?

I understand (I think) that the backscratching had not been considered illegal, although you would think anyone with better morals than an alley cat would have thought it reprehensible; and I think I also understand that this was a situation that no legislature (at least, none elected in N.Y.) was ever going to fix.

Abuse of power is abuse of power, but shouldn't every shareholder in the country at least kick in $5 for Spitzer's defense fund?
3.11.2008 5:58pm
Adam J:
Fair enough Thorley- I didn't realize the lawsuit got carried that far. However, I never said I didn't think Spitzer was a bully who frequently brought poor lawsuits (I think he did)- only that people shouldn't be so quick to question the lawsuits that were settled. My point was simply that companies are frequently willing to fight nuisance suits, as the gun industry did in this case- I suspect they realized if they rolled over for Spitz they would have had to roll over for every other attorney general- by making a stand and fighting an expensive lawsuit they saved themselves from making having to fight/settle other expensive lawsuits with other attorney generals. Thus, the case can make a good illustration of the benefits of fighting nuisance suits.
3.11.2008 6:00pm
Kevin P. (mail):
Harry Eagar:

... but shouldn't every shareholder in the country at least kick in $5 for Spitzer's defense fund?


I'm a shareholder and I'd be willing to kick Spitzer in the nuts for $5...
3.11.2008 6:08pm
Serendipity:
Maybe this could lead to one of the bloggers discussing a liberterian perspective on the illegality of prostitution (Hint, Hint, Cough, Cough)
3.11.2008 6:10pm
Adam J:
Serendipity- considering the gross hypocrisy of suspect in the case at hand, I'd rather not right now.
3.11.2008 6:21pm
Anderson (mail):
These are women who can carry on a conversation quite well; many are attractive, well-educated, well-groomed, pleasant, and discreet.

I'll take your word for it.
3.11.2008 6:38pm
endofthread:
So what does 4 grand get you that 3 grand won't? Especially as he is paying for the room, taxi, train tix, mini-bar, etc...

Surely an experienced litigator could have negotiated better terms than this. Especially if he had done the same 7-10 previous times. He makes all lawyers look bad now :)

A $40,000 a yr sex habit? Impressive. He must have an active imagination.
3.11.2008 6:41pm
rarango (mail):
Esquires, professors, and JDs all: I enjoy the fine legal points raised in this blog; but speaking as a member of the joe six pack society--this is a case about an asshole AG of NY who prosecuted a whole bunch of people for exactly the same crimes that he himself has supported--With ANY luck he will have his sorry ass in the same prison as some of his victims who, in turn, will render their attentions on him. Good riddance to a sorry SOB.
3.11.2008 6:50pm
UW2L:
@recovering former law student: Thanks for the recommendation! It is tricky, this stuff, and I appreciate outside resources to help me understand it.

@George Weiss: Well, there are only a couple UWs in the United States, and only one is on the quarter system, videlicet: Washington. We start in late September and get out in early/mid-June. This screws us over for bar prep and summer jobs in many delightful ways, but the system has its benefits as well. Taking final exams three times a year rather than two is not among them.
3.11.2008 6:56pm
Dan Weber (www):
A $40,000 a yr sex habit? Impressive.

He just has to get tasered once a year in Utah.
3.11.2008 7:29pm
wuzzagrunt (mail):
So...I keep hearing talking heads and insiders commenting that Spitzer hasn't stepped down because he may be using the prospect of his resignation as a "bargaining chip" in his negotiations with federal prosecutors. According to these folks (who I have no reason to believe know anything of value) are suggesting that Spitzer may be holding his resignation out the feds in order to cut a deal for immunity, or a lighter sentence.

Q: why would they care? Wouldn't they just invite him to try to run his state from a federal prison? What interest would the fed prosecutor have for offering concessions in return for what Spitzer will likely have to give up anyway--especially with NY legislators issuing ultimatums about impeachment?
3.11.2008 8:16pm
Adam J:
wuzzagrunt - two reasons that I can think of off hand; 1) the feds have a certain interest in ensuring that the state of NY is run in a smooth fashion(i.e. not from a jail-cell) and 2) I don't think johns are typically prosecuted, occasionally shamed with public exposure, but not prosecuted- and making an exception would seem quite mean-spirited here.
3.11.2008 8:42pm
jmw:
Forgive me if this has been brought up previously, but one angle that hasnt been explored is the reason for Mr. Spitzer being in DC. The press indicates that he was there in order to testify before Congress the next day. If so, consider the capacity he was traveling in. If he was traveling on official business, that means taxpayers footed the hotel bill as well as other incidental expenses. Query, what would be the legal consequences - if any?
3.11.2008 9:31pm
David Sucher (mail) (www):
The fact that Spitzer would (I assume) have been extremely knowledgeable about bank, IRS etc procedures is the reason why we should not assume that we know sufficient facts to opine. It is not credible that a very smart guy would have been ignorant of (literally) the procedures of his own business: catching white-collar crooks. Something fishy here.
3.11.2008 10:06pm
Bruce Hayden (mail) (www):
I think that David Sucher has a good point. Spitzer must have known a lot more about bank, IRS, etc. procedures than most of us do, and, of course, about the Mann Act, due to his previous role as AG, and esp. given his high profile cases. Either there is a lot we don't know, or he is the type who loves living dangerously. Really dangerously.
3.11.2008 10:33pm
Dave N (mail):
David Sucher,

As Attorney General, Spitzer was prosecuting various entities and individuals on state law grounds. As a result, he would have little reason to explore the language of the federal statutes--he hardly was planning to share his glory with the United States Attorney for the Southern District of New York.
3.11.2008 11:11pm
John Herbison (mail):
I have (unsuccessfully) litigated a constitutional challenge to a state prostitution statute based upon Lawrence v. Texas, among other authorities. The District Attorney General, the Attorney General of Tennessee, the trial judge and the Court of Criminal Appeals of Tennessee each assiduously avoided responding to the Lawrence issue.

Indeed, the Court of Criminal Appeals issued an opinion, State v. Paul Friedman, 2005 Tenn. Crim. App. LEXIS 574 (June 8, 2005), that nowhere even mentioned Lawrence v. Texas. Instead, the Court opined:

"There is unquestionably a control in the states over the morals of their citizens, and, it may be admitted, it extends to making prostitution a crime." Hoke v. United States, 227 U.S. 308, 321, 33 S.Ct. 281, 57 L.Ed. 523 (1913). While it is true that consenting adults have a right to privacy that extends to entitle them, in certain circumstances, to engage in sexual activity in the privacy of their home, see Campbell[ v. Sundquist], 926 S.W.2d [250,] 262, [(Tenn.App. 1996),] there is no such entitlement to do so in a public place.


I suppose that while buggery and fisting are constitutionally protected conduct, more conventional forms of sex, when tainted by the exchange of money, is not. If I am reading the majority opinion in Lawrence correctly, the foremost significance of that decision is that mere moral objection to adults' consensual practice of a sexual act behind closed doors, standing alone, does not even satisfy the rational basis test. (Justice Scoldlia's fulminating in dissent about the Court "taking sides in the culture war" supports such a reading of the majority opinion.)

The human sexual drive is stong enough that men were once willing to pay to stick it in even a hag like the late Andrea Dworkin. Apart from the moral queasiness prostitution arouses in the kind of folks who fret about what Tinky-Winky does with the genitalia that it doesn't have, what is the governmental interest in criminalizing commercial, consensual sexual acts, performed by adults behind closed doors?
3.11.2008 11:55pm
David Sucher (mail) (www):
Dave N.
Rumor is that Spitzer himself was behind or actively favored some of the specific procedures required of banks i.e. in reporting patterns of money transfers etc etc.
If that is true, then he must have known that his method of paying the prostitutes would not cover his tracks.
3.12.2008 12:23am
Christopher Cooke (mail):
David S: Spitzer did not influence the passage of the CTR/SAR procedures; they have been a part of federal law for many years (well before he became NY's AG).
3.12.2008 2:24am
Dave N (mail):
David Sucher,

I respectfully disagree. I have been a prosecutor my entire career at the state level. On an intellectual level I know that there are many federal laws with similar names and elements to state crimes--but I do not dwell much deeper than that in deciding what state crimes to charge someone with committing.

The only time I have had to wrestle the distinction between state and its federal counterpart is in habeas corpus litigation--where knowledge of federal law is necessary in state court and more signficantly, knowledge of state law is necessary in federal court.

However, I do not think knowledge of federal security law or IRS procedures and regulations would be necessary to prosecute under NY's Martin Act.
3.12.2008 2:30am
Mac (mail):
Harry Eagar:


Do none of you guys own securities or you just don't care that Wall St. money managers skimmed off your assets in backscratchng deals?

Harry,

I think you are forgetting the part about being safe from prosecution if you ponied up the money he wanted you to contribute to his campaign fund. Somehow, it doesn't make me feel good to know that the AG is only going after people he can't coerce into giving him money, or at least can be left alone, if they give him money. It seems that no money and he would find something on you. Enough money and you could be the biggest crook in town and you're home free. Not my idea of how government should be run.
3.12.2008 7:52pm
Mac (mail):
Christopher Cooke,

Do you remember when banks had to start reporting? I know it was well before the Patriot Act. It seems to me that it was to catch the Drug lords. I'm not sure, though? Anyone?
3.12.2008 7:54pm
Rich Rostrom (mail):
William Lerach made a seven-figure-fortune out of nuisance lawsuits: "shareholder" class actions.
3.12.2008 11:02pm