Monday, March 10, 2008
Spitzer "casts himself not just as an enforcer of the law per se, but also as an enforcer of a broader social compact"
The quote in the title of this post comes from a 2005 article in the New York Times Sunday Magazine on "Spitzerism" as a law enforcement philosophy. It was written by The New Republic's Noam Scheiber. In response, I posted here to agree with Scheiber that Eliot Spitzer, a rising-star Democrat who was at that time New York State's showboat Attorney General, had certainly never acted as though he was constrained by mere "law per se." But I ridiculed Scheiber's contention that such "qualities" made Spitzer an attractive candidate for national office on a Democratic ticket. I pretty much want my prosecutors and attorneys general to stick to "law per se." It seemed to me that Scheiber's heroic notion of "Spitzerism" was pretty much a code word for "unscrupulous and overambitious prosecutor running amok (mostly against Republican targets)."
Today it was announced, however, that now-New York State Governor Eliot Spitzer, whose administration has already been tarnished by assorted scandals, was involved with (at least as a client of) a now-federally indicted international prostitution ring. His involvement with the ring was apparently sufficient that he had a credit balance on his account with them — the precise size, and the offset of which against new charges, he's apparently quoted (as "Client-9") arguing about by phone with the ring operators in an affidavit attached to the just-unsealed federal criminal complaint. It thus seems likely that Spitzer himself has, at a minimum, violated the "law per se" of New York and/or Washington, D.C. against contracting for sex from prostitutes, although he has not yet himself been charged with any crime.
There's also a suggestion that he paid for a prostitute's train ticket to travel from New York to Washington for their tryst. So in addition to the underlying offense of violating state anti-prostitution laws, it's not inconceivable that Spitzer himself could be charged, either as a principal or co-conspirator, with violating the federal Mann Act and the federal wire fraud statute. As a former state attorney general and, before that, a prosecutor on the staff of Manhattan District Attorney Robert M. Morgenthau specializing in organized crime rings, he could not have been unaware of the likelihood of connections between an international prostitution ring like this one and other, more sinister organized crime operations. He could not have been unaware of the possibility that he might be subjected to blackmail attempts. The Governor of New York simply can't expect to be an "anonymous john."
Were I Czar, I would decriminalize the exchange of money for sexual favors among genuinely consenting adults. But I'm not, and the legislative bodies that make the laws applicable to Spitzer's conduct haven't decriminalized that conduct either. His transgressions occurred while he was an elected public official — indeed, the chief executive branch official of the State of New York, who had sworn an oath upon taking office to uphold and enforce the laws of that state.
He has not yet resigned; his very short afternoon news conference was just a vague announcement of unspecified failings and an apology, after which he took no questions. I don't interpret that as necessarily evidencing an intention to hunker down, Larry Craig-style, to try to ride out the storm. Rather, I note that unlike most vice cases (which typically are brought by state prosecutors in state courts solely under state law), this is a federal criminal case, in which Spitzer is at least a potential witness with respect to charges against the existing defendants. Perhaps the interstate nature of the ring explains the federal involvement by itself, but I wonder whether there's way more to this story — and specifically, to Spitzer's involvement in it — than his simply being an "ordinary client" of the ring. So far, the feds have spared him the indignity of a perp walk in cuffs, but that doesn't mean one's not coming. The New York Sun reported that these particular federal prosecutors are from a unit "specializing in government corruption cases". I speculate — and, in fairness, I emphasize that this is nothing more than my uninformed speculation, just a gut hunch — that there's another shoe (or boot or anvil) that we haven't heard drop yet.
Whether it's on the potential federal charges mentioned above, or something much less savory and much more culpable than money for sex across state lines, my guess is that Spitzer's lawyers are already in plea negotiations with the federal prosecutors, and that one component of a plea deal under discussion would include his resignation. Resigning, in other words, may be inevitable, but if he is himself a potential target of criminal prosecution and he announces it before plea negotiations are exhausted, it loses its value for that purpose. If, by contrast, he were relatively sure that he's not himself a potential target of prosecution, and he'd already made a decision to hunker down, I would have expected him to announce that today, to get it all over with at once before going "to the mattresses."
Spitzer's self-righteousness, egotism, and overweening ambition have earned him many enemies. Earlier today I heard legal pundit Greta Van Susteren on Fox News say something to the effect that Spitzer is "hated on Wall Street" because he's tried to "clean up the corruption there." But not all, nor even most, of Wall Street is involved in corruption, and Spitzer is hated by many who are themselves squeaky clean. He's been a class warrior, demonizing not just corrupt businessmen but businessmen and their businesses in general. Tonight, toasts will be drunk to his political demise, and cigars will be metaphorically lit from the bonfire of his career. It's hard for me to imagine that there are many fellows who are more deserving of that scorn and schadenfreude.
UPDATE (Mon Mar 10 @ 7:30pm): ABC News reports (h/t TPM) that 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 that Spitzer
is likely to be prosecuted under a relatively obscure statute called "structuring," according to a Justice Department official.
Structuring involves creating a series of financial movements designed to obscure the true purpose of the payments.
This suggests Spitzer was taking out big chunks of cash — consistent with the impressive fees reportedly charged by these high-dollar callgirls — in chunks of more than $5k but less than $10k in an attempt to avoid the paperwork that banks must file for large cash transactions. I've read elsewhere that Spitzer has family money, so that even on a public servant's salary, he probably could finance this habit without needing bribe money. Also per the same ABC News report:
It was only months later that the IRS and the FBI determined that Spitzer wasn't hiding bribes but payments to a company called QAT, what prosecutors say is a prostitution operation operating under the name of the Emperors Club.
That sounds pretty plausible to me. If there were no other organized crime connections, that's the kind of crime that might well result in a no-prison time recommendation and sentencing calculation for a first offender pleading guilty and cooperating. Various other press and blogospheric sources are now reporting that Spitzer is likely to formally resign tonight — and the time difference between his afternoon press conference, which was necessary to address an imminent NYT story, and a resignation tonight would represent about the right amount of time for the lawyers to sew up the paperwork for a formal plea agreement that includes his resignation.
UPDATE (Mon Mar 10 @ 9:30pm): The statute referenced in the ABC News report is almost certainly 31 U.S.C. § 5324. A quick Westlaw check suggests that it's never produced any reported decisions, which doesn't much surprise me. Certainly as a former prosecutor of organized crime defendants (including money launderers), Spitzer would have known that cash transactions trigger requirements for banks (under 31 U.S.C. § 5313(a), which (along with its implementing regulations, see, e.g., 31 C.F.R. §§ 103.18 & 103.22) require banks and other financial institutions to file "Suspicious Activity Reports" with the Treasury Department for suspicious transactions of $5k+, and for almost all currency transactions of $10k+. Without aggravation, it looks like the penalty tops out at 5 years plus a fine, but that would presumably be per count, and the nature of the crime suggests it was likely to have been repeated. That suggests to me that there is lots of room for prosecutorial discretion in charging, and likewise lots of flexibility on potential pleas.
I don't see any interpreting cases for section 5324 in a quick check of Westlaw (which doesn't surprise me), and I'm far from expert in this field of white collar criminal law — but Spitzer certainly may be deemed to be one, given his background of prosecuting money laundering! Anyway, as I read it, section 5324 basically makes it a crime to deliberately structure your transactions to avoid getting on those radar screens — intent being the key element of proof. Absent a confession, the prosecution would typically have to prove intent circumstantially, however. If there are financial records from which lots of large (but slightly under-limit) withdrawals correspond closely in time and cumulative amount to what the callgirl ring's receipts show from Spitzer, that would be a fairly compelling circumstantial case. To beat it, Spitzer would effectively have to come up with some other very convincing explanation for the size and purpose of the transactions.
Frankly, a "money laundering"-type charge would be far sexier, and far more likely to be actually charged in these circumstances, than a "mere" Mann Act or wire fraud charge predicated directly on the prostitution. That is, if that's the prospective charge, then it's much harder for Spitzer to defend — either in a court of law or the court of public opinion — on the basis that "this is all really only about consensual adult sex," or even "only about lying about sex."
Meanwhile, federal prosecutor WLS, guest-blogging at Patterico's and linking the same ABC News report, opines that "the facts suggest to me that Spitzer has received a target letter indicating that he is the target of a federal criminal investigation for his conduct." If so, he says, "his problems are a lot bigger than first seemed the case." Criminal defense lawyer and blogger Jeralyn Merritt at TalkLeft reports that Spitzer is being represented by NYC mega-firm Paul, Weiss (not a big surprise), and that a NYC television station is reporting that Spitzer's resignation may come tomorrow. She and her commenters are also speculating on what kind of plea deal may be brewing. Among other things, she's curious about the fact that this was filed as a complaint, rather than an indictment from a grand jury, and there's some discussion in the comments about the specific regulations that might be implicated.
UPDATE (Tue Mar 11 @ 2:20am): So how important were these trysts to Gov. Spitzer? This paragraph, from Tuesday's WaPo, is equal parts funny and sad (emphasis mine):
Spitzer's travel schedule shows he spent the night of Feb. 13 in Washington to attend a congressional hearing the next day, Valentine's Day. Spitzer was not initially scheduled to appear at the hearing on the state of the bond industry, held by the Financial Services subcommittee on capital markets, insurance and government-sponsored enterprises. But committee staff members said Spitzer called to insist on coming to testify, and they ended up pushing back the New York insurance superintendent to make room for the governor's last-minute appearance.
What better alibi to prove the need for an overnight trip than a room full of bored Congressmen, aides, industry lobbyists, and the Congressional Record? Meanwhile, WaPo's Dana Milbank chips in for the First Lady of the Empire State:
The woman accused of running a prostitution ring allegedly patronized by Eliot Spitzer told one of her call girls that the New York governor had been known to "ask you to do things that, like, you might not think were safe."
But whatever Spitzer — or, in the language of a federal court filing, "Client-9" — did with a petite brunette nicknamed "Kristen" on the eve of Valentine's Day last month at Washington's Mayflower Hotel, it probably wasn't as monstrous as what he asked his wife to do yesterday.
In the grand tradition of Larry Craig, David Vitter and Jim McGreevey, Spitzer dragged his partner of 21 years before the television cameras at his offices in New York to announce that he was "disappointed" in himself for unspecified sins.
Despite more colorful speculation, my guess about the "not safe" past requests is that they were requests for unprotected ("bareback") sex without a condom. Smart call-girls — heck, smart anyone — should know better than that, and it fits the escort's quoted reply, but it's exactly the sort of thing a white-bread 48-year-old rich boy with a self-destructive streak might well demand. On the subject of his wife and daughters: I don't lack sympathy for them, particularly the daughters; but it's not the world who owes them an apology, it's Eliot Spitzer.
Other weblog posts, if any, whose authors have linked to Spitzer "casts himself not just as an enforcer of the law per se, but also as an enforcer of a broader social compact" and sent a trackback ping are listed here:
» Eliot Smurfer from Overlawyered
Tracked on Mar 11, 2008 10:35:37 PM
» Spitzer's very guilty, but exactly of how much is still unclear from BeldarBlog
Tracked on Mar 12, 2008 5:47:51 AM
(1) Mark L made the following comment | Mar 10, 2008 6:41:19 PM | Permalink
Yes, but Spitzer has the magic "Get out of trouble free" card. He's a Democrat, so none of it matters.
Even Representative William Jefferson (aka the Refrigerator) hasn't seen a jail cell and probably won't. Laws are for Republicans.
(2) David Morrison made the following comment | Mar 10, 2008 6:43:25 PM | Permalink
As soon as I learned of this case, I checked your site. You didn't disappoint. Glad to see you're on the case.
Editing note: In the sentence above that begins "His transgressions occurred ...," I've deleted my original phrase "unlike those of Sen. David Vitter (R-MS)." Sen. Vitter's alleged involvement with the "Washington Madam" prostitution operation preceded his election to the Senate, but he was a Congressman at the time. As Prof. Bainbridge has noted in a growing and link-filled post about Spitzer's come-uppance, however, there perhaps is a stronger argument to be made for the resignation of an executive officer than of a mere legislator.
(4) JMW made the following comment | Mar 10, 2008 7:37:25 PM | Permalink
Isn't David Vitter from Louisiana?
Anyway ... I suppose the indignation over this is proportional to the dislike for Spitzer. But personally, I think if he were just a John, then there's really no reason for him to resign. Perhaps he could be booted for some subsequent crime, but let's face it -- the whole process will be inherently political and, personally, I think Draconian.
Furthermore, the charge of hypocrisy is overwrought. He is not necessarily guilty of hypocrisy, but weakness. He would only be a hypocrite if he had paid the call girl while believing, internally, what he had done was right.
And finally -- I would pose this question: if a (closeted) gay governor had, pre Lawrence, engaged in sodomy and been caught, should he have resigned?
In my view, no -- the law is anachronistic and fundamentally flawed. So too is the law on prostitution. So I have little sympathy for the view that a John should be booted out of a high office and his career wrecked over "schadenfreude."
JMW: Yes, my apologies to Sen. Vitter and to the states of Louisiana and Mississippi.
(6) DRJ made the following comment | Mar 10, 2008 9:14:43 PM | Permalink
Great post, Beldar, and on short notice. I agree with David Morrison. You're the first place to go for legal stories.
I am afraid if the allegations are true, JMW, Spitzer's shenanigans show he was a bit more than a mere John. Moving what we mortals think of as big bucks around surreptitiously and arranging for a $3,000+ call girl to travel from NYC to DC for a pre-Valentine tryst is a bit different in scope and [il]legality than picking up your typical street walker for a quickie.
(8) Gregory Koster made the following comment | Mar 11, 2008 2:23:07 AM | Permalink
Dear Mr. Dyer: This "structuring" business is unsettling. Suppose you suddenly decided, thanks to the subprime meltdown, that no bank was safe, and pulled out all your money, to stuff in the mattress. Could the Feds could come knocking and demand to know what you did with the dough? Could they accuse you of the "crime" of undermining confidence in a bank by withdrawing it all at once? I suppose a one shot withdrawal, cleaning out an account, would be less suspicious than large periodic withdrawals. Truly, there is no privacy in this world.
Where Spitzer got all this dough from might be interesting too. I know he's been sponging off his old man for some time. I wonder if he hit him up recently? If so, his wife may not be the only irate relation he has to face. Truly the song lyrics,
"You can rely on the old man's money,"
have acquired a new meaning.
I'm in a mind-numbingly specific discussion in the comments at TalkLeft (the branch starting with Comment #43) with Jeralyn Merritt and another of her commenters about which regulations and statutory provisions I think were probably implicated by the "structuring" allegations.
Basically, I think Spitzer was trying to avoid the regulation that requires banks to always file a Suspicious Activity Report to the IRS on $10k+ cash transactions. But he didn't know there was a different, less mechanical and specific regulation, which purports to oblige banks to also report transactions of $5k+ (whether in currency or not) that the bank "suspects or has reason to suspect" lacks any "reasonable explanation" given all the circumstances. There's not a very reasonable explanation for why the Governor of NY would need sporadic chunks of cash in amounts larger than $5k, and cumulatively (within a few days) more than $10k, but never $10k or more in a single day, unless he were trying to avoid the $10k requirement. And "structuring" your transactions in an attempt to cause a bank to not file the mandatory report for $10k+ currency transactions is itself a crime.
In other words, even if what he were doing with the money were not a crime, deliberately taking steps to stay off the feds' radar screens can itself be a crime. And enforcement of this sort of stuff has gotten much more serious in the post 9/11 world.
(10) David Morrison made the following comment | Mar 11, 2008 9:05:53 AM | Permalink
Hiding behind his wife's skirts, a la Larry Craig, David Vitter and Jim McGreevey, is, to my mind, the most despicable part of this.
(11) Joe made the following comment | Mar 11, 2008 9:21:18 AM | Permalink
Not a lawyer, but isn't Spitzer staring down a 10 year max plus a fine? With the Mann Act violation Spitzer is looking at the enhancement, or am I reading this wrong? Is there a further enhancement if he hit the two-fer, combined with another crime and over 100K in a 12 month period?
(d) Criminal Penalty.—
(1) In general.— Whoever violates this section shall be fined in accordance with title 18, United States Code, imprisoned for not more than 5 years, or both.
(2) Enhanced penalty for aggravated cases.— Whoever violates this section while violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period shall be fined twice the amount provided in subsection (b)(3) or (c)(3) (as the case may be) of section 3571 of title 18, United States Code, imprisoned for not more than 10 years, or both.
When Spitzer asked his wife to appear with him at the press conference, she should have given him the finger.
(13) EHeavenlyGads made the following comment | Mar 11, 2008 12:42:55 PM | Permalink
Excellent post and many thanks for the insight, Beldar. I look forward to your deciphering of what appears to be a whopper of a plea deal to come.
Only one thing is for certain right now: Spitzer will NOT be our nation's first Jewish president.
(14) JMW made the following comment | Mar 11, 2008 12:57:05 PM | Permalink
"Moving ... a bit different in scope and [il]legality than picking up your typical street walker for a quickie."
Using a gussied-up "structuring" charge to prosecute what's basically a minor "sin" crime just makes the civil libertarian in me even more queasy. Why, that's downright ... Iranian ...
So let me understand this -- Elliot's big crime here was not wanting the feds to monitor his bank account closely enough, so they could invade his personal life?
I swear ... between this and airport security, we'll be getting full body cavity searches at metro entrances before we know it. Gee, and I actually supported the PATRIOT act; time to rethink that one ...
(15) Scott Jacobs made the following comment | Mar 11, 2008 1:29:49 PM | Permalink
It is different because my picking up a hooker tonight is spure of the moment, couple-hundred dollar thing.
Spitzer engaged in months of hiding transactions to fund hit wick-wetting. He basicly was a one-man criminal conspiricy.
Also, I've never built a platform on morality and riden it all the way to a governor's mansion, nor build a rep by prosecuting people who hire out hookers, only to end up spending thousands and thousands of dollars on said "Women of ill-repute".
Thanks, Scott. You got there before I could, and delivered the goods.
(17) luagha made the following comment | Mar 11, 2008 2:41:47 PM | Permalink
If you suddenly pulled out a large amount of money from a bank, you or they would file the necessary form for an over-$10,000 transaction. The data will go into a database and in almost all cases that would be the end of it.
If you are involved in some kind of litigation or are a person of interest in some kind of case, that information is there for the taking as evidence. It's up to you as to whether it's evidence of wrongdoing or not but in and of itself it isn't.
JMW: When you choose to fly on an airplane that takes off and lands at airports protected by federal air traffic controllers, security, and military forces, a consequence of that choice is submitting to intrusive security. (I agree that its rationality could be improved.) You could decide to drive instead. When you choose to deposit your money in a bank in which your funds are protected by the Federal Deposit Insurance Corporation, a consequence of that choice is likewise that they'll make reports to the IRS about you if your transactions resemble those of money launderers, organized crime families, or terrorists. You could decide to use your mattress instead. In either case, if you're committing no crimes, you may be inconvenienced but you generally have nothing to fear.
Joe: You're right that the Mann Act does have a stiffer single-offense penalty and that on its face, it might fit. And the participants who profited by the call-girl ring have been charged under the Mann Act, which is indeed typical for organizers of such rings. It would be possible, but extremely atypical, for a mere customer to be charged under the Mann Act, and that would certainly be argued to be prosecutorial over-reaching and/or politically motivated. So I don't think it will happen. By contrast, although he was only trying to avoid being noticed on a fairly low-level state crime of prostitution solicitation, and even with respect to that, he was mostly trying to avoid notice because of fear of exposure and not the criminal penalties, it's very likely that Spitzer's conduct was absolutely representative of the core offense of "structuring." I.e., he probably knew of the $10k+ currency transaction reporting regs, and he was most certainly deliberately trying to evade them by making more and smaller withdrawals than otherwise.
There's a parallel to the Scooter Libby case here. The investigation actually was initially geared toward a much bigger and more culpable crime: the feds suspected Spitzer of bribery, like they suspected Libby of outing Valerie Plame. Both were cleared of those charges on which they were originally suspected. But then prosecutors were left with evidence that, in their minds, clearly indicated that other federal law had been violated -- "structuring" in Spitzer's case, perjury and obstruction of justice in Libby's -- and they didn't feel like they could just ignore that evidence and let the targets of their investigation walk away.
(19) Scott Jacobs made the following comment | Mar 11, 2008 4:11:19 PM | Permalink
Also, JMW seems to think that somehow the Patriot Act was involved. the reporting of Spitzer's bank transactions occured under rules set forth under the Bank Secrecy and Anti-Money Laudering Act.
Long before the Patriot act.
Spitzer REALLY should have known better. He would have been better off pulling out the full $10,000+ at once, and claiming it was a gift for a relative. The smaller bits here and there REALLY makes it look funny, and that's what got his activity reported by the bank (no feds involved). They thought he was taking bribes/laundering money.
(20) David Morrison made the following comment | Mar 11, 2008 4:19:08 PM | Permalink
At NRO's The Corner, Andy McCarthy (who was involved in the prosecution of the first World Trade Center bombing, I believe) points out that there might be a money-laundering element to this case, as well, besides "structuring":
"But there's an even simpler money laundering law that I imagine the Governor may be concerned about. You have committed a felony violation, punishable by up to 20 years in jail, if you have money that is the proceeds of some form of illegal activity (including prostitution), and you conduct a financial transaction with those proceeds (a) with the intention of promoting certain crimes (including prostitution), or (b) with the knowledge that the transaction is designed to conceal how the proceeds were generated. If I understand the allegations correctly, Spitzer not only obtained and paid in cash in order not to leave a paper trail, but paid extra cash in order to set up a credit with the prostitution ring for future use. That raises the possibility of money laundering under both the promotion and concealment theories."
That's from his post of 2:24 this afternoon.
(21) JMW made the following comment | Mar 11, 2008 5:18:27 PM | Permalink
"In either case, if you're committing no crimes, you may be inconvenienced but you generally have nothing to fear."
Well, says you. If you don't think you have much to fear from the TSA, try this experiment: pack anything valuable in your luggage and see if it makes it to the other side. Go ahead, pack your laptop. They're the TSA, on our side!
Generally speaking the "if you have nothing to hide, the government intrusion doesn't matter" argument is complete nonsense. It's the very definition of a chilling effect, and broadly speaking, the result of an extreme lack of imagination. I have to believe plenty of high-level businessmen ferry money in substantial sums about daily, working on confidential and highly competitive deals. They most certainly have "something to hide," it's just not illegal.
And for that matter, what Spitzer did was illegal, but again, he's a horny man chasing a prostitute, it's not like he was engaging in terrorism. Using this statute to bring him down just reeks of somebody's political come-uppance.
As to the Patriot Act commentary -- I know very well it came after, but I was referring to Beldar's comment that "enforcement of this sort of stuff has gotten much more serious in the post 9/11 world"
Yes, it has gotten much more serious -- to prosecute TERRORISM. Not some individual's bad mores. That such statutes would be created or enforced more rigorously in order to pursue "crimes of sin," validates EXACTLY the liberal fears that constantly muddy them. Some of the user-submitted comments I saw in the mainstream news already reflect this.
I'm no fan of Spitzer generally and particularly what he did was sleazy, but bringing the legal hammer down on him is exceedingly heavy-handed and downright puritanical. The voters of New York and its legislature have more than enough ammunition to answer the basic political questions, without the federal government doing it for them.
He's been doing this for six to seven years and maybe as much as ten. But less than four years ago, he broke up two competing prostitution rings in New York. Also, an unprotected, $2,000.00 dollar girl was sent to him which means he was known and trusted. The possibility that he is a lot more dirty than simply patronizing prostitutes and trying to hide the payments needs to be seriously investigated.
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