Spitzer Resigns: His Real Crime Was Nixonian Hubris

Posted by Lindsay Beyerstein, Majikthise at 7:12 AM on March 12, 2008.

UPDATE: Spitzer resigned today, the video is to your right.

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There are two emerging schools of thought as to the sequence of events that lead to Spitzer's downfall. Recall that the Emperor's Club was a major international prostitution ring that was brought down with much fanfare last week.

Theory A is that Spitzer was exposed because of the Emperor's Club bust. Theory B is that Spitzer inadvertently lead investigators to the Club because he was already being watched for "suspicious" financial transactions:

The suspicious financial activity was initially reported by a bank to the IRS which, under direction from the Justice Department, brought kin the FBI's Public Corruption Squad.

"We had no interest at all in the prostitution ring until the thing with Spitzer led us to learn about it," said one Justice Department official.

Spitzer, who made his name by bringing high-profile cases against many of New York's financial giants, is likely to be prosecuted under a relatively obscure statute called "structuring," according to a Justice Department official. [ABC]

In other words, a banker noticed that Spitzer was making a number of transactions just below the $5,000 reporting threshold. That's a red flag for bankers because the account holder might be deliberately structuring transactions in order to evade reports that might draw attraction to other illegal activities. This kind of "structuring" can itself be a crime, if transactions are broken down into smaller chunks in order to facilitate money laundering.

If Theory B is right, those "suspicious transactions" represented Spitzer's attempts to hide his payments to the very high-priced escort service.

As the Attorney General of New York, Spitzer crusaded against corporate crime, including abuses in the banking industry. He also helped bust some prostitution rings in his time.

Spitzer has absolutely no excuse. In the current political climate, selective prosecution is a fact of life. If the White House has some reason to dislike you, and you break the law, they will take you down hard.  Assuming you give them enough ammunition to bust you fair and square, you will deserve it, too. Both for being a criminal and for being stupid--not to mention for betraying everyone who trusted you to stay out of trouble long enough to effect real change.

Never mind whether the average rich, powerful white guy could get away with what you did. When you take on the establishment, you forfeit a certain amount of male privilege. Reformers have to make sacrifices.

I'm assuming for the sake of argument that the Justice Department played by the rules.  If it turns out that they subjected Spitzer to inappropriate scrutiny or violated his rights in some way, then they too must be called to account.

The fact is, Spitzer is intimately familiar with wiretaps and he has more enemies in the banking industry than any man alive. He should have known better.

It's a cliche to criticize a politician's judgement when you're mad at him but you can't summon sufficient moral outrage about his behavior. But this time it's entirely appropriate to raise questions about Spitzer's fitness to lead on the basis of his colossal hubris.

Regardless of what you think of the morality of paying for sex, and irrespective of whatever understanding Mr. and Mrs. Spitzer might have had... Eliot Spitzer was a self-indulgent fool to think that he could arrange for sex over the telephone and move his money around to cover it! (...in an election year, as the Dems were poised to take back the State Senate, on the heels of the State police intel scandal...)

Spitzer displayed a Nixonian level of hubris. If he thinks the rules don't apply to him, he shouldn't be in power.

Tagged as: justice department, new york, prostitution, spitzer

Lindsay Beyerstein a New York writer blogging at Majikthise.