Spitzer Resigns: His Real Crime Was Nixonian Hubris

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.