Wednesday, March 12, 2008

Spitzer probe: full of sound and fury; signifying nothing

Updated 2x

Below all the stories about New York Governor Eliot Spitzer’s imminent demise, the calls for his resignation, the indignation about his behavior, and the general air of schadenfreude about a guy whose overreach exceeded his ham-fisted grasp, there is an article in today’s New York Times that basically says this: When it comes to pursuing a prosecution of Spitzer, the Feds have nothin’.

To update some of yesterday’s details: it is now reported that the probe into Spitzer’s financial transactions began in July, under Attorney General Alberto Gonzales, though the Times cannot confirm whether AG AG had any knowledge of the Spitzer case.

Maybe that was because Gonzales was too busy fending off accusations that he had politicized the Justice Department in order to pursue partisan investigations and prosecutions.

Just sayin’. . . .

The investigation was triggered, as I mentioned yesterday, by a series of sub-$10,000 transactions between Spitzer’s accounts and a then-unknown shell corporation, QAT. Most reports say that the Suspicious Activity Reports were filed by the banks with the Treasury Department and then referred to the IRS because it looked like Spitzer was trying to hide something. And because Spitzer was a public official, the belief was that it must have involved organized crime or graft of some sort.

What reports are fuzzy about—to say the least—is at what point it was realized that the money was being used to pay for prostitutes, and why, at that point, the case wasn’t transferred from the Public Integrity Section to the criminal division, or, as would have been more typical in a different age, referred to state or local law enforcement.

There are two possible answers to that question (well, at least two answers that you can offer without admitting criminal behavior, yourself): 1) the pattern of money transfers engaged a federal statute that prohibited “structuring”—an attempt to hide larger cash payments by making smaller ones—and, 2) Spitzer’s contracting to have a prostitute from New York meet him in DC violated the Mann Act. But, as is already glaringly obvious, neither of those two possibilities stands up to simple scrutiny.

A charge of structuring, as today’s Times story tells us, requires prosecutors prove intent—and that intent has to be of a sufficiently nefarious nature:

Dale P. Kelberman, a former federal prosecutor in Baltimore who has had experience with the financial reporting statutes, said the motivation in moving money around would be critical in any decision about whether the law was broken. If the governor was simply trying to conceal his activities from, say, his wife, it would be considered different from trying to deceive federal authorities.

“There are innocent reasons for structuring transactions that need to be considered,” Mr. Kelberman said.

The chance that Spitzer will be charged under the Mann Act is also small. First, again, as noted yesterday, the matter that caused a woman to cross state lines for “immoral sex” did not occur until February of this year—long after the investigation had realized exactly what was going on with the financial transactions, and months after the US Attorney, Michael Garcia, had already sought permission (likely from AG Michael Mukasey, even though his office denies his involvement) to indict a “public official.”

That raises the question of what charges exactly that indictment would be on, but assuming it was supposed to be a retrofit of the Mann Act, well, here’s what former federal prosecutor Charles Stillman thinks:

While in theory Mr. Spitzer could face charges of violating the Mann Act, a 1910 law, Mr. Stillman said it had almost never been used in modern times against customers, only those involved in managing a prostitution operation.

“The idea of prosecuting for it is just over the top,” he said. “I just don’t see that as a reality here.”

So what is left? There was talk yesterday afternoon of charging Spitzer with “money laundering”—but, whether that was a separate but unexplained charge or another way of reporting on structuring, that term is nowhere to be found in the Wednesday Times reports.

Which brings us back to things like the seven deadly sins—lust and hubris come to mind—and the hard-to-refute charge of rank hypocrisy. And it can also be said that Spitzer was an idiot for not realizing that the banking laws and the Bush-era surveillance state would leave his “sins” readily available for public exposure. All possibly deep flaws that might make Eliot Spitzer a less than ideal leader, but not, in themselves, crimes.

New York State politicians and pundits will no doubt spend today strutting and fretting about the “Eliot Mess,” and, by the end of the day, Governor Spitzer might find his brief but brightly burning political career snuffed out. But he will likely not find himself facing time in a dusty jail cell.

Update: WNYC is now reporting that two sources close to the Governor confirm that Eliot Spitzer will be resigning today. (It is now reported that Spitzer will announce at 11:30am EDT that he will resign effective Monday to give David Patterson time to arrange the transition.)

Update 2: Jim Sleeper and Wayne Barrett are both talking on WNYC (they might post a link to the audio later this afternoon) and both think that while Spitzer was “hoist with his own petard” (goody, more Shakespeare!), both also think that with regard to this investigation something is rotten in the State of Denmark (couldn’t resist). Much of the discussion is similar to what I have detailed over the last two days, but Barrett especially thinks that the way the wiretap was handled—it was put up and taken down very quickly—shows this to be a political “assassination” (yes, he used that word).

(cross-posted on The Seminal and Daily Kos)

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