Net gambling opponent resigns as governor

Eliot Spitzer
N.Y. Governor Eliot Spitzer

N.Y. Governor Eliot Spitzer announced his resignation today after allegations surfaced this week that he is involved in a prostitution ring being investigated in New Jersey.

Spitzer made a name for himself in New York fighting organized crime rings, like the prostitution ring he is accused of soliciting, while working in the Manhattan district attorney's office.

For eight years before becoming the governor, Spitzer was attorney general for the state of New York. While in office he won national recognition for landmark cases protecting investors, consumers, the environment and more. He took up civil actions and criminal prosecutions relating to corporate white-collar crime, securities fraud, Internet fraud and more.

Through his work as attorney general, Spitzer also became a very vocal opponent of online gambling. In 2002, Spitzer threatened banks involved with online gambling transactions with prosecution.

One result was that Citibank, one of the United States' leading credit card issuers, made an agreement with the attorney general's office to no longer process transactions with online casinos and other Internet gambling operations.

"Americans now waste $4 billion a year on this pernicious form of gambling," Spitzer said in a press release after the deal was made. "With this agreement, we will cut off an unlimited line of credit that was a jackpot for illegal offshore casinos."

Other law enforcement actions in the past had been directed at the online gambling entities. Spitzer's action was the first to target financial entities that process gambling transactions.

Noting that it is often difficult to prosecute online gambling companies operating in violation of New York and U.S. law, Spitzer said in the press release it's essential that financial entities such as banks and credit card companies do everything in their power to avoid facilitating "these illegal and harmful transactions."

In 2006, Spitzer ran for governor of New York based on a reform platform, promising to "change the ethic of Albany."

After winning the election, Governor Spitzer said in his inaugural address, "Every policy, every action and every decision we make in this administration will further two overarching objectives: We must transform our government so that it is as ethical and wise as all of New York, and we must rebuild our economy so that it is ready to compete on the global stage in the next century."

Spitzer's ethical house of cards came crashing down around him this week, however, when The New York Times reported he has patronized a high-class prostitution service called Emperors Club VIP, based in New Jersey, and that he met for more than two hours with a $1,000-an-hour call girl at the Mayflower Hotel in Washington D.C.

The governor's liaisons with prostitutes were discovered after an investigation was initiated into his monetary affairs when his bank reported suspicious transactions to the IRS as required by the Bank Secrecy Act.

According to Newsday, Spitzer split up more than $10,000 he wanted to transfer to an organization that turned out to be a front for the prostitution ring. Federal law requires the reporting of any transfer of $10,000 or more, so Spitzer split up the transfers.

He then tried to have his name taken off the wire transfers, which the bank refused to do, contending it would be improper and that the wires were already out anyway.

The bank reported the transactions as potentially suspicious activity, and the IRS launched an investigation, initially believing they would find that Spitzer was the victim of extortion or perhaps find an imposter.

The case was later handed to the FBI for it to investigate possible political corruption, but FBI investigators linked the money transfers to the prostitution ring instead. Federal prosecutors charged four people operating the Emperors Club VIP last week, before the announcement of Spitzer's involvement.

When his involvement in the prostitution ring first came to light, Spitzer made a public apology for his conduct without ever mentioning the specifics of the scandal or giving any indication that he would resign.

Since then, officials across the state of New York have been calling for the governor to resign or be impeached because of his actions. As a result, Spitzer announced his resignation today, effective Monday (March 17), to give the lieutenant governor time to make a smooth transition.

"Over the course of my public life, I have insisted, I believe correctly, that people, regardless of their position or power, take responsibility for their conduct. I can and will ask no less of myself," said Spitzer. "For this reason, I am resigning from the Office of Governor."

His resignation doesn't put a stop to the controversy. There is still the possibility that Spitzer could face criminal charges for his actions, and he could also face disbarment.

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