Prosecution of Spitzer Would Stretch Statutes Beyond Usual Uses
Updated: Several charges are possible against New York Gov. Eliot Spitzer, accused in news reports of hiring high-priced prostitutes and paying for them in four installments of $5,000 or less. But are the charges probable?
The possibility of impeachment, apart from the legal charges, is weighing heavily on the governor’s mind, aides told the New York Times, and he is expected to resign today.
The Wall Street Journal outlines four possible charges: transporting people across state lines for prostitution in violation of the Mann Act, structuring transactions to evade financial-reporting requirements, traveling between states with the intent to commit a crime, and helping an illegal entity launder money.
Lawyers who spoke to the New York Law Journal and the New York Times said federal statutes are rarely used to prosecute the kinds of misdeeds that have been linked to Spitzer.
The Mann Act is usually used to prosecute those who use force to transport people across state lines for sex or forced labor. “It’s the force that’s the material part,” Andrew Hruska of King & Spalding told the New York Law Journal.
Charles Stillman, a former federal prosecutor in Manhattan, agreed in an interview with the New York Times. “The idea of prosecuting for it is just over the top,” he said. “I just don’t see that as a reality here,” he said.
Observers also were skeptical about charges related to Spitzer’s financial transactions. Investigators believe Spitzer made three wire transfers of about $5,000 to the prostitution business known as Emperors Club VIP from personal bank accounts in the spring and summer of 2007, the Wall Street Journal story says. They also believe he paid $4,300 cash for a Feb. 13 linkup with a prostitute in Washington, D.C.
The crime of structuring involves breaking down cash payments into smaller increments to avoid the $10,000 reporting threshold. “You have to intend, by trickery and deceit, to evade the reporting requirements,” Stillman told the Times.
Kathryn Keneally, a Fulbright & Jaworski partner who specializes in white-collar criminal defense, told the New York Law Journal that wire transfers wouldn’t be covered by the statute.
Even if the government could prove intent to evade cash reporting requirements, a prosecution would be unusual, Hruska said. “To use it in a situation where you are not dealing with the profits of criminal activity would be an unusual use of the statute even if it might fit the bare language.”
Dale Kelberman, a former federal prosecutor in Baltimore, told the Times that intent is important. An attempt to conceal activities from a spouse would be different from trying to deceive federal authorities. “There are innocent reasons for structuring transactions that need to be considered,” he said.
The Wall Street Journal story says Spitzer’s status as a prominent government official apparently helped prompt the investigation. Many banks now examine transactions involving “politically exposed persons” such as politicians and judges to make sure they are not hiding evidence of bribery. At least one of Spitzer’s banks flagged his transactions out of fears they could be evidence of corruption, people with knowledge of the transactions told the newspaper.
Since the Sept. 11 terrorist attacks, banks have been more vigilant about filing reports of questionable transactions, according to the New York Times. Since then, reports of questionable transactions have more than quadrupled, from almost 205,000 in 2001 to more than 1 million in 2006. Spitzer himself had used the reports in cases he brought as attorney general.
Spitzer had been expected to announce his resignation yesterday, but instead the governor remained ensconced in his home as he considered his next move. His wife was reportedly urging him to remain in office, the New York Times reports in a separate story.
Sources told the Wall Street Journal that Spitzer wouldn’t resign until he reaches an agreement with the government not to pursue charges. He would likely be reluctant, in any event, to accept a felony conviction because it would mean the loss of his law license.
Updated at 8:57 a.m. to include news that Spitzer is expected to resign today.
