What Are You Forgiving Eliot Spitzer For?

When former governor Eliot Spitzer announced his intention to run for New York City comptroller last week, he told the New York Times, "I’m hopeful there will be forgiveness, I am asking for it."

Spitzer is no stranger to asking people—his wife, his well-to-do father, prostitutes whose nether regions are imbued with magic powers—for things. "Things that, like, you might not think were safe," according to the chief booker for the upscale prostitution ring Emperor's V.I.P. Club.

But now that Spitzer's has collected the necessary signatures and finds himself back in "steamroller" form, let's look back at what, exactly, he's asking New York City voters to forgive: starting with the 2008 investigation into Client-9, all the way back to the timeless accusations of privilege.

Michael J. Garcia, the U.S. Attorney of the Southern District of New York who led the 2008 investigation, now holds down multi-million dollar private practice gig despite—or perhaps because!—he "ignored years of chicanery on Wall Street." Garcia's five-paragraph statement on the investigation was considered novel since the AG's office is often prohibited by grand jury secrecy rules from confirming or denying investigations or what charges were considered.

Garcia's statement said:

"ELIOT SPITZER has acknowledged to this Office that he was a client of, and made payments to, the Emperors Club VIP. Our investigation has shown that on multiple occasions, Mr. SPITZER arranged for women to travel from one state to another state to engage in prostitution. After a thorough investigation, this Office has uncovered no evidence of misuse of public or campaign funds. In addition, we have determined that there is insufficient evidence to bring charges against Mr. SPITZER for any offense relating to the withdrawal of funds for, and his payments to, the Emperors Club VIP."

Why didn't admitting to soliciting prostitution result in a criminal charge? Leo Glickman, an election lawyer and founding partner of Stoll, Glickman & Bellina in Brooklyn, told Gawker:

"There is frankly nothing unusual about not prosecuting [Spitzer] for that particular crime of prostitution, even if it involved crossing state lines. The federal law [the Mann Act] is the crime, but without something additional, such as the use of public funds, or somehow being involved in the business of prostitution, other than being a customer, it’s certainly very routine not to bring criminal charges.

In other words, Spitzer didn't just get off because he used to run the office prosecuting him. Glickman called it "extremely unlikely" that either a felony or misdemeanor charge would be brought against Spitzer:

As a practical matter, it just wouldn’t happen under any circumstance [laughs]. And he certainly would not receive a felony conviction for that particular crime. He wouldn’t be asked to take a plea that involved a felony charge, nor would a felony charge be brought against him . . . People simply do not get charged with federal crimes, felony or misdemeanor, for the type of conduct Spitzer engaged in.

In his 2008 statement Garcia, who did not respond to request for comment from Gawker last week, also credited the "longstanding practice" of the AG's office and the public interest.

"In light of the policy of the Department of Justice with respect to prostitution offenses and the longstanding practice of this Office, as well as Mr. SPITZER's acceptance of responsibility for his conduct, we have concluded that the public interest would not be further advanced by filing criminal charges in this matter."

Pretttty sure the public was interested in having Spitzer's private life laid bare, especially by the traders who cheered Spitzer's resignation. (There was some residual bitterness over Spitzer's lawsuit to recoup most of the $190 million Richard Grasso earned as head of the New York Stock Exchange.) But it's worth noting that Spitzer's lawyers also played a role: "quietly making their case to the country's most prominent prosecutor's office that he ought not be charged."

As has been said many times, if Eliot Spitzer had been the one prosecuting Eliot Spitzer, he may not have emerged as cable ready. Before Spitzer helped sentence dotcom hype man Henry Blodget to $4 million fine and a lifetime ban from the securities industry, that seemed like an unlikely conviction as well.

But the truly twisted aspect of the investigation into Spitzer's misdeeds—besides whatever Client-9 paid $4,3000 for on Valentine's Day, 2008—is that according to the Public Officers Law for the state of New York, even if Spitzer were a convicted felon, he would not be barred from running for office in New York state.

Glickman told Gawker:

"You must be removed from office if you are a convicted felon. That's in public officers law Sec 30e. Case law says that if you're removed, you can't run in the special election to fill the vacancy that your felony conviction created. However, as a convicted felon, you can run for office. There is nothing in the state constitution or state statute barring a convicted felon from running. (Rules for elected judges are a little different.)"

(NB: There was some disagreement over this among the handful of election lawyers and law professors we spoke to. Regulations regarding felons in office differs from state to state, but "It is possible for a felon to serve in the U.S. Congress," according to FactCheck.org)

A representative for the U.S. Attorney's office refused to comment on whether the investigation into Spitzer could be reopened or whether the AG's office had any intention to do so. "We have no comment," beyond that initial statement, the representative told Gawker.

However, as the AG's statement and the unsealed complaint revealed it was Spitzer's payments that led to discovering the prostitution ring in the first place.

"On March 6, 2008, this Office announced the filing of criminal charges related to an international prostitution ring known as the Emperors Club VIP.

The investigation which led to those charges began when this Office learned of payments made in a questionable manner by former Governor SPITZER to a bank account in the name 'QAT Consulting.' After the investigation by the Federal Bureau of Investigation and the United States Internal Revenue Service-Criminal Investigation Division, the Office determined that the QAT Consulting account and a similar account at another financial institution had been used to launder more than $1 million worth of criminal proceeds derived from the Emperors Club VIP's prostitution business.

Reports at the time claimed Spitzer spent anywhere from more than $15,000 to $80,000 on prostitutes. At the sentencing, it was revealed that the governor used postal money orders. Marc Agnifilo, the lawyer for Temeka Rachelle Lewis, the Emperor Club booker, called it "relatively unsophisticated" and a sign that Spitzer was using his own money. However, there was still the matter of payments made in campaign filing to the Mayflower Hotel. An affidavit showed that Spitzer and a prostitute had a rendez-vous there one month after the payment was filed.

As comptroller, Spitzer would not need to hold any financial licenses, such as a broker-dealer license. "It’s not the comptroller himself who is investing the pension funds," said Stephanie Hoo, a representative for the New York City's Comptroller's Office.

"It's five pension funds and each one has a board of trustees and the comptroller’s office is the investment advisor to the funds, but it’s not the comptroller’s office itself who is buying and selling stocks and bonds with a daily basis. Board of trustees make the investment decisions and the money sits with the custody bank and we might have contracts with money managers to invest different portions of the funds."

Those money managers, however, as well as anyone buying and selling securities have to seek a license from FINRA. According to FINRA, statutory disqualification process disqualification results from:

"certain misdemeanor and all felony criminal convictions for a period of ten years from the date of conviction"

FINRA provided Gawker with a list of the misdemeanors in the Xeroxed document below. Most concern financial crimes, such as larceny and fraud.

What Are You Forgiving Eliot Spitzer For?

There have been at least two times during his career as a public servant where Spitzer engaged in some self-serving financial finagling, in both cases related to raising campaign funds.

The first was during his 1994 and 1998 campaigns for state attorney general. Spitzer claimed that he alone financed those campaigns, until he admitted to the New York Times that his father, the wealthy real estate developer Bernard Spitzer, played "an extensive role" in paying for his son to run for office.

Throughout his campaigns, Mr. Spitzer created the impression that he wanted the job so badly, he was willing to spend millions in his own money to win it. It is not clear whether his father's involvement violated any campaign laws or will simply turn out to be a political embarrassment.

Mr. Spitzer said, ''I would say that what I have done absolutely complies with the law, and that is the critical issue here.'' Asked why he had been less than forthright about his campaign finances, he said he wanted to spare his family more unwanted publicity.

The more recent instance was in 2008 when Spitzer, who aggressively pushed for campaign finance reform, found a way around the $10,000 maximum donation limit, which he helped set: by having special interests cut a check to the NY State Democratic party instead.

"He wasn’t breaking the law, but it was sort of a clever way of doing a run-around," Russ Haven, legislative counsel for the New York Public Interest Research Group, told Gawker. "I don't think Spitzer was insincere in pushing for reforms. He expended a lot of energy for himself and his staff in trying to get real campaign finance reform done in New York," Haven added. "He wasn’t meeting the spirit of his promise, which was to reduce the dependence on campaign contributions from a small bunch of well-resourced individuals."

Haven stressed that it was up to the voters to decide, noting that the Spitzer's qualities and energy might translate better in the comptroller's office, whereas he was "ill-suited" to "to deal with the complicated politics of Albany and the legislature, which he miscalculated."

New York magazine recently imagined how Spitzer would wield his power as comptroller, picturing his keen eye for corruption once again applied to corporate interests:

Spitzer could also bring back some of his old prosecutorial zeal, going after corporate executives and boards when they screw up. Interest-rate-rigging banks, crooked consultants, overpaid chieftains like Spitzer's old nemesis Richard Grasso — all of these types could come under the comptroller's microscope. Again, these powers have long existed but rarely been exercised effectively. (It took current comptroller John Liu three years to sue BP for the losses he claimed city pensioners suffered from the 2010 Deepwater Horizon spill.)

This weekend, a newly confident Spitzer found himself in his sweet spot as "an outsider taking on the institutional interests." For voters, it could depend on which party they want to let off easy. Or, in Spitzer's parlance, forgive.

To contact the author of this post, please email nitasha@gawker.com.

[Image via Associated Press]