DID WALL STREET NAIL SPITZER?

by Alexander Cockburn

Was there a medium-size right-wing conspiracy to nail Gov. Eliot Spitzer, above and beyond Spitzer's own diligent efforts in the same cause? It certainly looks like it, with the right-wingers in question very possibly hailing from Wall Street, where the ruling powers loathed Spitzer for his crusades against them when he was New York's attorney general. If threatened, Wall Street plays very dirty. Let's nose along the trail.

It's clear that the Feds' probe started with Spitzer, not the prostitution ring. Spitzer's wire transfers led them to the Emperors Club, the call-girl business efficiently administered by a 23-year-old Blair Academy grad, Cecil Suwal, on behalf of her 62-year-old boyfriend, Mark Brener, from the high rise in Cliffside Park, N.J., with fine views of Manhattan.

The official story is that it was Spitzer's efforts to break down a $10,000 transfer to an account fronting for Emperors Club that alerted clerks at his Manhattan branch of Capital One's North Fork bank. A transaction at another bank where Spitzer had an account also supposedly twitched a red flag. In a requirement originally aimed at drug dealers, all banks have to report deposits of $10,000 and up to the Treasury Department. People not wanting to have their banks snitch to the Feds about their transactions routinely keep the sums below the red-light figure, and Feds have told the banks to adjust their mandatory snooping to report $8,000-plus sums, or sums that add up to $10,000.

Spitzer divided his $10,000 transfer down into smaller units, thus allegedly triggering a probe. But it strains credulity to believe that North Fork's "suspicious activity report" on a well-known client immediately aroused the interest of the government clerk scrutinizing the hundreds of thousands of suspicious-activity reports churning through his computer in the IRS watch post in Long Island. The official version has the IRS man noting Spitzer's name and then passing the information up the food chain to the Justice Department and the U.S. attorney's office in Manhattan.

Instead of the banks being curious on their own, what if the Feds told the banks to report all of Spitzer's wire transfers to them? It seems likely, and if so, we have here in outline a sting operation that raises another pressing question: Who exactly was it who put Spitzer in touch with Emperors Club in the first place? Who was it that first steered the Feds in Spitzer's direction? Below are relevant remarks made on CNBC by Ken Langone on the night of Spitzer's March 12 resignation. The billionaire venture capitalist Langone was an New York Stock Exchange board member whom Spitzer had gone after when he was attorney general. Langone later proclaimed he was launching "a holy war" against Spitzer.

CNBC: "Would you say that you were surprised by this news?"

LANGONE: "Not at all. ... I know for sure he went himself to a post office and bought $2,800 worth of mail orders to send to the hooker. ... I know somebody who was standing in back of him in line."

As a 20-year veteran of Wall Street e-mailed me apropos Langone's remarks: "Spitzer's enemies on Wall Street probably hired private eyes to follow him. I know this to be SOP against Wall Street enemies."

Once the wheels were set in motion, we had the unedifying spectacle of the full resources of the state devoted to exposing Spitzer's various rendezvous with consenting adults, primarily the comely 22-year-old "Kristen." Spitzer's role as the sole target in this recruitment of investigative and prosecutorial manpower since July 2007 is evidenced by the malicious insertion in the prosecutor's indictment of a hint from the phone taps about his sexual preferences (reminiscent of Kenneth Starr's detailed disclosures about the minutiae of physical transactions between Bill Clinton and Monica Lewinsky).

It's hard to root for Spitzer with much enthusiasm, beyond mandatory support for anyone facing political ruin and possible criminal charges for having sex with a consenting adult. But Spitzer had frightened Wall Street, which was a good thing.

Major Wall Street operators created the housing bubble, fixed the system of bogus AAA ratings, kept the debt off their balance sheets and prevented pricing transparency. As with the dot-com NASDAQ bubble of nearly a decade ago, there are perpetrators who should be facing criminal sanctions. Wall Street has nothing to fear for its subprime frauds from the Securities and Exchange Commission; the commission has no criminal prosecutorial powers. But New York State does have the Martin Act, one of the most powerful criminal enforcement weapon in the country and one used to great effect by Attorney General Spitzer. In January of this year, there were news stories about Attorney General Andrew Cuomo using the Martin Act to go after the subprime corporate miscreants. Such an onslaught, with the backing of Spitzer, was undoubtedly making Wall Street nervous.

As traders on the floor of the New York Stock Exchange cheered Spitzer's downfall on March 12, guess who rang the closing bell? Lynn Pike, president of Capital One, which owns North Fork Bank. She was celebrating the opening of more than 350 banks in the New York region. Are these 350 now deployed to bag more Dems?