It Wasn't the Sex; Suspicious $$ Transfers Led to Spitzer
The federal investigation of a New York prostitution ring was triggered by Gov. Eliot Spitzer's suspicious money transfers, initially leading agents to believe Spitzer was hiding bribes, according to federal officials.
It was only months later that the IRS and the FBI determined that Spitzer wasn't hiding bribes but payments to a company called QAT, what prosecutors say is a prostitution operation operating under the name of the Emperor's Club.
As recently as this past Valentine's Day, Feb. 13, Spitzer, who officials say is identified in a federal complaint as "Client 9," arranged for a prostitute "Kristen" to meet him in Washington, D.C.
The woman met Client 9 at the Mayflower Hotel, room 871, "for her tryst," according to the complaint. Client 9 also is alleged to have paid for the woman's train tickets, cab fare, mini bar and room service, travel time and hotel.
The suspicious financial activity was initially reported by a bank to the IRS which, under direction from the Justice Department, brought in the FBI's Public Corruption Squad.
"We had no interest at all in the prostitution ring until the thing with Spitzer led us to learn about it," said one Justice Department official.
Spitzer, who made his name by bringing high-profile cases against many of New York's financial giants, is likely to be prosecuted under a relatively obscure statute called "structuring," according to a Justice Department official.
Structuring involves creating a series of financial movements designed to obscure the true purpose of the payments.
Prosecutors reportedly have a series of e-mails and wiretapped phone conversations of Spitzer.
In a interview two years ago, Spitzer, then-attorney general, told ABC News he had some advice for people who break the law. "Never talk when you can nod, and never nod when you can wink, and never write an e-mail because it's death. You're giving prosecutors all the evidence we need," he said.
Click Here for the Investigative Homepage.
