Spitzer's Next Move: Resignation?

March 11, 2008 — -- The future of New York Gov. Eliot Spitzer is clouded with uncertainty today, after Monday's bombshell allegation identified him as a client of a high-priced prostitution ring.

The immediate question is will he step down?

New York Republicans offered a ultimatum Tuesday, threatening to seek impeachment if he does not resign in with 48 hours, a spokesman for a leading assemblyman in the minority said Tuesday.

"The governor has 48 hours to resign or articles of impeachment would be introduced," Josh Fitzpatrick, spokesman for Assembly Republican Minority Leader James Tedisco, told Reuters.

Spitzer issued a general apology Monday at a hastily organized news conference in Manhattan but did not respond in detail to mounting allegations of his involvement in the ring. He also declined to say whether he would resign.

"I have acted in a way that violates my obligation to my family and violates my or any sense of right or wrong," he said at an afternoon news conference with his wife, Silda, at his side.

"I apologize first and most importantly to my family. I apologize to the public to whom I promised better. I have disappointed and failed to live up to the standard I expected of myself. I must now dedicate some time to regain the trust of my family."

Spitzer's apology came after The New York Times reported on its Web site the governor had admitted to senior advisers that he had been linked to the prostitution ring. Two federal sources tell ABC News a federal wiretap recorded Spitzer arranging to meet with a high-priced prostitute in Washington, D.C.

Critics of the governor called for a quick resignation.

"The governor of New York should immediately resign from office and allow the people of New York to pursue honest leadership," said Nick Ayers, executive director of the Republican Governor's Association. "The American people are tired of corrupt and hypocritical politicians. The governor of New York is just another in the long list of politicians that have failed their constituents."

If he resigned, Spitzer would be replaced by Lieutenant Gov. David Paterson, a veteran politician, who would serve the remainder of Spitzer's term.

Whether or not he resigns, the governor may still have to face the legal ramifications of his actions. The U.S. attorney's office refused to comment on the matter Monday but experts say he could be facing serious charges, even though for the moment, he has not been charged with any crime.

"This federal law carries a penalty of up to 20 years imprisonment for knowingly persuading or inducing any individual to cross state lines for the purposes of prostitution," said Naomi Seligman Steiner, of the political watchdog group Citizens for Responsibility and Ethics in Washington . "Gov. Spitzer also appears to have violated District of Columbia law, making it unlawful for any person to engage in prostitution or to solicit for prostitution. This is punishable by up to 90 days in jail, or a fine of up to $500, or both, for the first offense."

Many on Wall Street and the Republican side of the aisle may relish in the allegations against Spitzer. Cheers reportedly filled the floor of the New York Stock Exchange when the news was announced Monday.

But Spitzer has a strong reputation as a family man. He was often seen around the capitol of Albany with his three daughters. Many insiders were shocked.

"These are serious and disturbing accusations that are completely at odds with the man I know. They come as a complete shock," said New Jersey Gov. Jon Corzine. "As the governor said, his actions are a clear violation of his own sense of right and wrong. He will have to regain credibility not only with his family but with the public."

ABC has confirmed that Spitzer stayed at the Mayflower Hotel in Washington on the night of Feb. 13 and testified before Congress the following morning on the state of the bond industry.

Last week, federal prosecutors arrested four people in connection with an expensive prostitution operation called the Emperors Club. The club charged up to $5,500 an hour for one if its prostitutes, who were rated on its Web site on a scale of one to seven diamonds.

According to a federal complaint, more than $1 million was laundered through the ring in four years.

Administration officials would not say whether this was the ring with which the governor allegedly became involved. The federal complaint mentions an Emperors Club suspect identified as "Client 9."

Federal law enforcement sources confirmed that Spitzer was the Client 9 named in the complaint against four people indicted after the investigation.

The complaint says Spitzer allegedly spent about $4,300 on the services of a prostitute identified only as Kristen. He paid for her to travel: "train tickets, cab fare from the hotel and back, mini bar or room service, travel time and hotel."

Kristen was described to Spitzer as "an American, petite, very pretty brunette, 5 feet, 5 inches, and 105 pounds," according to the complaints.

Law enforcement sources said the governor allegedly made a series of calls to arrange for a prostitute to come to his hotel room at 8:47 p.m., telling her that the door to his room would be left open, according to federal court papers.

According to the same set of federal documents, the governor may also have asked prostitutes to engage in "unsafe" sex.

Ironically it was Spitzer who led investigations to the Emperors Club after a series of unusual financial transactions that Spitzer made were forwarded by bank officials to the IRS.

The IRS reportedly linked the transactions to Spitzer.

Given the nature of the transactions, allegedly designed to mask their flow to a company called QAT, authorities originally thought they might have a public corruption case.

The case was assigned to the Public Corruption Unit at the U.S. Attorney's office in Manhattan.

As the investigation went forward, authorities started electronic surveillance, including wiretaps, and reviewing Spitzer's e-mail and text messages.

It became clear this was a prostitution ring that was allegedly laundering money to cover its activity. According to one source familiar with the probe, "the governor became collateral damage in an investigation that he prompted."

Daniel Parker, attorney for Cecil "Kate" Suwal, who is charged by the government for organizing the Emperors Club, denied that his client knew the governor.

"My client entered a plea of not guilty at arraignment," Parker said. "What the governor chooses to announce is his business, and if true, it is a sad day for New York State."