Thursday, March 13, 2008

Eliot Spitzer: Is There a Deeper Corruption Here?

When a super law-and-order Attorney General turns out to have been breaking the law, when a prosecutor of prostition rings visits prostitutes on the side, when the scourge of white collar crime gets caught money laundering, something more serious is at stake than a private pecadillo. It is a sign of deep personal corruption on his part. But ultimately Eliot Spitzer is only being charged with a personal sort of corruption, not with abuse of his office. The question remains whether the investigation of Spitzer was a far deeper and uglier sort of corruption. Some things there are troubling.

At first glance, this appeared to be a bust of a prostitution ring that accidentally nabbed to Governor of New York. That Spitzer was referred to as "Client 9" reinforced that impression. But it soon became clear that what happened was actually an investigation of Eliot Spitzer that bagged a prostitution ring as mere collateral damage. To repeat the now well-known story Spitzer's bank reported a pattern of suspicious transactions that appeared to suggest some sort of bribery. The Justice Department investigated and determined that that Spitzer was not involved in bribery, but was attempting to conceal payments to very expensive prostitutes. The FBI then wiretapped that prostitution ring to determine when Spitzer would be crossing states lines to use its services. On January 26, the wiretap indicated that he would traveling from New York to Washington, D.C. to and meeting a prostitute there, in violation of the Mann Act, a federal law against crossing state lines for illicit sex. The FBI staked out his Washington, D.C. hotel to catch him in the act, but failed. Their second stakeout was successful.

So, how disturbing is any of this? It seems to me that three things here might potentially be disturbing (1) the definition of "suspicious" financial activities and threshold for reporting them, (2) the attention given to Spitzer's individual finances, out of hundreds of thousands of such reports, and (3) the continued investigation once it became clear he was paying prostitutes. To give my own opinions:

(1) I do not pretend to know enough about the world of finance to know what is and is not suspicious, or what should be the threshold for reporting to the government. Given the role money laundering plays in more serious crimes, such as terrorism, drug smuggling, organized crime, or political corruption, it does seem reasonable to have some sort of reporting requirements for suspicious activities. It should be set high enough not to unreasonably intrude on people's private finances, or to swamp the government with false leads, but not so high as to miss out on important action. People far more knowledgeable than I am can debate the details.

(2) Some people have thought it suspicious that out of hundreds of thousands of suspicious activity reports, Eliot Spitzer's received attention. But, according to the Wallstreet Journal, it is accepted practice to pay special attention to reports on the politically powerful. Nothing partisan there; Bob Dole has also attracted extra attention and scrutiny. I have no objection to paying extra attention to suspicious activity reports on powerful political figures. Political corruptions is, after all, a serious concern, and the powerful are always exposed to temptation.

(3) Once it became clear that Spitzer's suspicious transfers were matters of private (albeit illegal) vice and not public corruption, the Justice Department's response begins to look extreme. Wiretapping of a prostitution ring and not one, but two stakeouts are, to be charitable, overkill. The same Journal Article makes clear that federal prosecutions of prostitution rings are rare except in cases of organized crime or child exploitation. And even when the federal government does investigate prostitution, it rarely employs wiretaps. Furthermore, none of the other clients have been exposed, let alone charged. All of this does begin to make the investigation look politically motivated. At the same time, I am not clear what would have been the proper course of action. What should the DOJ have done when what appeared to be a case of public corruption turned out to be private vice? Dropped the investigation? Treated it as a misdemeanor? Notified the local DA? I really don't have the answer.

There are disturbing implications here besides prosecutorial overkill in this one case. It may be appropriate for the Justice Department to give extra scrutiny to the finances of powerful officials, but the question looms of what next? The temptations of abuse here are mighty. Selective investigation and prosecution is one temptation. Finding not enough to indict but just enough to blackmail is another. If the Treasury and Justice Departments are watching the finances of the powerful, some clear, firm guidelines are needed on follow-up. And given the history of this Administration, internal guidelines are probably not enough. There should be a law.

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