Former New York Governor Eliot Spitzer in March 2008.
Posted on 04/20/2010 6:26:32 AM PDT by NYer
Former New York Governor Eliot Spitzer in March 2008.
It was a routine transaction with an unusual request: Eliot Spitzer, then governor of New York state, had asked a Manhattan bank to remove his name and account information from a $5,000 wire transfer to a company called QAT Consulting Group.
The request, if granted, would have violated the Code of Federal Regulations. It also triggered a mandatory bank investigation into the transaction and generated a suspicious activity report, or SAR, that has never been released by the government.
It was Aug. 6, 2007, and Spitzer, in his inaugural year as governor, was immersed in a very public political war with then-Senate Majority Leader Joseph L. Bruno. That morning, NBC's ''Today'' show ran a segment on their feud over Spitzer's role in revealing details about Bruno's misuse of state aircraft.
But the finger-pointing between the political titans was only a tremor compared to the scandal taking shape that Monday in the New York City offices of the former North Fork Bank.
The bank's wire room, citing a federal regulation that requires banks to keep identifying information on clients who make wire transfers, denied the request for anonymity by Spitzer's private banker, Adam Brenner, a vice president at the Madison Avenue branch.
"In response, Mr. Brenner pointed out that a prior transaction in the amount of $10,000 had previously been processed similarly on July 11, 2007, between these same parties," states the SAR filed by North Fork Bank. "The August 6th wire transfer was denied and later processed as an internal bank transfer between the two clients' accounts."
The highly detailed, five-page SAR -- obtained by the Times Union -- confirms how Spitzer's peculiar request three years ago triggered the federal investigation that unraveled a high-priced prostitution ring called the Emperors Club and brought down a governor in the process.
The new details also come as there is heightened interest in Spitzer with the recent publication of two books chronicling his spectacular fall. The revelations in the SAR confirm the origins of the case that derailed the former governor, who has re-emerged on the public stage with frequent appearances on talk shows and lectures to college students on government policy.
The SARs, which are generated frequently by banks, are forwarded to federal and state law enforcement agencies, including the FBI and U.S. Treasury Department. Investigators routinely sift them for leads and crimes that may be worth prosecuting.
But the report containing Spitzer's name certainly would have drawn the interest of law enforcement. His occupation, "NYS Governor," was listed on the report's first page under a section outlining "suspect information." The bank's investigators also checked a box indicating they had reason to believe that crimes were possibly being committed by Spitzer, QAT Consulting and a young New Jersey woman who had set up QAT's account, Cecil G. Suwal.
The bank's report characterized the suspicious activity as money laundering or structuring, an unlawful practice in which monetary transactions are broken up to conceal their origin and purpose.
After the bank denied Brenner's request on Spitzer's behalf, details of the transaction were reported to an executive vice president at North Fork and to a high-ranking bank officer. They instructed Brenner to call Spitzer and ask him to explain his unusual request.
"Mr. Brenner reported that he spoke directly with the customer, Mr. Spitzer, who advised that the purpose of the transfer to QAT was to pay a personal expense," the report states. "Mr. Brenner further stated that the customer did not wish to elaborate, however did state that he is sensitive to the bank's position and going forward will transfer funds through the proper channels."
But the bank officials concluded Spitzer's response "did not provide an adequate explanation."
The bank launched what would be a nearly monthlong investigation, culminating with the filing of the five-page SAR on Sept. 4, 2007. The report would end up in the offices of federal prosecutors in Manhattan, who used subpoenas and search warrants to examine banking records, e-mails, text messages and to eavesdrop on telephone calls of the Emperors Club conspirators and their clients.
On March 8, 2008, seven months after Spitzer's peculiar request piqued the interest of North Fork bank officials, Suwal and three others were arrested by agents with the FBI and Internal Revenue Service. Four day later, as reports surfaced identifying Spitzer as a client, he resigned in disgrace.
While Spitzer's request to conceal his name on the $5,000 wire transfer was a trigger for the bank to investigate, it remains unclear how far the probe would have gone if not for the fact QAT Consulting, and Suwal, also were customers of the same bank. That coincidence, if it is one, enabled North Fork's investigators to dig deeper into the shady company that was the recipient of hundreds of thousands of dollars in wire transfers from New York's governor and a curious mix of characters.
What the bank's investigators found was a suspicious company with questionable corporate records and a website that touted its expertise "in all legal ways in arranging suitable and lawful USA offshore structuring both for your business and your private affairs," according to the SAR.
The bank examined Spitzer's personal and business accounts but found no other unusual activity. He had been a client of North Fork Bank since 2000, records show. But their probe of QAT uncovered a trove of suspicious corporations, bizarre transactions and phony addresses.
The bank dug deeply into the dealings of QAT, which federal authorities would later identify as a shell corporation behind the criminal enterprise known as the Emperors Club VIP. Federal court records show the Emperors Club generated more than $1 million in illicit profits over a four-year period beginning in 2004 by "marketing dozens of women as prostitutes to wealthy, male clients."
The SAR filed by North Fork Bank raised enough questions for federal investigators to examine the business dealings of Suwal and QAT Consulting, which the bank's report concluded had the markings of a sham.
"An Internet search of 'QAT Consulting Group, Inc.,' found a website promoting a company with an exact match to the client's name," the report states. "The website appears to be under development and contains misspellings and a confusing array of links to other websites. ... After conducting its investigation, the bank was unable to determine the business purpose for QAT. The types of transactions and counterparties identified did not seem consistent with a finance consulting firm."
The bank's report concluded by stating that QAT's account was "under review for possible closure" and that Spitzer's accounts would be left open but monitored for "further suspicious activity."
The money flowing through QAT's accounts included transactions from "a doctor, an acupuncturist, a recruiter in the entertainment industry, an adult film star and a Belgium musician," the report states, without giving their names. The report also highlights a series of international wire transfers between an unidentified "judge and a female adult entertainer."
"There were also two foreign incoming wires for $50,000 each from Grosvenor Group and one for $975 from Gian Paul De Blas," the report states.
In March 2008, shortly after Suwal and three others were arrested on federal charges filed by the U.S. attorney's office in Manhattan, published reports in British newspapers identified Gerald Cavendish Grosvenor, identified as one of the wealthiest individuals in Great Britain, as an Emperors Club client.
Spitzer, like other Emperors Club clients, was not prosecuted even though his transactions involved interstate fund transfers and prostitutes who crossed state lines to have sex with him.
Then-U.S. Attorney Michael Garcia said in a statement that while Spitzer admitted being a client of prostitutes, their investigation uncovered no evidence that Spitzer used campaign or public money. He also said they concluded their was no "offense relating to the withdrawal of funds for, and his payments to, the Emperors Club VIP."
Instead, federal prosecutors turned their focus on Suwal and her conspirators.
"Escort services such as the Emperors Club ... even though they generally do not involve violent coercion or the exploitation of minors, nevertheless cause substantial harm to society as a whole and to the individual women who are victimized," prosecutors wrote in their sentencing memorandum prior to Suwal's sentencing.
On Feb. 11, 2009, Suwal was sentenced to six months in prison for her guilty plea to conspiracy charges.
Ping!
Not quite as stupid as Jerry Springer, when he was mayor of Cincinnati, writing a check to a hooker.....
Not a bit of shame...He was on TV this AM....Like his life as a whore never happened...
Was it CNBC? I saw a preview for a segment where the announcer touted their next expert who would be on after the break. When he proudly announced spitzer’s name I changed the channel.
Didn’t Bob Beckel do the same thing?
Yes he did.
Cash only, Baby!
As much as I loathe Spitzer, it’s still scary to read how the bank, at the govt’s behest, will go looking in to your personal money affairs (no pun intended). Not only does a $10,000 or more transaction trigget a report to the IRS, but smaller amounts adding up to that are called “structuring” and are considered illegal. WTF?!
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