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The Spitzer Sting

Was there a medium-sized right-wing conspiracy to nail Eliot Spitzer?

Alexander Cockburn

March 13, 2008

Was there a medium-sized right-wing conspiracy to nail Eliot Spitzer, above and beyond Spitzer’s own diligent efforts in the same cause? It certainly looks like it. It’s clear that the feds start ed with Spitzer, whose wire transfers led them to the Emperors Club VIP, a prostitution business efficiently administered by a 23-year-old Blair Academy grad, Cecil “Katie” Suwal, on behalf of her 62-year-old boyfriend, Mark Brener, from a high-rise in Cliffside Park, New Jersey, with fine views of Manhattan.

The official line 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 similar transaction at another bank where Spitzer had an account also supposedly twitched a red flag. Banks have to report transactions of $10,000 and up to the Treasury Department. People not wanting to have their bank snitch to the feds about their transactions routinely keep the sums below the red-light figure, so the feds have told the banks to adjust their mandatory snooping to report smaller sums, or sums that add up to $10,000.

Like innumerable other affronts to privacy, this reporting requirement began as a tool in the “war on drugs” and is now part of the furniture of our lives. All the same, it strains credulity to believe that North Fork’s “suspicious activity report” on a well-known and presumably valued client immediately aroused the interest of the IRS employee scrutinizing the many SARs churning through his computer on Long Island. The official version has the IRS man noting Spitzer’s name, then passing the information up the food chain to the Justice Department and the US 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? If so, we would have 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?

Once the wheels were set in motion, we had the unedifying spectacle of the state devoting its resources to exposing Spitzer’s various rendezvous with consenting adults, primarily “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 criminal complaint of a quote from the phone taps about his sexual preferences (reminiscent of Ken 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. It was extraordinary to hear the Mann Act, ancient weapon of racist bigotry against blacks, being brandished as a possible sanction against the governor for having paid for a prostitute to travel from New York to Washington. Spitzer, obviously a stew pot of fierce psychic contradictions, was brimful of prosecutorial zeal himself, against prostitutes as well as convicted sex offenders. It was Governor Spitzer who pushed civil commitment into law last year, legalizing possible lifetime incarceration for sex offenders, no matter what their original sentences may have been.

But Spitzer also frightened Wall Street, which was a good thing. There were plenty of powerful financial institutions that craved his downfall and whose employees cheered wildly when it happened. A little perspective is useful here. We are now well advanced in an election year where the prime candidates, Barack Obama, Hillary Clinton and John McCain, have scarcely made a centerpiece of their campaigns the outrageous and racist thievery practiced by Wall Street in the subprime scandals. A lawsuit filed by the NAACP on March 7 makes for instructive reading in this regard. It seeks to fast-track the NAACP’s class-action lawsuit against Washington Mutual, Citi, GMAC and fifteen other mortgage firms that steered African-American borrowers into predatory loans. The suit cites a 2008 study by United for a Fair Economy estimating losses of $164-$213 billion for subprime loans during the past eight years. UFE considers this to be “the greatest loss of wealth for people of color in modern US history.”

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 tech-stock bubble, the perpetrators should be facing criminal sanctions. Wall Street has nothing to fear from the SEC for its subprime frauds; the commission has no prosecutorial powers. But New York State does have the Martin Act, the most powerful criminal enforcement weapon in the country and one used to great effect by Spitzer when he was Attorney General. In January there were news stories about AG Andrew Cuomo using Martin to go after the subprime corporate miscreants. Such an onslaught, with the backing of Governor Spitzer, was undoubtedly making Wall Street nervous. Now Spitzer is gone. Wall Street has nothing to fear from Clinton or from Obama, whose candidacy floats on vast contributions from Wall Street, as detailed by Pam Martens in CounterPunch.

Presidential elections are mostly about keeping important is sues off the agenda, whether it be US complicity in Israel’s atro cious crimes in Gaza or the funds voted by Clinton and Obama for the Iraq War, now arriving at its fifth anniversary, or impeachment of a President destroying constitutional protections. Instead we get a sex scandal, freighted as always with hypocrisies far in excess of Spitzer’s own double standards, about which I trust we will one day get a book from Mrs. Silda Wall Spitzer.

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

Alexander CockburnAlexander Cockburn, The Nation's "Beat the Devil" columnist and one of America's best-known radical journalists, was born in Scotland and grew up in Ireland. He graduated from Oxford in 1963 with a degree in English literature and language. After two years as an editor at the Times Literary Supplement, he worked at the New Left Review and The New Statesman, and co-edited two Penguin volumes, on trade unions and on the student movement. A permanent resident of the United States since 1973, Cockburn wrote for many years for The Village Voice about the press and politics. Since then he has contributed to many publications including The New York Review of Books, Harper's Magazine, The Atlantic Monthly and the Wall Street Journal (where he had a regular column from 1980 to 1990), as well as alternative publications such as In These Times and the Anderson Valley Advertiser.

He has written "Beat the Devil" since 1984.

He is co-editor, with Jeffrey St Clair, of the newsletter and radical website CounterPunch(http://www.counterpunch.org) which have a substantial world audience. In 1987 he published a best-selling collection of essays, Corruptions of Empire, and two years later co-wrote, with Susanna Hecht, The Fate of the Forest: Developers, Destroyers, and Defenders of the Amazon (both Verso). In 1995 Verso also published his diary of the late 80s, early 90s and the fall of Communism, The Golden Age Is In Us. With Ken Silverstein he wrote Washington Babylon; with Jeffrey St. Clair he has written or coedited several books including: Whiteout, The CIA, Drugs and the Press; The Politics of Anti-Semitism; Imperial Crusades; Al Gore, A User's Manual; Five Days That Shook the World; and A Dime's Worth of Difference, about the two-party system in America.    


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