Spitzer has retained the law firm of Paul, Weiss, Rifkind, Wharton & Garrison. Michele Hirshman, former chief of the public corruption unit in the Manhattan U.S. attorney's office and a former colleague of Spitzer's when she served as New York's first deputy attorney general, is the lead attorney, said Madelaine Miller, a spokeswoman for the firm.
Law enforcement sources were quoted by the Associated Press and Newsday saying that Spitzer spent as much as $80,000 during numerous liaisons with Emperors' Club prostitutes. Newsday also reported that Spitzer drew the attention of bank officials when he split one financial transaction of at least $10,000 into three smaller ones to evade reporting requirements. Citing unnamed law enforcement sources, the newspaper reported that Spitzer then tried unsuccessfully to take his name off the three transactions.
After Spitzer was first linked to the prostitution ring, he apologized for unspecified bad behavior at a hastily called news conference. But he has not admitted publicly that he consorted with prostitutes or that he knowingly engaged in suspicious or illegal financial transactions.
On Tuesday, authorities said it is the transactions themselves that could get Spitzer into legal trouble, especially if authorities determine that he was trying to "structure" them to avoid reporting requirements or disguise the true nature of the payments.
According to the federal law enforcement official, Spitzer's bank reported his suspicious transactions, as required under the Bank Secrecy Act, by electronically filing at least one Suspicious Activity Report, or SAR. One financial crimes expert, former senior FBI official Dennis Lormel, said that SARs have been required for many more financial transactions since the Sept. 11 attacks and that bank compliance officers "have come down really hard" on financial institutions.
The SARs are forwarded by the Internal Revenue Service to a Treasury Department agency known as FinCEN, the Financial Crimes Enforcement Network.
SARs usually contain the names of the senders and receivers of financial transactions and information from bank officials about why they believe the transactions were suspicious, said Lormel, who is now senior vice president for anti-money laundering for Virginia-based Corporate Risk International.
It is illegal to disclose publicly that a SAR has been filed, but the information is widely disseminated to federal and even state law enforcement agencies, Lormel said.
