Investigators split on charging Spitzer with crimes

BY ROBERT E. KESSLER | robert.kessler@newsday.com

9:12 PM EDT, March 14, 2008

While stressing that the investigation is in its early stages, prosecutors and investigators in the Southern District are split on whether to charge Gov. Eliot Spitzer with any substantive crimes that might lead to jail time in connection with his involvement in a prostitution ring, according to several sources familiar with the situation.

Federal investigators are going over Spitzer's overall finances to determine what, if any charges the soon-to-be ex- New York governor might face. Among the possibilities are money laundering, structuring (breaking transactions into smaller amounts to avoid currency rules), or fraudulent use of public or private funds, the sources said.

For example, investigators are looking into whether he used any public or campaign funds or services to pay for or facilitate any illegal activities, including hiring prostitutes, the sources said. An affidavit filed in federal court as part of the investigation into the prostitution ring details what is said to be his use of personal bank funds to pay for prostitutes.

From the point of view of leniency, some investigators argue that the loss of the governorship and the humiliation that goes with his downfall might be sufficient punishment, the sources said.

In that event, Spitzer, who announced his resignation Wednesday, probably would plead to a minor charge, a misdemeanor or a low-level felony for which he would almost be guaranteed no jail time, they said. For example, pleading to a charge of structuring a small amount of money, say $5,000, would result in a felony conviction but no prison time, a source said.

The contrary argument goes that a prominent public official, who was the chief law enforcement officer of a state, should have to face some prison time to set a public example, the sources said.

But such arguments can't be settled until all the facts are known, the sources agreed. FBI and IRS agents have not had time to completely review Spitzer's use of personal, state and campaign resources.

Prosecutors already have charged four people suspected of running the prostitution ring, called Emperors Club V.I.P., with violations of the Mann Act -- which bars transporting people over state lines for prostitution -- money laundering and conspiracy. Daniel Parker, an attorney representing one of the suspects, said Friday he believed indictments were imminent because investigators had subpoenaed Ashley Dupré, allegedly the prostitute hired by Spitzer, to testify before a grand jury.

A spokesman for Manhattan U.S. Attorney Michael Garcia declined to comment. Spitzer's attorney, Michele Hirshman, also declined to comment.

Department of Justice data compiled by the nonprofit TRAC organization shows that the Manhattan U.S. attorney's office rarely brings cases under the Mann Act and money structuring laws as a top charge. The cases usually involve organizers of sex rings and human traffickers.

Stephen Ryan, a former federal prosecutor of political corruption and organized crime in both Rhode Island and New York, asked Friday, "What purpose does it serve to send Spitzer to prison, if the facts are as they are known now? He engaged in an essentially victimless crime."

"This could take much longer than you think," said one source, referring to a final decision on what to charge Spitzer with, if anything.

Staff writer Anthony DeStefano contributed to this story.