Sex scandal passes but Spitzer may face legal woes
NEW YORK (Reuters) - Publicly humiliated after announcinghis resignation over a sex scandal, New York Gov. Eliot Spitzercould now be caught in a legal tangle for months, formerprosecutors said on Thursday.
If Spitzer really is "Client 9" who patronized an upscaleprostitution ring, he could face prosecution for transporting aprostitute across state lines or for structuring moneytransfers to avoid detection -- or lastly for paying for sex.
Spitzer announced on Wednesday he would step down asgovernor after The New York Times reported he was a repeatclient of the escort service and paid a young woman $1,000 (493pounds) an hour for a rendezvous in a Washington hotel room.
The federal investigation began last year when banksalerted the Internal Revenue Service to Spitzer's suspiciousmoney transfers to shell companies linked to the prostitutionring, the Times said.
That led to the stunning downfall to a man who evokedmorality as he pursued malfeasance on Wall Street whileattorney general of New York state.
The Times, citing unnamed law enforcement sources, saidSpitzer was the unnamed Client 9 from a federal affidavitsupporting charges filed last week against four suspectedringleaders of the Emperors Club online prostitution ring.
Spitzer apologized to his family and the public forunspecified offences, referring to his "private failings."
"I think there's a reasonably strong likelihood that they(prosecutors) would initiate charges, or at least pursue thisvery seriously at this juncture," said Brad Simon, a formerfederal prosecutor who now works as a defence attorney at Simon& Partners LLP in New York.
"In his case I'm sure there will be many months ofdiscussion, negotiating and investigating."
'A TOUGH CALL'
While prostitution is illegal in Washington, D.C., as it isin most U.S. states, clients are rarely prosecuted.
But because, authorities say, Client 9 paid for the womanto travel to Washington from New York, he may have violated theMann Act that bans interstate transport to engage inprostitution.
Silent movie star Charlie Chaplin was famously prosecutedunder the Mann Act in 1944 after paying for a train ticket fora woman to meet him in New York, but he was acquitted.
Spitzer's lawyers could argue that the Mann Act's intentwas to catch traffickers in prostitution, not clients.
"His lawyers will undoubtedly make the case that he'ssuffered enough," Simon said.
"This is a tough call for the prosecutor because, on theone hand, you don't want to be accused of giving preferentialtreatment, but you also don't want to be perceived as treatinghim unfairly because of who he is."
A possible money-laundering or structuring charge could beharder to fight. Structuring involves making wire transfers ina way intended to conceal the money's purpose and source.
"By sending the money into a known shell company, he'sarguably aiding and abetting money laundering," said WilliamDevaney, a former New Jersey federal prosecutor now at VenableLLP in New York.
"The crime is not just the structuring, the crime is theintent to avoid the tax reporting requirement," he said.
Investigators may also be looking into whether there wasany misuse of state funds, although media reports suggestedSpitzer only used his own money.
New York Lt. Governor David Paterson, who is set to replaceSpitzer on Monday, said in a radio interview on Thursday thatthe state would cooperate with investigators.
Legal observers speculated Spitzer was seeking to reach adeal to avoid or reduce any criminal liability. But U.S.Attorney Michael Garcia, the top federal prosecutor inManhattan, said on Wednesday there was no such deal.
An attorney, Spitzer also stands to lose his law license.
"If he is convicted of a felony, he will certainly bedisbarred in New York," Devaney said.
Any decision would be made by an independent reviewcommittee.
(Editing by Daniel Trotta and John O'Callaghan)