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On March 10, 2008, The New York Times reported that New York Governor Eliot Spitzer had patronized an elite escort service run by Emperors Club VIP. The ensuing scandal led to Spitzer's resignation as Governor on March 17.
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Investigations
The investigation of Spitzer was reportedly initiated after North Fork Bank reported suspicious transactions to the Treasury Department's Financial Crimes Enforcement Network as required by the Bank Secrecy Act, which was enhanced by Patriot Act provisions, enacted to combat terrorist activity such as money-laundering. Spitzer reportedly had at least seven liaisons with prostitutes from the agency over six months, and paid more than $15,000 for their services. Federal agents had him under surveillance twice in 2008. According to published reports, investigators believe Spitzer paid up to $80,000 for prostitutes over a period of several years – first while he was attorney general, and later as governor. Governor Spitzer, referred to as "Client–9" in an affidavit filed in US Federal Court, arranged to meet at the Mayflower Hotel in Washington on February 13, 2008 with a prostitute named "Kristen." "Kristen" was later identified as the 22-year-old Ashley Dupré. She intended to travel from New York City for the planned tryst and Spitzer agreed in advance that he "would be paying for everything—train tickets, cab fare from the hotel and back, mini-bar or room service, travel time and hotel". After the assignation on February 13, 2008, Spitzer paid her $4,300 in cash. The payment included $1,100 as a deposit with the agency toward future services.
Room 871 at the Mayflower Hotel was booked under the name George Fox, a pseudonym that was allegedly the name of his close friend, a hedge fund investor. Reportedly, some of this information came to light from a federal wiretap.
According to Newsday, Spitzer wanted to transfer more than $10,000 to a front company for the prostitution ring. However, he broke up the transactions into smaller slices due to federal law requiring the reporting of any transfer of $10,000 or more. When he tried to get his name taken off the wires, the bank refused, saying that the money had already been wired out and that it would be improper to do so in any case. The IRS Criminal Investigation Division then began a probe, initially fearing that Spitzer was the victim of either extortion or identity theft.
North Fork's report in July 2007 went largely unnoticed until HSBC filed a report in the fall that the transactions were going to QAT International and QAT Consulting Group, which were offshore shell companies operating as a front for the Emperors Club VIP.
Later, the IRS contacted the FBI to investigate possible political corruption. The investigation led Federal authorities to link the money transfers to the Emperors Club. Prosecutors charged the four people operating the escort service with violations of the Mann Act, a week prior to the revelations of Spitzer's involvement. On November 19, 2007, Republican operative Roger Stone sent a letter to the FBI saying that Spitzer "used the service of high-priced call girls" while in Florida. Stone provided detail saying that Spitzer wore calf-length black socks while performing the sex act.
"I cannot allow for my private failings to disrupt the people's work," Spitzer said at a news conference in New York City. "Over the course of my public life, I have insisted – I believe correctly – that people take responsibility for their conduct. I can and will ask no less of myself. For this reason, I am resigning from the office of governor."
In November 2008, the Department of Justice declined to prosecute Spitzer for violating the Mann Act.
Reactions
After Spitzer's initial press conference, New York State Assembly Republican Minority Leader James Tedisco and Republican New York Congressman Peter King separately called for his resignation. Tedisco later announced that he would initiate impeachment proceedings in the State Assembly if Spitzer did not resign. Spitzer's office and the U.S. Attorney for the Southern District of New York declined to comment, except to say that "There is no agreement between this office and Gov. Eliot Spitzer, relating to his resignation or any other matter."
The real George Fox, who is a close friend and campaign donor of Spitzer, issued a statement denying any connection to the scandal beyond the unauthorized use of his name. He said that he was "disappointed and distressed" that Spitzer had used his name as an alias, and confirmed that Spitzer privately apologized to him.
According to Nell Minow, a corporate-governance expert, Wall Street reaction to the scandal has been largely positive, due to a general dislike of Spitzer amongst investment professionals. Governor Spitzer made his rise to victory in New York City politics promising "ethics and integrity to be the hallmarks of [his] administration." He had prosecuted several prostitution rings in his career, and his connection with a prostitution ring was felt as a betrayal by some women's rights and anti-human trafficking groups that had previously worked with him.
In an editorial reflecting on the scandal, political writer Martha Nussbaum wrote "Spitzer's offense was an offense against his family. It was not an offense against the public. If he broke any laws, these are laws that never should have existed and that have been repudiated by sensible nations."
"Kristen"
"Kristen", 22, was an aspiring pop recording artist living in Manhattan whose professional stage name is Ashley Dupré. She was just one of the escorts that Spitzer liaised with, but she gained significant media attention following the scandal. After the news broke, she responded that she didn't "want to be thought of as a monster," and that it had been a "difficult" and "complicated" time for her. On March 15, the New York Post published an extensive photo shoot showing Dupré in provocative poses. By late October 2008, Dupré's profile on MySpace.com had received nearly 12 million page views. As a result of the media attention following the scandal, Dupré was reportedly offered $1 million by Hustler to pose nude for the magazine, and received unofficial offers from Penthouse, among others. She eventually agreed to pose for Playboy in the May 2010 issue.
Political impact
Spitzer announced on March 12, 2008 that he would resign his post as Governor effective noon on March 17 amid threats of his impeachment by state lawmakers. Lt. Gov. David Paterson succeeded him on March 17, 2008. By resigning, Spitzer lost his status as a superdelegate in the 2008 Democratic nomination for President, depriving Hillary Clinton, whom he supported, of a superdelegate vote. This also reduced the total number of superdelegate votes available. Spitzer discussed his status as a superdelegate on The Colbert Report on February 12, 2008, the day before Spitzer met his escort at the Mayflower Hotel.
Kristin M. Davis, a competing madam who was involved in the scandal, served four months of jail time on Rikers Island as a result of the scandal, and later announced a run for Spitzer's old seat in the New York gubernatorial election, 2010. Davis finished in last place among those on the ballot.
Overseas, Gerald Cavendish Grosvenor, 6th Duke of Westminster was a high-profile casualty of the scandal when Emperors Club prostitutes alleged that he had been a client. The allegations were followed by Grosvenor stepping down in March 2007 as Assistant Chief of the Defence Staff (Reserves and Cadets) in the British Ministry of Defence, a position he had held for four years.
2013 Comptroller Election
Both Spitzer and Davis ran in the 2013 election to become the New York City Comptroller. There was some debate as to whether or not Spitzer's name recognition would help him in the election. Spitzer lost.