Investigations
The investigation of Spitzer was 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 had at least seven liaisons with prostitutes from the Emperors Club 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 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 meeting on February 13, 2008, Spitzer paid her $4,300 in cash. The payment included $1,100 as a deposit toward future services to be provided by the Emperors Club.
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. Some of this information came to light from a United States Department of Justice 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 several days prior to the revelations of Spitzer's involvement.
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In November 2008, the Department of Justice declined to prosecute Spitzer for violating the Mann Act.
