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March 13, 2008

Enough is enough: Feds probe Spitzer's records back to 1999

The feds are launching a massive investigation into Eliot Spitzer's finances, going back to 1999. They say they're looking for more evidence of "structuring."

"Structuring" sounds sinister, but it just means breaking a large transaction into several smaller ones in order to skirt reporting guidelines. It's not money laundering. It's not public corruption. You can "structure" while buying legal goods and services with your own money. 

Structuring is a thought crime. If you calibrate the size of your transactions in order to avoid federal scrutiny, you're guilty. Yet the exact same transactions could be perfectly legal if you made them with "pure" intentions. Structuring charges are a way of meting out ad hoc punishment to people who are otherwise adhering to the letter of the law. How dare you prefer not to call attention to yourself?

Bush's Justice Department is using structuring as an excuse to literally make a federal case out of a pretty banal prostitution scandal. A powerful man bought sex with his own money, he got caught, he resigned. In two weeks, nobody but his family and New York political junkies will care.

Unlike pimps and prostitutes, johns are rarely prosecuted unless they get caught in the act. For example, none of the DC Madame's clients are going to jail because their names turned up in her little black book. Buying sex isn't a federal crime, and New York State doesn't give a rat's ass about Spitzer's dalliances, as far as the criminal law is concerned.

So, the so-called Public Integrity Section of Bush's Justice Department is trying to exploit an obscure bit of bank law to destroy Spitzer.

This isn't an isolated incident. The Republicans are using the criminal justice system to pick off rising Democratic stars, one by one.

This isn't just politics as usual. It's no longer about getting the Republicans' enemies out of office, or costing the Democrats the next election. It's about making sure the targets are so thoroughly discredited that they never return to public life. It's about ruining their lives, if at all possible.

Don Siegelman, was a rising Democratic star in Alabama. He was a rare commodity, a Democrat who could win elections in a deep red state. Some people saw a presidential bid in his future. Now, Siegelman is languishing in a federal prison camp, thanks to Karl Rove and the some cooperative US Attorneys. (For more details, see Scott Horton's Siegelman Chronicles.)

Now, the Bush Justice Department is trying finish off Eliot Spitzer, another high profile Democrat who once harbored presidential ambitions.

Our former governor was reckless enough to cause the sex scandal that ended his political career. In any sane world, Spitzer would just slink back into private life in disgrace. If Spitzer's political enemies had any sense of proportion, they'd be satisfied to see him lose his office and his reputation. But that's not good enough for the DOJ. They want to bring Spitzer up on federal criminal charges.

For what, really? For being a little sneaky when he wired his own money to pay for a call girl. Or, maybe for arranging to have a New York escort to service him in DC, in violation of a federal anti-"White Slave trading" statute. The feds can pour on the legal jargon and the righteous indignation, but that's really it.

The message to future reformers is clear: Don't you dare fuck with us.


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The Spitz will never return to public life, even if given a pardon.

Siegelman wasn't guilty of the crimes he was convicted of?

Is it only the [Republican ] Bush Justice Department prosecutions that are suspect. Are the Democratic prosecutions of guys like Tom DeLay all above board, and without any political implication?

The Phantom -

No, Don Siegelman wasn't guilty of the crime he was convicted of.

The feds got a criminal to tell a story about witnessing Siegelman taking a bribe, and his story was so contradictory that they made him write it down to get rid of the contradictions. They didn't tell the defense this or give them the notes before trial, in violation of discovery rules.

accusations of "structuring" are much more viable when the suspect is reasonably wealthy, so that they're much more likely to be moving significant quantities of money around.

Spitzer has family money.

And the funny thing is, there's plenty of rich, influential repugs. Boy, I hope they're okay with Hillary using the "structuring" investigations after the election.


I do not know the facts of this case. But there are some who discount the veracity of what CBS said. Not trying to be cute...I do not know. I'd just be careful about saying "the feds got a criminal to".....

Just the facts.

I will dig around tonight, and will see if the 60 minutes story is available online.

The politically important story here is how this Spitzer business provides more evidence of the politicization of the FBI and the Department of Justice.

In lieu of getting upset about whether some guy bought the services of a prostitute with his own money, I'm interested in figuring out how we go about prosecuting the current administration. That probably won't happen, of course, because nobody is interested in defending the Constitution or our way of life. Getting hysterical about private sexual infractions is more fun and vastly safer than the genuinely patriotic goal of defending decent government. To be fair, restoring something like responsible government opens up a truly scary prospect because the problem is not this or that malefactor. A good percentage of the population favors authoritarian governance so that confronting the current political evil means confronting something rotten among a large segment of the population.

It does seem strange for structuring itself to be a crime. Banks reporting probably structuring seems perfectly reasonable, but if they're reporting it anyway, why make it against the law? If you're doing something illegal with the money, then they should charge you for doing that illegal thing, not the exact way the money was transfered.

I've been working on a long-term investigation of the Siegelman affair for Raw Story. Here's the first installment of the series. I'm on the byline of the third installment.

I will say without hesitation that Don Siegelman is innocent, because the State didn't prove its case against him. I will also say that it was a miscarriage of justice that Siegelman and Scrushy found themselves charged with crimes in the first place.

This whole incident involves a political contribution made behind closed doors. The only two people who were there say that there was no bribe. Siegelman didn't pocket a penny. Scrushy had already served on the board under the three previous governors.

The state's only evidence against S&S was hearsay from a Siegelman staffer who got time off his own sentence for cooperating. Even that staffer, Nick Bailey, could only testify that Siegelman came out of the meeting with Scrushy's check in his hand and said something to the effect that Scrushy wanted to be on the board, and could they do that? Bailey didn't even claim that Sieglman described a quid pro quo. It turns out the check wasn't even cut until a couple after the meeting! Incidentally, Bailey restated his testimony to the FBI many, many times, and the State won't give the defense the notes, which the defense is entitled to.

That's not proof beyond a reasonable doubt. It's outrageous that charges were brought in the first place. The fact that the governor said he was inclined to indulge a campaign contributor who wanted to do some unpaid public service hardly constitutes evidence of bribery.

You can establish a probable motivation in court using all sorts of legitimate strategies, though. If a customer comes in an tries to conduct a transaction that requires filing certain paperwork, and then pulls the transaction and, after grilling the teller about the requirements, runs right up to the line, then that's a suspicious activity. I'm wary of the whole idea that bringing motivations into a situation is a "thought crime" issue---that's the argument used against hate crime legislation.

It's quite possible that Republicans are going after Democratic rising stars, but this business with Spitzer was quite likely to have come out whether or not his bank had reported him in the first place. If they have ambitions, they should stay clean--simple as that. These days, politicians on both sides are getting caught all the time, so I can't believe that the ambitious ones would be so brazen. And of course, you know, the irony of Spitzer's knowing in such detail how all of these bank transactions work...

Making a federal case out of it (either for structuring or for violations of the Mann Act) is really stupid, but the prostitution scandal alone probably would have killed his career all by itself.

Structuring charges are a way of punishing people for adhering to the letter of the law. How dare you prefer not to call attention to yourself?

Lindsay, this doesn't make sense. Structuring is against the law. So when you engage in structuring, by definition, you are not adhering to the letter of the law.

I'm wary of the whole idea that bringing motivations into a situation is a "thought crime" issue---that's the argument used against hate crime legislation.

Then if you support hate crimes legislation, you might be able to explain why an offense that depends on defendant's motivation for his behavior (rather than the behavior itself) the criteria for conviction is not properly called a thought crime.

For me, that's one of several reasons progressives should oppose hate crime legislation.


I'm not expert on US law in general, but I was under the impression that the notion of looking beyond a crime's simple material result (the 'behavior itself') wasn't something that's exclusive to 'hate crime legislation' in the US, which would make that reason to oppose it quite lame.

If Rudy could have a zillion affairs and wear women's clothes and run for the presidency what's the big deal with Spitzer's call girl? The hypocrisy is stunning. Would they be investigating if he was a Republican? No.

I hope you stay on this store, perhaps professionally. it's tempting to make it into a big joke, and Spitzer is hated by a surprising number of Democrats, but there are a lot of red flags up.

Great work on Siegelman.

Nomad, I think there is a difference between "looking beyond the crime's simple material result" and making the defendant's motivation the main criteria for conviction.


There is a difference, but I don't think 'hate crime legislation' necessarily falls into the latter category. Take a hate crime and disregard the motivation, and you still have a crime.

I don't think that the gravity of a crime is the main critera for conviction. It certainly is the main critera for sentencing, which is what I thought 'hate crime legislation' actually modifies.

Unless 'hate crime' is taken to include more than what I'm familiar with, but in any case you implied your objection applied to all hate crime legislation.

If the rules say you don't have to report transactions below a certain threshold, then you should be allowed to take that fact into account when you're conducting your business. Why should it be a crime to choose one set of otherwise legal transactions in order to avoid scrutiny itself? There's nothing inherently wrong about being secretive.

There are all kinds of legitimate reasons why someone would want to structure their business to avoid the scrutiny of their bank and/or the government. If you're not breaking any other laws, or concealing any other crimes, it's nobody's business how you divide up your payments. I don't see anything wrong with maximizing your privacy while abiding by the rules. The spirit of the law is that the government wants to know if you're moving more than X dollars. The letter of the law uses a per-transaction threshold for automatic reporting.

To my mind, structuring is a lot like legal tax planning. The government accepts that everyone wants to pay as little as they can get away with. There is no legal sanction for trying to minimize your taxes, per se. Obviously there are rules about how you may go about it, and if you break those rules you face severe penalties. But there's no overarching rule that says that you may not structure your transactions so that you end up owing less than you otherwise would. Why should there be an overarching rule that says that you can't try to operate under the radar, if that's your preference? Basically, structuring is a way to owe the government less information.

Structuring is like using a radar detector to avoid the police. Radar detectors are illegal, and so is structuring. In fact, I wouldn't be surprised if Spitzer used structuring as a way to funnel his father's money into his political campaigns. It shouldn't be illegal fund your son's campaign, but it would be ironic if Spitzer was hung by the same sort of goo-goo public financing laws that liberals support.


It's illegal to have affairs or to wear women's clothes?

Oh no. A significant portion of the population is in a lot of trouble.

Good point about hate crimes. With structuring there is "no underlying crime." (Lulz) Taking motivation into account is different than motivation itself being a crime.

The administration abuses things like rendition and Gitmo to get around the law. Can we throw them in jail for trying to skirt the spirit of the law?

Nomad, you do misunderstand hate crimes. It's not the same as bringing up proof of bias after conviction as information relevant to sentencing. I don't have a problem with that.

It is true, as you say, that if you take "a hate crime and disregard the motivation, and you still have a crime." That's proof that the only criteria for labeling the behavior a hate crime is the thoughts of the accused. It's also why hate crime legislation is unnecessary: try the defendant for the acts he performed, and punish him appropriately for that.

Lindsay, the law doesn't say that you have to report transactions at a certain threshold--the law makes the bank liable for reporting. Is you position that the government has a reasonable interest in certain cash transactions that allows them to require banks to report them, but that reasonable interest in the transactions doesn't allow them to forbid individuals from trying to hide them?

"That's proof that the only criteria for labeling the behavior a hate crime is the thoughts of the accused."

That's also the difference between manslaughter and murder (which are distinct charges), and a variety of other crimes. Intent plays a part in many legal determinations, it is hardly unique to hate crimes.

Unless you are arguing that all considerations of intent should be stripped out of the legal process you position seems highly inconsisten.

The problem with structuring laws is that intent is the only crime.

All in all this series on the Spitzer thing is the best telling I've run across. Lots of things to track on: money, power, sex, politics, detectives. For most of the other coverage, it's just the sex.


"Nomad, you do misunderstand hate crimes."

It's Numad, not Nomad.

And no, I don't misunderstand hate crimes. At least, not in the way you claim. You're mirepresenting my point. Sentencing is where the practical effect of hate crime legislation occurs.

Intent is the main critera to determine that one is charged/convicted of a hate crime [I]instead[/I] of something else. Yes, that's true.

If that's what you meant by "intent is the main critera for conviction", and that's not how I read it at all, then I don't see your point. As Margalis points out (and as I tried to point out in my original comment), the idea of categories of crime based on intent/motive/thought has been integrated long before hate crime legislation.

Nomad, you do misunderstand hate crimes. It's not the same as bringing up proof of bias after conviction as information relevant to sentencing. I don't have a problem with that.

I think Numad understands hate crimes just fine. Parse, while I'm glad to hear that you don't have a problem with courts using proof of bias as a basis for sentencing, I'd be more interested in hearing what principled distinction you make between hate crimes and the countless other cases where we take into account a person's motivations in determining charges and punishment.

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