ALBANY — Eight months after a federal investigation into a prostitution ring brought about the downfall of Gov. Eliot Spitzer, the question still persists in some circles: Was the federal government out to get Mr. Spitzer?
No evidence has surfaced to support such an assertion, and investigators have said that politics played no role in their pursuit of Mr. Spitzer. But that has not put to rest suspicions, expressed on left wing blogs, that Mr. Spitzer, a zealous pursuer of Wall Street wrongdoing who some thought could one day be president, had been singled out.
Now, a congressional committee has called for what would be the first public examination of the events that prompted the initial inquiry into his bank transactions, which showed he was sending money to a front company for Emperor’s Club V.I.P.
The House Financial Services Committee intends to take up the matter early next year and tentatively plans to hold hearings that could include testimony from the United States Treasury’s law enforcement unit, along with Mr. Spitzer’s bank, North Fork, and HSBC, a bank used by a company connected to the prostitution service.
“The question was: Why were they looking for this? Is this political retribution?” said Representative Michael E. Capuano, a Massachusetts Democrat and a member of the committee who has been critical of the increased scrutiny of banking transactions, which increased greatly under the passage of the Patriot Act.
“It raises questions in my mind that he may have been targeted for political purposes,” he said, adding that he had no evidence that suggested as much.
The committee’s interest in the matter surfaced in e-mail messages obtained by The New York Times as part of a Freedom of Information request.
The Democrats who lead the committee were not asked to pursue the inquiry by Mr. Spitzer, committee officials said, and did not have close ties to the former governor. Indeed, one of the members of the committee who initially pressed for information about the case in a letter last summer is Republican Steven C. LaTourette of Ohio, who has taken an active interest in banking issues.
The office of the United States attorney for the Southern District of New York, Michael J. Garcia, declined to comment. Because Mr. Garcia said earlier this month that no charges would be pursued against Mr. Spitzer in the case, the committee’s work may represent the only forum in which to untangle the mystery of how the former governor ended up in the middle of a law enforcement rarity: a federal investigation into an adult prostitution ring.
A spokeswoman for Mr. Spitzer declined to comment.
The committee also plans to more broadly examine the government’s practice of reviewing hundreds of thousands of suspicious activity reports filed by banks each year and whether such reports are being used appropriately.
Use of such reports was expanded by the Patriot Act and has previously been a subject of inquiry for the House Financial Services Committee, whose chairman is Representative Barney Frank. The committee made its initial inquiries into the Spitzer case over the summer, but its review has been put on hold amid the financial crisis. The committee has played a central role in oversight of the federal bailout of Wall Street.
Mr. Frank, Mr. Capuano and two other lawmakers signed a letter sent in July to the Financial Crimes Enforcement Network, a branch of the Treasury Department that serves as a repository of financial intelligence. The letter was also signed by Representative Melvin L. Watt, a North Carolina Democrat who is chairman of a subcommittee on oversight and investigations, and Mr. LaTourette.
The lawmakers asked for answers to a series of detailed questions about the use of suspicious activity reports, or SARS, in the Spitzer case, including whether the case was “precipitated by a ‘tip’ to a law enforcement agency by some person(s) outside the law enforcement or banking community.” Among the other questions: “Was there an investigation of Governor Spitzer in progress before any SAR was filed?” and whether similar transactions made by a “nonpolitical, nonpublic person triggered the filing of a SAR by a bank.”
The letter also seeks a detailed timeline of when and to whom the suspicious activity reports were filed and whether they were expedited or treated in any unusual way.
“Obviously we wouldn’t have written the letter if we didn’t have questions about it,” Mr. Watt said.
Mr. Frank, through a spokesman, declined to comment.
James H. Freis Jr., the director of the Financial Crimes Enforcement Network, the Treasury’s law enforcement arm, wrote the legislators in September and told them that “given the sensitivity of your inquiry, we would prefer to respond in person rather than in writing.”
Stephen Hudak, a spokesman for the Crimes Enforcement Network, said, “We’re not giving any comment beyond the letter that Director Freis wrote.”
Banks are required to file suspicious activity reports if they notice any of a variety of red flags when customers make large transactions. For instance, federal guidelines say that banks should file a report when a customer makes $5,000 worth of transactions — deposits, wire transfers or withdrawals — if the particular transaction is out of the norm of the customer’s typical behavior or if it appears to be structured to evade any particular regulation.
A number of federal law enforcement agencies, including the Drug Enforcement Administration, the Internal Revenue Service, the F.B.I. and Immigration and Customs Enforcement, have access to the reports and periodically examine them.
News reports in the days after Mr. Spitzer was first identified as a client of the prostitution ring provided a window into how the investigation began. In July 2007, North Fork Bank filed a report about a series of wire transfers totaling about $10,000 made by one of its customers, Mr. Spitzer, to QAT International, a shell company. The transfers appeared to be intended to avoid a disclosure requirement for a larger single transaction.
The report went unnoticed for several months, however, until another bank, HSBC, filed reports about suspicious activities by QAT International and another shell company, QAT Consulting Group, that were connected to the Emperor’s Club. It was the second report that prompted the investigation and drew interest to the previous report involving Mr. Spitzer.
An official at HSBC declined to comment. Capitol One, which now owns North Fork, did not return a call for comment. Officials at the Internal Revenue Service also declined to comment.
One of Mr. Spitzer’s last appearances in Washington was before a subcommittee of the House Financial Services Committee — a hearing on bond insurance.
It was on that trip that Mr. Spitzer stayed at the Mayflower Hotel in Washington, where he had the encounter that would lead to his resignation.
Recent Comments