Posted by WLS:
According to this abcnews story, Spitzer’s involvement with this ring was not uncovered by virtue of some happenstance over-hear on a wiretap involving a prostitution ring. Rather, the feds targeted Spitzer himself based on a suspicious activity report filed by his bank, which noticed him paying large amounts of money in ways that it thought were evidence of criminal conduct. This report says Spitzer is suspected of “structuring” which is the intentional structuring of financial transactions involving cash in amounts less than $10,000 for the purpose of avoiding the filing of “Currency Transaction Reports” with IRS and FBI. They indicted the prostitution ring based on what they uncovered in looking into Spitzer, but the facts suggest to me that Spitzer has received a target letter indicating that he is the target of a federal criminal investigation for his conduct.
Combine this with the play between the sheets, and I think NY has a new governor by late morning tomorrow.
Updated 3/11 — After having taken a few minutes to read through the documents posted, what I can say is this. The SDNY has charged 4 people in connection with violations of federal law connected to their operation of an international prostitution ring. This investigation included a wiretap that went up in Dec. 2007, and was probably up for 90 days — which is pretty normal.
They are looking into an intentity called “QAT Consulting,” which is the “business” name used by the prostitution ring to run through credit card bills and pay its taxes (according to the operators).
Because much of this business is done in cash, both the johns and the pros have to handle large quatities of cash, which can tend to make banks suspicious and leads them to file STRs with the FBI and the IRS where they identify the account, account holder, and any principals named on the account.
But I suspect that separate and apart from this investigation there was a second investigation initiated of Spitzer based on STRs filed. The suspicion was that his deposits for the benefit of one or more shell companies operating as “QAT Consultants” were transactions designed to shield something. Some of the reporting suggests the investigators thought he might be laundering bribe money into shell companies, and they went looking into QAT to see if they could find how the money was getting back to Spitzer.
I think it was at that point that the two seperate investigations came together — one looking at QAT Consultants as a prostitution ring, and the other trying to figure out why Spitzer was deposition large amounts of cash with a shell company that did no business so far as anyone could tell.
Then Spitzer turns up on the wiretap around February — though I doubt that was the first time they caught him on the wiretap. In addition to recording each incoming and outgoing call to the Prostitution ring, the technology allows the government to “trap” the incoming number or to record the number called by the phone being monitored. So the agents on the wiretap would have known almost instantly that the call was coming from a cell phone (or hardline) linked to Spitzer.
From there its pretty ordinary police work.