Money Crimes with Nicole Lapin - POLITICAL: Eliot Spitzer

Episode Date: October 31, 2024

When Eliot Spitzer became Governor of New York, it seemed like he was destined for greatness — maybe even the Presidency. But those dreams were crushed when a federal investigation revealed that his squeaky-clean image was much dirtier than anyone thought. Money Crimes is a Crime House Original. For more content, follow us on Instagram and TikTok @crimehouse. To learn more about listener data and our privacy practices visit: https://www.audacyinc.com/privacy-policy Learn more about your ad choices. Visit https://podcastchoices.com/adchoices

This is Crime House. Picture this. A politician is standing behind a podium. He is somber, remorseful even. His wife is by his side, literally and figuratively, as he tells the world his deepest, darkest secret. It's a scene many of us are familiar with. More often than not, sex is involved. Although sometimes it's financial, maybe a bribe or misuse of public funds, but every

once in a while, it is both sex and money. That's what happened with Eliot Spitzer, the former governor of New York. Back in 2008, he stood before a crowd, his wife by his side, and apologized for acting in a way that violates my obligations to my family. It was a not so subtle acknowledgement of accusations that he had slept with sex workers. But that was just the beginning.

Because even though Elliot had hired them, his donors may have footed the bill. As the saying goes, those who don't understand history are doomed to repeat it. That's especially true when it comes to money. If you want to make the right decisions when it comes to managing your assets, you need to know what mistakes to avoid and how to spot a trap. This is Money Crimes, a Crime House original. I'm your host, Nicole Lapin.

Every Thursday, I'll be telling you the story of a famous financial crime and giving you advice on how to avoid becoming a victim yourself. At Crime House, we want to express gratitude to you, our community, for making all of this possible. Please support us by rating, reviewing, and following Money Crimes wherever you get your podcasts. Your feedback truly makes all the difference. And for ad free and early access to money crimes, plus exciting bonus content, subscribe to Crime House Plus on Apple podcasts. Today, I'll introduce you to Elliot Spitzer,

the disgraced former governor of New York. Once upon a time, Elliot dreamed of becoming the next president of the United States. But when he was accused of spending campaign funds to hire sex workers, those hopes were shattered. And that was only one of many accusations of financial crimes Eliot Spitzer faced in his political career. Hey everyone, it's Nicole. I have a quick favor to ask you. If you're enjoying Money Crimes, I would be so incredibly grateful if you took a moment to rate and review us on Apple or on Spotify. Your feedback helps us improve the show and reach more people who love all things finance and crime. Thank you so much for your support.

Our story starts in the mid-1980s in the criminal underbelly of New York City. Thanks to laws passed in the 70s, the mob's influence wasn't the same as it used to be. But even though New York's infamous Five Families, the Columbus, the Gambinos, etc. had a lot less power, they were definitely still around. They had influence in certain corners of the city, threatening and intimidating people into doing things their way. And that did not go unnoticed. Ambitious politicians looking to make a difference made a promise to the people of New York. They would finally bring the mob down once and for all, as long as they got elected.

Enter 27-year-old Elliot Spitzer. As the son of an English literature professor and a real estate mogul, Elliot had grown up among the city's elite. He'd gone to Princeton for undergrad, and then after that, Harvard Law School. With that kind of pedigree, Elliot could have done anything he wanted with his career, and he chose public service.

After graduating from Harvard Law, Elliott worked as a clerk for the Federal District Court in Manhattan. He then had a quick stint at a private law firm before landing a job as a prosecutor for the Manhattan District Attorney's Office. More than anything, Elliot wanted to be the guy who changed New York City for the better. So when he was put in charge of the Labor Racketeering Unit, which basically meant he was going after organized crime, he was ready to hit the ground running. He was ready to hit the ground running. One of Elliot's first targets was the infamous Gambino crime family.

And he knew the best way to get them was through their wallets. The Gambinos controlled almost every trucking company that delivered to the city's garment factories. To bring in money, they'd enforce a mob tax on their deliveries. No payment, no shipment. Elliot decided to start there and he went hard.

His plan involved creating a fake trucking company along with what appeared to be a fully operational shop in the city's garment district. He hoped to lure in the Gambino's and get them to threaten the store's manager. Then he would take them down. Except it didn't work. The Gambinos didn't take the bait.

But Elliot refused to give up. It was time for plan B. This time he wanted to plant a bug in the Gambino's office. It was simpler than his original idea, but a lot more dangerous. But Elliot was willing to take the risk. The details of how everything went down are still a little murky, but apparently this plan was straight out of a heist movie. It involved a fake repair call, lockpicking, cutting off alarms, even staying away from motion sensors.

There were lots of moving pieces here. But against all odds, the bug got planted and no one was caught. All that was left to do was listen and wait. For nearly three years, Elliot tuned in eagerly, waiting for one of the Gambinos to slip up and give him something good. And eventually, they did. Thanks to the bugged office, Elliot collected enough evidence to charge brothers Thomas and Joseph Gambino, two of the family's highest ranking members. But even with the evidence Elliott collected, he knew that extortion would be hard to prove. So instead, he charged the Gambino brothers with antitrust violations.

Basically saying they prevented fair business competition by forcing everyone to use their trucks and pay their mob tax. Far less sexy, but far easier to prosecute. In the end, it didn't quite go Elliot's way. The Gambinos took a deal to avoid jail time. In exchange for pleading guilty, they collectively paid $12 million in fines and agreed to stay out of the family's trucking business going forward.

So Elliott didn't take down the Gambino family like he'd hoped, but he certainly hit him where it hurt. In the process, he made himself a household name in New York, and two years later, in 1994, he used that momentum to run for attorney general. But Elliott's splashy move against the Gambinos wasn't enough. He ended up losing the election. Still, Elliott refused to give up.

Four years later, in 1998, he ran for attorney general again. To pay for both campaigns, Elliott personally took out millions of dollars in loans from Chase Bank, which seemed fishy. Paying off all that interest wouldn't exactly be easy on a government salary. Then, about a week ahead of the election, the New York Times published a report that

confirmed what was going on. Despite Elliott's insistence that it was his money, his dad had played a, quote, extensive role in helping to finance his campaigns. Because even though the bank loans were in Eliot's name, his dad was giving him hundreds of thousands of dollars to help pay them off. And while it wasn't necessarily illegal, it was definitely bending the rules. See, there are specific campaign finance laws that dictate how much money you can receive from a single donor, even if they're family.

According to New York state law, Elliott could spend as much of his own money as he wanted, but his dad couldn't donate more than $260,000 a year. To get around that, Elliot's father claimed that all that money was actually a personal loan that went straight to his son. If Elliot decided to use those funds to pay for his campaign, well, that was his decision.

So it was definitely technical and also totally hypocritical. While Elliott brought the hammer down on criminals who evaded the law through loopholes, he went ahead and did the same thing when it benefited him. He may not have been breaking any laws, but it also wasn't exactly the right thing to do. But in the end, the scandal was just a speed bump

in Elliott's campaign. In November of 1998, the people of New York cast their votes and Elliott won. Now he was determined to put his time in office to good use. As attorney general, Elliott focused on helping everyday average people. Even though he came from an incredibly privileged background, he seemed to really care about the little guy, so to speak.

He went up against big banks, secured more workers rights and made sure to enforce environmental protection laws. But his biggest crusade was against the corrupt practices of Wall Street. As AG, Elliott went toe to toe with multiple financial heavyweights. In 2002, he released emails that showed Merrill Lynch analysts were pushing specific stocks for the company's personal gain. Thanks to Elliott's actions, Merrill Lynch stopped what they were doing. Then for good measure, he made them pay a $100 million fine.

Elliott's big win earned him the nickname, the Sheriff of Wall Street. It was a badge he wore with pride. It also resonated with voters. Later that year, he easily won his next election for attorney general. Elliot started his second term with a win against the biggest brokerage firms in the country.

They'd all been doing the same thing that Merrill Lynch was doing, pushing stocks that benefited them, but not the investors themselves. Altogether, 10 firms paid a combined $1.4 billion settlement. And his big moves went beyond financial crimes. Elliot also oversaw a task force that arrested 18 people involved in a prostitution ring

on Staten Island. Everywhere Elliot looked, he found another criminal to bring to justice. He was good at his job, great even, but he wanted more. On December 8th of 2004, only halfway through his second term as attorney general, Elliott announced that he was running for governor of New York. It was his obvious next step and a huge leap for his career.

But like they say, with great power comes great responsibility. And Elliot was not prepared to live up to it. Hey there, it's Nicole. If you have been enjoying the crazy stories on money crimes, then I think you're going to love the Crime House original, Mind of a Serial Killer. What sets Mind of a Serial Killer apart is its focus on the twisted psychology of the world's most notorious serial killers. We're talking names like Jeffrey Dahmer, Ted Bundy, the Night Stalker. Featuring expert psychological analysis from licensed clinical and forensic psychologist Dr. Tristan Engels, Mind of a Serial Killer

will definitely take you into these stories like never before. So get ready to uncover what drives someone to commit the unimaginable. Mind of a Serial Killer is a Crime House original. New episodes drop every single Monday. Just search Mind of a Serial Killer and follow wherever you get your Ontario only. Please play responsibly. If you have questions or concerns about gambling or someone close to you, please contact Connix Ontario at 1-866-531-2600 to speak to an advisor free of charge. BenMGM operates pursuant to an operating agreement with iGaming Ontario.

In late 2004, 45 year old Elliot Spitzer announced that he was running for governor of New York. He'd spent the last six years protecting everyday New Yorkers from big banks and mob bosses. Now he wanted to level up by becoming governor. The election wasn't for two years, but he definitely had momentum on his side. Elliot had made a name for himself as the Sheriff of Wall Street. It seems like he really cared about fighting corruption and people wanted to see what he could do in a higher office.

Elliott made it through the primary and won the election in a landslide. On January 1st, 2007, he was sworn in as governor during the traditional midnight ceremony. Later that day, there was a public version of the ceremony. Elliot took the oath of office again in front of his constituents, then enjoyed a concert in his honor,

headlined by James Taylor and Natalie Merchant. It was a fun way to kick things off, but the good times didn't last long. Reality set in when enemies on the other side of the aisle started coming for Elliott, most notably the Republican leader of the state Senate, Joseph Bruno. Of course, they had their standard disagreements

over legislative issues, but what really got under Elliott's skin were the personal attacks. Senator Bruno called Elliott everything from a rich spoiled brat to a dictator. And as the story goes, Elliott didn't take the insults lying down. Now, bear in mind that what happened next is all alleged,

meaning it was never definitely proven in a court of law. But here's what Elliott was accused of doing in response to Joseph Bruno's attacks. Working with his communications director, Elliott used the state police to spy on Senator Bruno, specifically to see when and where Bruno was jetting off in state helicopters. Then Elliott took that information and handed it off to the Times Union newspaper who ran a story about Bruno misusing the state's air fleet for personal use. If this was true, it would look a lot like the playbook

Elliot had used on the Gambino family, except back then he was fighting organized crime. In this case, Elliot would have been weaponizing his position in the government for a petty feud. Safe to say, it would be a pretty overblown reaction to getting called a spoiled brat. Even his own party thought so. The new attorney general, Andrew Cuomo,

released a 53 page report calling out Eliot's administration for their alleged plot against Senator Bruno. Cuomo argued that Eliot's aides had misused state funds by enlisting the state police to hash out his own personal drama. The same day Cuomo released his report, Elliott called a press conference. He took responsibility for his office's actions and admitted that his administration had grossly mishandled the situation. But he stopped short of taking any personal accountability or admitting any of the details were true.

Afterwards, Elliott suspended his communications director indefinitely, letting him take the fall instead. Still, the incident definitely hit Elliott where it hurt. Especially because his whole image was based on promoting integrity and ethics. Even though Cuomo's report didn't lead to any legal repercussions for Elliott, it certainly had political consequences. In December of 2007, his approval rating fell to 37%. Elliott knew he needed to do something to repair his image. He dreamt of running for president one day.

But there was no path to the White House unless he could gain back his constituents' trust. Unfortunately for him, what happened next had the opposite effect. If the public had already been losing faith in Elliott, they were about to lose it entirely. And it was all his fault. And it was all his fault. In February of 2008, Elliott traveled to Washington DC. He checked in at the Mayflower Hotel under the alias George Fox. Then he got the key to room 871 and went upstairs to meet with a sex worker.

After his trip, Elliott went home to New York and life went on as usual. But a month later, the Manhattan U.S. Attorney's Office put out a press release that four people had been arrested in connection to a high-end escort business called Emperor's Club VIP. And wouldn't you know it, but the sex worker who Elliot had met with was employed by that exact escort business. The press release was a pretty standard affair, except for one curious thing. The lead prosecutor was the chief of the public corruption unit.

That's the same office that looks into the conduct of elected officials. When reporters clocked that detail, they knew that an important public figure had to be involved, and they quickly figured out who it was. Now, it's not totally clear how the media caught on to Elliott's involvement, but the day after the press release, the authorities told Elliott he'd been ID'd as one of the escort services' clients. After that, word started to spread, and the press picked up on it. As it turned out, Elliott's meeting with the sex worker had been captured on a wiretap. He wasn't the target of the sting, but he had implicated himself all the same. Reporters at the New York Times had come to the same conclusion. Four days after the press release, they reported that Elliott had used Emperor's Club VIP to meet with a $1,000 an hour call girl.

What's more, Elliott had met with women from the agency at least seven or eight times over a six-month period. All in all, he had paid some $80,000 for sex workers dating all the way back to his time as attorney general. And that was just the respectable report coming from the New York Times. There were plenty of less reputable papers that were happy to publish the salacious details of Elliott's affairs. He was no longer the sheriff of Wall Street. His new nickname was the LoveGov. The same day that the New York Times published their piece, Elliott held a press conference. His wife, Silda, stood by his side as he apologized to her, to their three daughters, and to the

public. In a matter of days, his political career had crumbled. But he didn't resign, at least not yet. That came two days later. Rumors were flying that Elliott had used campaign funds to pay for the sex workers. Elliott's opponents were using it as an excuse to threaten impeachment. And whether or not it was true, Elliott knew that they'd happily drag his name through the mud. His entire private life and his family's would be on full display.

Even if Elliott somehow didn't get impeached, he decided it wasn't worth it and he resigned from office. But that didn't mean he was out of the woods. Campaign finance violations are extremely serious. Federal investigators wanted to know if he had, in fact, used campaign funds to pay for his activities. If they found evidence of wrongdoing, Elliott would be in huge trouble. For a few months, it seemed like he might be in huge trouble. For a few months it seemed like he might be in

the clear, but then another report came out. Apparently Elliot had spent roughly $800 on two nights at the Mayflower Hotel. But the question was if he'd used campaign funds to pay for his escort services too. And even though it wasn't that much money in the grand scheme of things, it was a very big deal. First off, it's an ethical issue. Campaign funds come from people donating to a candidate they believe in, and obviously they want their hard-earned money to go to good use. The money in Elliott's campaign fund was supposed to help him get elected,

but instead it seemed like he might have spent it on escorts. Then there's the legality of it. Political candidates can't use campaign funds for personal use, period. The Federal Election Commission has an easy rule for this called the irrespective test. Essentially, if an expense would exist outside of a campaign, then it's a personal expense.

That includes rent, clothing, food, you get the gist. Campaign funds can only be spent on things that are exclusively related to the campaign, like organizing rallies or ad spending. And if a candidate is found to be breaking these rules, there are steep fines and even possible jail time. Luckily for Elliott, after the federal investigators did their due diligence, they announced that there was no evidence of misuse of campaign funds

and they wouldn't be pressing charges. They decided Elliot's resignation was punishment enough. He laid low for a while after that, but Elliot felt he was made for the spotlight and he couldn't seem to stay away. But just as he was making his way back into the public eye, another scandal was brewing. One that would send him right back into the public eye, another scandal was brewing. One that would send him right back into exile. After stepping away from the governor's office, 49-year-old Elliot Spitzer pivoted from politics

into working for his father's Manhattan real estate firm. While it was a pretty good fallback plan, it wasn't what he wanted. Elliott loved being in government and was desperate to rejoin the world he'd left behind. So he slowly got into the mix, starting with a bi-weekly finance column for Slate magazine. A year later, he snagged a role as an adjunct professor of political science at City College of New York. And in 2010, he'd make his biggest leap yet. A TV hosting gig on a discussion program for CNN.

So it wasn't like Elliott was completely blacklisted. He still had options. He even saw a potential path back to politics. In 2013, five years after resigning from being governor, he ran for city comptroller, which is the city's chief financial officer. Traditionally, the comptroller scrutinizes the mayor's budget, but it's really more of a monitoring and advising role. But Elliott loved thinking big. His vision for the role involved expanding the Comptroller's office so it could actually conduct inquiries into the effectiveness of government policies. It was just a little ironic considering

his previous issues. The public seemed to agree with that sentiment. Elliot lost the Democratic primary for the position. At the same time, his personal life was unraveling too. Three months after the loss, he and his wife, Silda, officially separated. Things weren't looking great for Elliot. He retreated back to private life and waited for the right time to make his next move. Maybe the universe didn't want that to happen because three years later, Elliot found himself in hot water. Again. In February 2016, a 26-year-old Russian woman named Svetlana Travis Zakharova, also known

as Lana Travis, called 911. She said she was at the Plaza Hotel in New York City and had cut her wrists. When authorities arrived at the plaza, they found her in her room, along with Elliot. He was trying to calm her down. The police then whisked her away to the hospital for medical attention. But when they got there, Lana said that Elliot hadn't been trying to calm her down.

He had choked her. Elliot emphatically denied that version of events. He admitted that he and Lana had a previous relationship of sorts, although he didn't go into detail. He said that on the night in question, she'd called him up and told him she was leaving to Russia the next day. He wanted to see her one more time, so they met up at the Plaza Hotel. They spent about an hour together, then Elliot left, only for her to call him later, distraught and agitated, threatening to kill herself.

He went back to talk her down, and that's when she cut her wrist and called 911. It was hard to tell who was telling the truth here, or if there was a third version somewhere in between. All we know is that the next day Lana did return to Russia. Once she was home, she dropped her accusations and emailed Elliot an apology. But that wasn't the end of it. It turned out Elliot had been paying Lana to keep their relationship a secret before the Plaza Hotel incident. Again, we don't know any details about what the nature of their relationship was,

but it is clear that Elliott didn't want anyone to find out about it. So it seems like he kept paying Lana even after she went home to Russia in February of 2016. But then, according to Elliott, Lana's demands quickly got more extreme. She wanted trips to Paris and other valuable property. She even wanted more money, hundreds of thousands of dollars.

And oddly, she also wanted to rekindle their relationship. Lana had made it clear that if she didn't get what she wanted, she would ruin his life. Elliot took her threats seriously. In total, he paid Lana somewhere in the ballpark of $400,000 to keep her quiet. But it seems like it wasn't enough for her. In June of 2016, four months after the Plaza Hotel incident, Lana reportedly reached out to one of Elliot's daughters on social media. She wanted

to share what Elliot claims were false details about their relationship. That was the final straw for Elliot. At that point, he sued Lana, hoping to put a stop to the blackmail. His suit, though, only sought $1 in damages, plus other relief as may be appropriate. It may seem kind of pointless, but this kind of lawsuit is actually pretty common. The single dollar signifies that the individual is suing

for what's called nominal damages. That means that there has been a proven violation of your rights, but there's not a specific harm that you can point to to be fairly compensated. It's also a great way to make a point. Celebrities like Gwyneth Paltrow and Taylor Swift have sued for nominal damages of $1. Obviously, they don't need the money,

but they wanna clear their names and prove that they're in the right. In Elliot's case, that's likely what was going on as well. He didn't need the money from Lana, but he wanted to settle the issue in court. In these types of scenarios, the outcome is usually focused more on an acknowledgement of wrongdoing rather than financial punishment.

Despite Elliot only suing for nominal damages, Lana's crimes were pretty serious and the authorities had their own agenda with her. So three months later, when Lana visited the US, she was arrested and charged with forgery and grand larceny. Prosecutors said that she'd engaged in a systematic and protracted extortion scheme against Elliot, as well as a second man named Paul Nips.

Paul was the owner of a toy store, and apparently Lana had tried extorting $5,000 from him as well. We don't know what Lana had on Paul exactly, but prosecutors were willing to offer her an out. She took the deal, pleading guilty to one count of attempted petite larceny, which is a misdemeanor and not a felony. When it came to her situation with Elliot, she denied trying to extort him and claim that they were in a long-term relationship.

Elliot didn't try to argue. The plea deal meant that neither Elliot nor Paul had to testify in court about the details of their relationships with Lana, which was probably in Elliot's best interest. He didn't need another salacious scandal blowing up in the headlines. And even though the story made the rounds

in the New York Times and a few other outlets, it didn't have the same reach as his other scandals. Once everything with Lana was over, Elliot went back to working in the private sector without much notice. But Elliot Spitzer wouldn't be Elliot Spitzer without some drama swirling around him. Even more recently, he is still making headlines. In 2023, the New York Times ran an article about a fight between Eliot and a co-op board

that was trying to put a stop to one of his building projects. Ironically, the head of the board is a man who Elliot investigated way back in 2003 for his involvement in a mutual fund trading scandal. So no hard feelings, right? That's it for today's episode, but before I go, I wanted to leave you with this final thought. Sometimes even the appearance of impropriety can be enough to ruin somebody's life, But before I go, I wanted to leave you with this final thought. Sometimes even the appearance of impropriety can be enough to ruin somebody's life, especially in politics. Despite clear evidence that he wasn't exactly an ethical guy, Eliot Spitzer never went on

trial for his actions, so we don't really know for certain if he actually committed any major financial crimes. But in the end, it didn't matter because the presence of a question mark was enough for his constituents to lose faith in him. And it led to the end of his political career as he knew it. Thank you so much for listening. I'm your host, Nicole Lapin. Come back next time as I take you through another wild story and offer you some advice along the way.

Money Crimes is a Crime House original. Join me every Thursday for a new episode. Here at Crime House, we want to thank each and every one of you for your support. If you like what you heard today, reach out on social media at Crime House on Instagram and TikTok. Don't forget to rate, review and follow Money Crimes wherever you get your favorite podcasts. Your feedback truly makes all the difference. Money Crimes is hosted by me, Nicole Lapin, and is a Crime House original powered by PAVE Studios. It is executive produced by Max Cutler.

This episode of Money Crimes was produced and directed by Ron Shapiro, written by Alex Burns, edited by Alex Benedon, fact-checked by Claire Cronin, sound designed by Cary Murphy, and included production assistance from Sarah Carroll. Hey there, it's Nicole. account. featuring expert analysis from a licensed clinical and forensic psychologist. Mind of a Serial Killer is a Crime House original. New episodes drop every single Monday. All you have to do is search Mind of a Serial Killer and follow wherever you listen to podcasts.