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Greed-to-Grief, No. 11

Greed-to-Grief, No. 11

Money, sex, and the governor

George Pillari
July 10, 2025

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Eliot Spitzer was raised in a privileged New York family. He graduated from Princeton before earning his law degree from Harvard.

Eliot Spitzer

After graduation, Spitzer began his legal career in private practice with prominent New York law firms before transitioning to public service as a prosecutor in the Manhattan District Attorney's office. This early experience in criminal prosecution would prove instrumental in shaping his confrontational approach to law enforcement.

The Making of the "Sheriff of Wall Street"

Spitzer's true rise began in 1998 when he was elected New York State Attorney General, a position he would hold for seven years. It was during this time that he earned his reputation as the most feared prosecutor on Wall Street, transforming a traditionally low-profile office into a national platform for corporate accountability.

As the state's attorney general, he gained national attention for his aggressive pursuit of corruption in the financial industry.

Spitzer revolutionized the use of the Martin Act, an obscure New York securities law that gave the state attorney general broad powers to investigate financial fraud. Where federal regulators moved cautiously, Spitzer struck with precision and publicity.

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His most famous victory came in the aftermath of the dot-com bubble, when he exposed the conflicts of interest that were pervasive among Wall Street research analysts.

The way research is supposed to work at Wall Street firms is the research teams do research and say something like, “We rate Google a strong buy with a price target of $200.” The research is supposed to be truthful and independent.

When Spitzer and his team began investigating these conflicts, Merrill Lynch was an initial target and was emblematic of the issue for Spitzer: the big-money players were taking advantage of the small guy.

As Merrill Lynch research analyst Henry Blodget rated a company as a “strong buy,” he was privately sending emails that said things like, “I can’t believe what a piece of shit that thing is.”

When all was said and done, Spitzer extracted a $1.4 billion settlement from ten investment banks and reformed how Wall Street conducted research.

Time Magazine called him "the Crusader,” while tabloids dubbed him "Eliot Ness," comparing him to the famous federal agent who brought down Al Capone.

His investigations extended far beyond Wall Street, targeting everything from insurance fraud to environmental violations, earning him a reputation as a relentless reformer unafraid to take on powerful interests.

The Peak: Governor of New York

Riding high on his success as attorney general, Spitzer was elected governor of New York in 2006 by the largest margin ever in the state, capturing nearly 70% of the vote, that signaled the arrival of a new leader who could challenge Wall Street and corporate power while fighting for the little guy.

As governor, Spitzer positioned himself as a national Democratic star with potential presidential ambitions. However, his confrontational style that worked so well in legal settings created friction in the chummy world of legislative politics.

From taking on Wall Street to reforming the way things were done in Albany (the New York state capital), Spitzer was effective, produced results, but made his fair share of enemies.

Political enemies can be patient.

The Fall: Client 9

The Emperors Club VIP was a prostitution ring. High-priced prostitutes, mind you.

While Spitzer was in a Washington, DC hotel with his $1,000 per hour prostitute from Emperors Club, guess who was listening in? If you have read any previous posts, you know it was our buddies at the FBI.

The FBI was tracking and gathering evidence on the Emperors Club when out of the blue, the sitting governor of New York shows up on the audio.

Imagine the reaction of the agents sitting in the surveillance van! Many believe that adversaries that Spitzer steamrolled as attorney general and as governor put the FBI on his trail. Payback is a bitch.

Check this out bro! That’s Governor Spitzer.

The fallout was devastating and immediate. Spitzer had prosecuted several prostitution rings during his career as attorney general and while governor, he strengthened laws and penalties for those who solicited prostitutes.

The man who had built his reputation on moral authority and legal righteousness was revealed to be Emperors Club "Client 9" in the very type of operation he had once targeted.

On top of that, Spitzer managed to divert or dodge his security detail for years during his liaisons.

At one point, Spitzer wanted to transfer more than $10,000 to pay some of his prostitution bills, but broke up the transactions into smaller amounts to avoid federal reporting requirements. (According to the Bank Secrecy Act, banks are required to report transfers of more than $10,000 to federal regulators.)

This structuring of the financial transactions to avoid detection was itself potentially illegal, adding another layer to his legal jeopardy. It is estimated that Spitzer spent more than $80,000 on prostitutes…..Holy red-light district, Batman!

The media frenzy and scandal consumed the New York political establishment and Spitzer resigned a short time later.

Spitzer and one of his mistresses who said he brought her up the stairs to his apartment in a suitcase when his wife was out of town.

The legal consequences, however, were surprisingly limited. Despite the potential for prosecution on charges ranging from money laundering to solicitation, federal prosecutors ultimately decided not to bring criminal charges against Spitzer, likely due to the public humiliation he had already endured and the cooperation he provided in other investigations.

Unlike most we have profiled in Greed-to-Grief, for Spitzer, it was not all about him. As a crusader against unfair business practices on Wall Street, he did a lot of good for a lot of people as David fighting the Goliath of Wall Street.

As a crusader, he took on big banks and made bold demands that could have backfired and sunk his career. He helped level the playing field for millions of investors. A hero by most standards.

A hero yes, but also a human being. The problem with humans is that we are fallible. We have emotions and weaknesses. Some say we are in a constant battle with our inner demons. A battle that Spitzer lost.

Key Takeaways

If you are going work with somebody rich and powerful, do your reverse diligence. They will thoroughly vet you, so you should vet them.
Crusaders have always bothered me a bit. It just feels like they are over-compensating for something. In Spitzer’s case, it was a mess of a personal life.
Spitzer was caught red-handed (pun intended). He did the smart thing and immediately admitted his misdeeds while helping law enforcement with other investigations, thereby eliminating his prosecution for money laundering (it is illegal to pay for prostitutes in New York.)

Things I think about

From Earth, we always see the same side of the moon because the moon orbits the Earth in about 27 days while it rotates once on its axis once every 27 days.