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Date Posted: 15:50:55 03/10/08 Mon
Author: Wildcat

NY Gov. Spitzer linked to prostitution ring: Report

By Daniel Trotta, Yahoo News

New York Gov. Eliot Spitzer, a Wall Street anti-corruption crusader who campaigned on a theme of ethical reform, apologized for a "private matter" on Monday but made no reference to a New York Times report linking him to a prostitution ring.

Spitzer, a Democrat, said nothing about possibly resigning. Fox News television, citing unnamed sources, said before Spitzer spoke that the governor was expected to resign.

The leader of the minority Republicans in the state assembly, James Tedisco, called for his resignation.

Spitzer, 48, was caught on a federal wiretap arranging to meet with a prostitute at a Washington hotel last month, the Times reported on its Web site.

"I have acted in a way that violated the obligations to my family and that violates my -- or any -- sense of right and wrong. I apologize first, and most importantly, to my family. I apologize to the public whom I promised better," Spitzer told a packed room of reporters in New York City with his wife at his side.

He has been married to Silda Wall Spitzer since 1987 and they have three daughters.

"I am disappointed that I failed to live up to the standard that I expect of myself. I must now dedicate some time to regain the trust of my family," Spitzer added.

He did not take questions from reporters and Spitzer's aides declined to comment further.

As New York's state attorney general before being elected governor in November 2006, Spitzer built his reputation going after white-collar crime on Wall Street. As governor, he vowed to clean up state politics.

He was nicknamed The Sheriff of Wall Street and in 2002, after his landmark settlement with 10 of the country's largest securities firms over charges of misleading investors, Time Magazine named him "Crusader of the Year."

The New York Times, citing an administration official, reported that Spitzer had told his top administration officials he had been involved in a prostitution ring.

Spitzer is pledged to support Democratic presidential candidate Sen. Hillary Clinton of New York as a superdelegate at the party's convention this summer.

Superdelegates at the convention are party activists who support candidates, in addition to delegates elected during nominating contests around the states ahead of this November's presidential election.


Julian Zelizer, politics and history professor at Princeton University, said the case was a blow to Democrats beyond the state of New York.

"He was a rising star. Before he became governor he was seen as a potential president. ... Whenever you lose a rising star, it's a little demoralizing, " Zelizer said.

Shares of bond insurers fell on the news. Spitzer has been a crucial figure in helping the insurers raise more capital and keep their top credit ratings.

The bond insurers, which guarantee more than $2.4 trillion of debt against default, have been scrambling to get capital as their expected payouts have been surging.

Spitzer is the individual identified as Client 9 in court papers that were filed last week when four people were charged with running a multimillion-dollar international prostitution ring, the Times reported, citing unidentified sources.

Client 9 arranged to meet with a prostitute on February 13 in room 871 of the Mayflower Hotel in Washington, according to court papers.

New York law firm Paul, Weiss said it was representing Spitzer but had no comment. Spitzer previously worked for that law firm.

Reaction to the news noted the contrast between the allegations and Spitzer's high ethical stances.

"Get ready for a schadenfreude festival on Wall Street," said Barry Ritholtz, director of equity research at Fusion IQ in New York.

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