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Epitaph for Eliot Spitzer
And now he has vanished, abruptly and sadly. Gone but not forgotten? Or has his name been replaced by the likes of Fannie and Freddie, Hillary, and disgraced hedge-fund managers and mortgage bankers? Perhaps, but whatever else we still have to say about Eliot Spitzer--if anything--he has left behind hard lessons for the insurance brokerage business that must never be forgotten.
One observer likened it to an assassination: so sudden, so shocking was his departure from the public stage. The Wall Street Journal called it "one of the more spectacular collapses by a political figure in recent years". A friend who lives on the Upper West Side of Manhattan said he could almost hear the sounds of champagne corks popping from way down on Wall Street. We're talking about Eliot Spitzer's mid-March resignation as governor of New York after being caught in a sex scandal. Eliot Spitzer, Mr. Clean, self-righteous crusader, bane of the insurance business, father of three teenage daughters, husband to the distraught wife he dragged into his final two press conferences to stand by his side, and "client 9" to a high-priced, 23-year-old hooker called Kristen. Reportedly, he paid $4,300 in February alone and up to $80,000 over the past few years for services that included assignations with a prostitute.
Four years ago, the former New York attorney general uncovered bid-rigging and client-steering improprieties among the megabrokers, who were found to be acting in their own best interests and not those of their clients, thereby violating an all but sacred trust. But his scorched earth policy in pursuing miscreants left him few friends in the financial community, especially in the ranks of insurance brokers.Many felt deeply that the abuses he bared were real and that the process was necessary and healthy for the future of the brokerage industry. But they objected to his tactics, deploring them as excessive and manipulative and geared to pave his way, as in the end it did, to the governor's mansion in Albany. Many speculated that the now 48-year-old Spitzer, a rising Democratic star, was headed down the road to the White House, not down the road to perdition. There are those who argue that Mr. Spitzer should not have vacated his office in the face of a victimless crime, that however sordid the story may appear, he was simply a john. But the charges against him are potentially more serious: money laundering, for example, "structuring" transactions to avoid scrutiny and reporting requirements, and a Mann Act violation for transporting a prostitute across state lines for purposes of having sex. Spitzer's banking transactions appear to have been his undoing. He apparently fell victim to a financial surveillance system called suspicious activity reports, which follow suspicious activities of high-profile figures and turn information over to the IRS's criminal division. Curiously and ironically, Mr. Spitzer's reckless behavior led prosecutors to his door step following the same money trail he followed in hounding so many in the financial community. It's almost as though he wanted to be caught. THOMAS J. SLATTERY, a veteran editor and writer on insurance industry affairs for more than 40 years, is a managing director of Slattery-Esterkamp Communications, Baldwin, N.Y. July 16, 2008 Copyright 2008© LRP Publications |
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