Legal News

Spitzer Case Product of Beefed Up Public-Corruption Unit

By Dan Slater

Jack Abramoff. William Jefferson. Rick Renzi.

What do they share? The government cases against them all resulted in part from the DOJ’s public corruption investigators’ use of bank reports of suspicious financial activities by “politically exposed persons” — such as politicians and bureaucrats.

Now add Eliot Spitzer to the list of those caught in the public-corruption dragnet. Indeed, writes the WSJ this morning, Spitzer’s status as a prominent government official appears to have opened the door to investigation into the matter. Many banks now examine transactions involving so-called “politically exposed persons” — politicians, judges, prosecutors and their families — to ensure they’re not used to hide ill-gotten gains. At least one bank used by Mr. Spitzer, Capital One Corp.’s North Fork unit, flagged his transactions to federal regulators as a potential sign of corruption, people with knowledge of the transactions said.

In a separate story, the WSJ reports today that public corruption cases are on the rise. For years, the WSJ writes, the financial industry has complained about the burden of complying with federal rules, adopted post-9/11, that require banks to file reports on transactions exceeding $10,000, or any other suspicious activity that suggests money laundering.

It might be paying off. From 2001 through 2006, public corruption prosecutors in the districts, working in tandem with the 30-lawyer public intergrity section in Washington, say they’ve charged 365 defendants and gained 332 convictions, a large increase over the 286 defendants charged and 287 convictions in the eight years from 1993 through 2000.

As for Spitzer, the investigation is being carried out by a team of public-corruption prosecutors in New York’s Southern District, a unit that U.S. Attorney Michael Garcia reportedly beefed up after his arrival in 2005.

Full post as published by Law Blog - WSJ.com on March 12, 2008 (boomark / email).