White collar crimes are difficult to fight because the defendants are usually powerful people. Look what happened to one successful and infamous crusader against white collar crime.
White collar crime affects all of us. It encompasses nonviolent transgressions perpetrated by sophisticated individuals, often in the financial industry. Its annual cost to Americans was between $300 and $660 billion in 2005 according to The Federal Bureau of Investigation and the Association of Certified Fraud Examiners. It is surely more now. At the same time, the perpetrators often suffer little, if at all, and retain the riches gained through deceptive practices. But Spitzer, a lawyer by training, ruffled white collar crime and brought the ire of those who engage in it down on his head.
In the aftermath of the 2008 financial crisis many escaped justice who probably shouldn’t have. But fighting white collar crime is difficult — just watch the documentary, “Rough Justice, The Rise and Fall of Eliot Spitzer.” Though his story was sensationalized because he engaged in prostitution, former New York Governor Eliot Spitzer’s undoing seems to be something more. In particular, he had a nasty habit of making enemies with powerful people by cracking down on white collar crime.
In 2002, Spitzer published emails from well-known Merrill Lynch stock analyst Henry Blodget that showed he was privately providing information that conflicted with his public recommendations. His motivation, one can conjecture, was that he was hired by Merrill Lynch and thereby partial to their interests. And since Blodget was not providing the accurate, honest recommendation the public was relying on him for, Spitzer charged Blodget with civil securities fraud. The settlement barred Blodget, the co-founder and chief executive officer of Business Insider, from the securities industry for life.
This and other Spitzer actions were no doubt threatening to both individuals and corporations that were deceitful in their practices. It may be why even though lots of public figures were clients of prostitution, only one brought sufficient negative attention so that his career was ruined. It was Spitzer.
Alex Gibney, the director and writer of the documentary, “Rough Justice, The Rise and Fall of Eliot Spitzer,” leads the viewer through evidence that the prosecution of Spitzer wasn’t just fortuitous. Normally federal prosecutors do not charge the clients of prostitutes. However, the 1910 Mann Act prohibited the transportation across state lines for the purpose of prostitution. Spitzer brought a prostitute from New York to Washington, D.C. to have a tryst in the Renaissance Hotel under the name of George Fox. Someone had made it his business to know these tedious details.
The New York Times
“Was that accidental?” Gibney asks. broke the story on March 10, 2008 when Spitzer was governor of New York. Shortly thereafter he resigned.
Though it is true that what Spitzer did by engaging in prostitution was socially unacceptable, he also fought for years — to the benefit of the American public — against white collar crimes.
We can only hope that there are others waiting in the wings to take on this gigantic battle, though with better personal judgment than ex-Governor Spitzer. Still, one wonders who would be so brave or foolish after Spitzer’s experience. There are few without a blemish that a dedicated investigator hired by white collar criminals couldn’t find and use to their advantage.
So perhaps Spitzer’s fate is a reason there has been so few specific charges and hearings and so little fallout from the financial crisis. It may have been that some of the potential prosecutors watched the neutralization of Spitzer and judged that the personal cost of accusing a white collar criminal could be too great, even if it served the greater good.
Spitzer was New York State Attorney General from 1999 to 2006. During that time he went after securities fraud, price fixing, predatory lending practices and corporate deceptive. This means Spitzer stepped on the toes of powerful people. He not only accused, but in many cases prosecuted.