How Client 9 Got Caught

The rendezvous that established Gov. Eliot Spitzer’s involvement with high-priced prostitutes occurred last month in one of Washington’s grandest hotels, but the criminal investigation that discovered the tryst began last year in a nondescript office building opposite a Dunkin’ Donuts on Long Island, according to law enforcement officials.

There, in the Hauppauge offices of the Internal Revenue Service, investigators conducting a routine examination of suspicious financial transactions reported to them by banks found several unusual movements of cash involving the governor of New York, several officials said.

The investigators working out of the three-story office building, which faces Veterans Highway, typically review such reports, the officials said. But this was not typical: transactions by a governor who appeared to be trying to conceal the source, destination or purpose of the movement of thousands of dollars in cash, said the officials, who spoke on condition of anonymity.

Eliot Spitzer

The money ended up in the bank accounts of what appeared to be shell companies, corporations that essentially had no real business.

The transactions, officials said, suggested possible financial crimes — maybe bribery, political corruption, or something inappropriate involving campaign finance. Prostitution, they said, was the furthest thing from the minds of the investigators.

Soon, the I.R.S. agents, from the agency’s Criminal Investigation Division, were working with F.B.I. agents and federal prosecutors from Manhattan who specialize in political corruption.

The inquiry, like many such investigations, was a delicate one. Because the focus was a high-ranking government official, prosecutors were required to seek the approval of the United States attorney general to proceed. Once they secured that permission, the investigation moved forward.

At the outset, one official said, it seemed like a bread-and-butter inquiry into political corruption, the kind of case the F.B.I. squad, known internally by the designation C14, frequently pursues.

But before long, the investigators learned that the money was being moved to pay for sex and that the transactions were being manipulated to conceal Mr. Spitzer’s connection to payments for meetings with prostitutes, the official said.

Then, with the assistance of a confidential informant, a young woman who had worked previously as a prostitute for the Emperor’s Club V.I.P., the escort service that Mr. Spitzer was believed to be using, the investigators were able to get a judge to approve wiretaps on the cellphones of some of those suspected of involvement in the escort service.

The wiretaps, along with the records of bank accounts held in the names of the shell companies, revealed a world of prostitutes catering to wealthy men. At the center was the Emperor’s Club, which arranged “dates” with more than 50 beautiful young women in New York, Paris, London, Miami and Washington.

But its finances moved through the shell companies — the QAT Consulting Group, QAT International and Protech Consulting — which held bank accounts into which clients wired their payments, according to court papers in the case.

CONTINUED: Payments Showing 'As A Business Transaction'

---

1 | 2 | Next >