As written up in the Times, which is trying to make it sound as though bank employees simply went about their routine business and discovered Spitzer's weird transactions incidentally, it is nevertheless clear that the bank executives had the option of NOT filing a "Suspicious Activity Report" (these things are referred to as SARS) on Spitzer, because none of the individual money transfers exceeded the limit that would have required SARS. It was done at their own discretion.
It is inconceivable that Spitzer of all people wasn't fully aware of the laws involved, and of the dangers to him of moving these funds through banks. Yet he went ahead and did it with apparent impunity. That's what has me convinced he must have thought he could trust his bankers. Why did he trust them?! They were buddies, that's why. What other other logical explanation is there, when he clearly had the option of doing it all with wads of untraceable cash? It's either that he was led to believe it was safe, or else (if you want to go there), he wanted to be caught, he had an inner self-destructive drive. It's not impossible - many people do!
But again, as covered in the Times, the banks could have in this case chosen not to make the reports, these were not required by law.
Here's the article -
OH, SHIT.
I hadn't seen that it has a second page - on which it is revealed that one of the banks is HSBC.
http://www.nytimes.com/2008/03/12/nyreg ... ref=slogin
The Reports That Drew Federal Eyes to Spitzer
By DAVID JOHNSTON and STEPHEN LABATON
Published: March 12, 2008
WASHINGTON — Last summer, employees at a large New York bank detected something suspicious: Gov. Eliot Spitzer was moving around thousands of dollars in what they thought was an effort to conceal the fact that the money was his own, federal officials said on Tuesday.
They said the apparent sleight of hand kept the transactions small and removed his name from deposits. The governor’s actions prompted the bank to file alerts known as Suspicious Activity Reports with the Treasury Department, which were reviewed by I.R.S. agents on Long Island, the federal officials said.
A few months later, another New York bank sent its own reports of suspicious activity to the Treasury. They showed that Mr. Spitzer and others, including people overseas, collectively deposited hundreds of thousands of dollars into an account of a company called QAT International Inc., whose business involved foreign accounts and shell companies and appeared to be vaguely related to pornography Web sites.
It was the bank reports, required under federal law, that apparently tripped up Mr. Spitzer, setting in motion the federal investigation that identified him as a client of a high-end prostitution ring.
The federal officials said the rules that ensnared Mr. Spitzer apply to every bank customer, but they acknowledged that questionable activity involving a public official, particularly a prominent figure like the governor of New York, was likely to receive quicker and more thorough review.
Financial institutions have long been required to file reports on questionable transactions, but since the Sept. 11 terrorist attacks banks have been under heavier pressure from federal regulators to report any kind of questionable activity — even if, for example, a customer appears with cash that gives off a chemical-like odor.
As a result, the number of such reports has quadrupled, to more than one million in 2006 from not quite 205,000 in 2001, according to the federal government. When he was New York State’s attorney general, Mr. Spitzer himself used the reports to make his cases.
The federal officials sought to emphasize that Mr. Spitzer, a Democrat, had not been singled out by the Republican administration, although allegations of political interference dogged the Justice Department during the tenure of the former attorney general, Alberto R. Gonzales, who left office last year after lawmakers in both parties called for his removal. The Spitzer investigation began in July and Mr. Gonzales resigned in August last year; it is not clear whether he knew about it.
Michael B. Mukasey, Mr. Gonzales’s successor, was aware of the prostitution case involving Mr. Spitzer but did not specifically authorize the filing of charges, the federal officials said. Mr. Mukasey has pledged to manage the department’s criminal investigations in a manner free from partisan political interference.
The federal officials, who had been briefed on the case, spoke on condition of anonymity because they were not authorized to discuss the continuing criminal investigation and because it can be a crime to disclose the contents of a suspicious activity report.
Last July, suspecting that Mr. Spitzer might be involved in some kind of public corruption, the Treasury Department referred the banks’ reports to a section of the Manhattan federal prosecutor’s office that usually handles cases involving official wrongdoing. The case was not turned over to the criminal unit, which would usually investigate major prostitution rings.
The officials said that no one knew at first the nature of QAT’s business or why Mr. Spitzer seemed to be trying to hide what appeared to be payments to the mysterious company that seemed to have no real business. Investigators at the bank were said to have thought it could have involved organized crime.
Officials acknowledged that Mr. Spitzer was a subject almost from the start, because of the banks’ Treasury Department reports. The officials said the investigators were surprised when they learned that Mr. Spitzer was involved in activities very different from the kickbacks, bribery and theft of honest services cases they usually encountered.
Relying heavily on financial records and court approved wiretaps, investigators found that Mr. Spitzer was a customer of an expensive prostitution operation, which used a Web site to attract customers who paid thousands of dollars an hour for the services of its young women.
The officials said Mr. Spitzer was implicated in potential wrongdoing in two ways, first for the apparent efforts to hide the financial arrangements and second for the arrangements for a prostitute to travel to Washington — a possible violation of the Mann Act, a federal law that makes it a crime to cross a state line for purposes of prostitution.
The officials said federal authorities rarely prosecuted either offense, unless it was connected to a more serious illegal activity like human trafficking or drug smuggling. They also said investigators did not use some tools at their disposal. For example, while Mr. Spitzer’s encounter with the prostitute in Washington was carried out under heavy surveillance, there were no video or audio recording devices in the hotel room.
Charles A. Stillman, a former federal prosecutor in Manhattan who has defended politicians in corruption cases, said the frequency and purpose of Mr. Spitzer’s financial transactions would determine whether he was knowingly trying to keep banks from spotting and reporting the activity as suspicious.
“If there were a lot of transactions designed to stay under the radar, then somebody has to take a hard look at it,” he said. “You have to intend, by trickery and deceit, to evade the reporting requirements.”
While in theory Mr. Spitzer could face charges of violating the Mann Act, a 1910 law, Mr. Stillman said it had almost never been used in modern times against customers, only those involved in managing a prostitution operation.
“The idea of prosecuting for it is just over the top,” he said. “I just don’t see that as a reality here.”
Officials said that although the inquiry began last summer, its pace accelerated significantly in the fall with the reports from the second bank that held at least one account tied to the company accused of running the prostitution service.
According to a complaint unsealed last week in the prostitution case, one of the banks was HSBC, a large international bank with American headquarters in New York.
Linda Recupero, a spokeswoman at the bank, declined to say what involvement the bank may have had in the inquiry.
Under the Bank Secrecy Act, all financial institutions are required to file currency transaction reports with the federal government for any deposit or withdrawal of more than $10,000. In addition, financial institutions are required to file the Suspicious Activity Reports with the Financial Crimes Enforcement Network, an agency of the Treasury Department, if they believe that money is involved in a crime.
A federal regulation requires the banks to file the reports when they believe a crime involving at least $5,000 may have been committed. The reports are filed to a computing center run by the financial agency in Detroit, which then decides which agency should investigate them.
Dale P. Kelberman, a former federal prosecutor in Baltimore who has had experience with the financial reporting statutes, said the motivation in moving money around would be critical in any decision about whether the law was broken. If the governor was simply trying to conceal his activities from, say, his wife, it would be considered different from trying to deceive federal authorities.
“There are innocent reasons for structuring transactions that need to be considered,” Mr. Kelberman said.
Reporting was contributed by Jo Becker, Cara Buckley, Russ Buettner, Sewell Chan, Nicholas Confessore, Lisa W. Foderaro, Kate Hammer, C. J. Hughes, Andrew Jacobs, Serge F. Kovaleski, Trymaine Lee, Jennifer Mascia, Mike McIntire, Jeremy W. Peters, Michael Powell, William K. Rashbaum and Benjamin Weiser.
