"Disgraced NY governor won't need new job"

By DAVID B. CARUSO, Associated Press

Last updated: 7:33 p.m., Wednesday, March 12, 2008

NEW YORK -- Eliot Spitzer probably doesn't need to get a day job when he leaves the governor's office next week.

The scion of a wealthy Manhattan real estate developer, Spitzer is a millionaire who could easily live off his share of his father's real estate business.

But that doesn't mean there won't be financial wrinkles ahead for Spitzer, who announced his resignation Wednesday after becoming ensnared in a prostitution scandal.

If he were to lose his law license, his ability to return to private law practice might be compromised.

There's also the possibility that his wife could divorce her cheating husband and walk away with a chunk of the family fortune.

"Any judge who is going to decide this case is going to bend over backward to give her a break, considering what she's been through," said Albert Momjian, a prominent Philadelphia divorce lawyer.

Silda Wall Spitzer gave up a lucrative career in corporate law in 1994, the year that her husband made his first run for public office.

Since then, she has worked unpaid jobs in philanthropy and founded a charity called Children for Children.

Spitzer's fall may have one indirect financial benefit.

He will probably have to give up what appears to be his most expensive vice: high-priced prostitutes.

When the scandal broke, allegations surfaced that he had shelled out $4,300 to a call girl the night before Valentine's Day.

A law enforcement official speaking on condition of anonymity later told The Associated Press that Spitzer was a regular customer who spent as much as $80,000 on a call-girl service over several years.

Until this week, the governor's Mr. Clean image extended to his spending, too.

His staffers always boasted that their millionaire boss was a frugal guy who owned only a few pairs of shoes and drove a minivan.

"He was certainly not free with the dollars."

"He was very, very careful," said Hank Sheinkopf, a New York political consultant who worked on Spitzer's first two campaigns.

"This is not the kind of guy who would take $50,000 out of his own bank account one weekend and blow it in Atlantic City."

Spitzer could have afforded many more luxuries.

He reported $1.9 million in income to the IRS in 2006, according to his last publicly available tax return.

Not including last year, his earnings have been $14.9 million since 1998, and that total only hints at his family's wealth.

His father, Bernard Spitzer, is said to be worth at least $500 million.

Spitzer's tax returns show that a majority of his income comes from rents collected on apartments and shops owned by the family.

As governor, he earned $179,000 a year.

For years, the family spent weekends in a modest, rented home in Columbia County, south of Albany.

The Spitzers recently paid $4 million to buy the entire 160-acre property.

The family's main residence continues to be a luxurious Fifth Avenue apartment in a tower built by his father in 1968.

Spitzer lives there rent-free, courtesy of his father, who owns at least 10 such apartment towers.

When his three children were younger, Spitzer shelled out nearly $50,000 a year for nannies.

Now the kids attend the Horace Mann School, where tuition exceeds $29,000 per student -- nearly $100,000 in education expenses alone.

Spitzer and his wife have also given generously to charity, donating $474,509 between 2000 and 2006.

All of those spending habits pale in comparison to what Spitzer spent on politics: He financed his losing 1994 and winning 1998 campaigns for state attorney general with millions of dollars in personal loans.

Much of that debt was retired when the governor sold his share of a family owned apartment building back to his father.

If there is a divorce, Silda Spitzer would likely be entitled to half of whatever assets the family acquired during their 20-year marriage -- although discussion of a split may be premature.

Silda Spitzer stood next to her husband when he announced his resignation Wednesday and some observers said they believe the marriage may survive.

"She has grounds for 50 different divorces here," said Raoul Felder, a divorce lawyer and state judicial board chairman who lived in Spitzer's apartment building for 19 years, and later feuded with the governor over an off-color book he co-wrote with the comic Jackie Mason.

"But will she stick?"

"I think she will," Felder said.

"She's stood by him so far."

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Associated Press investigative researcher Randy Herschaft contributed to this report.

THE FINANCIAL TIMES

"Regulators will feel loss of a risk-taker"

By Aline van Duyn in New York and Brooke Masters in London

Published: March 13 2008 02:00 | Last updated: March 13 2008 02:00

Eliot Spitzer's departure as New York governor raises questions about whether the state's regulators will be able to maintain the pivotal position in global financial regulation they have had since Mr Spitzer's days as attorney-general.

In recent weeks, Mr Spitzer played a vital behind-the-scenes role in persuading banks to pitch in on the rescue of Ambac, one of the world's biggest bond insurers.

The race to prop up Ambac was led by Eric Dinallo, the New York-insurance superintendent, a regulator appointed by Mr Spitzer.

Mr Spitzer had encouraged Mr Dinallo to adopt the proactive - and risky - approach that has been the hallmark of his years as a state official.

A $1.5bn (€970m, £750m) Ambac deal was completed on Friday, just days before the scandal broke about Mr Spitzer's liaison with a prostitute.

If the news had come earlier the deal might not have scraped through as it did, say bankers involved.

One area in the spotlight upon his departure is the role of New York as the most powerful regulator of the US insurance industry.

Highlighting the political importance of the theme, which is growing as municipal borrowers face funding difficulties due to the confidence crisis around bond insurers such as Ambac, the congressman Barney Frank told a hearing:

"This has not been a traditional Federal role - insurance has been state-regulated."

"That's not going to continue."

"I think the government has to be a partner with state regulators."

Mr Spitzer sharply increased the scope of what states could try to do.

His investigations of biased Wall Street research and sleazy mutual fund trading uncovered dramatic e-mails and wrung billions of dollars in penalties from financial services firms.

The probes embarrassed the Securities and Exchange Commission and gave him national prominence - he was dubbed the "Sheriff of Wall Street" and "Crusader of the Year".

He also waded into other areas usually left to the Federal government, filing lawsuits against out-of-state polluters, challenging George W. Bush's environmental policies and seeking to investigate racial patterns in lending.

Other state officials began to follow Mr Spitzer's example.

California, for example, passed a law that granted its attorney-general new powers to investigate financial services, which was modelled on New York's Martin Act, an important Spitzer tool.

Mr Spitzer was key to keeping alive the US system of competing regulators, in which states and the national government have overlapping responsibilities.

Mr Dinallo described a January meeting he held with banks about the bond insurance crisis as "like Nixon going to China" and urged them last month to "reward the risk I am taking".

"Only by rewarding regulators who take these risks will we be able to change the regulatory paradigm," he said.

Mr Dinallo yesterday said that he did not expect his department's work to change after Mr Spitzer's resignation.

Yet without the backing of a risk-taker such as Mr Spitzer, many financial industry executives are wondering whether that will be possible.

Additional reporting by Stacy-Marie Ishmael in New York

http://www.ft.com/cms/s/0/5638c10e-f0a0-11...?nclick_check=1

"Paterson: State government is stable and going forward"

By MICHAEL GORMLEY, Associated Press

Last updated: 6:54 p.m., Thursday, March 13, 2008

ALBANY -- A day after New York's governor said he would resign in disgrace after he was snared in a call-girl investigation, the reporter's question was inevitable for the man who will become Eliot Spitzer's successor:

Have you ever patronized a prostitute?

"Only the lobbyists," shot back David Paterson in his first news conference as the man who will be sworn in Monday as New York's 55th governor.

While the lieutenant governor is getting international attention for taking the top office because of one of the most shocking political downfalls ever, and because he's black and legally blind, he is likely to make his mark with his humor and his collegiality in a place where both have been scarce.

That's how the well-liked 53-year-old Harlem Democrat made his mark for 20 years in the state Senate and 14 months as Spitzer's lieutenant.

Through it all, the vast majority of references that he's made to his sightlessness have been in punch lines.

In 2006, he described Spitzer as the visionary and himself as the legislative technician, "because I sure don't have the vision."

On Thursday, his first press conference since Spitzer resigned Wednesday, Paterson sought to soothe a shattered state and fractious government.

Where Spitzer had once called the new comptroller spectacularly unqualified and lawmakers self-dealing and unresponsive, and said the Legislature had an aura of unseemliness, Paterson held out a hand.

"We will all commit ourselves in a bipartisan way to building a relationship that will restore the public trust in our government," said Paterson.

"I'm hopeful we will be able to proceed with a more professional and collegial basis," said Republican Sen. George Winner.

"If he's a success, we're successful in getting our work done."

As a senator, Paterson pushed some liberal causes while also chipping away at the Republican majority -- neither of which will soon be forgotten.

But Paterson said governing is not the same as being a lawmaker:

"In the Legislature, you are an advocate."

"We'll have to see if he has moderated," Winner said, citing Paterson's past that rankled gun owners and New Yorkers who support the death penalty.

"He would have trouble getting elected on his own."

But lawmakers say they hope this former legislator, with solid relationships on both sides of the aisle, will usher in cooperation beyond any traditional honeymoon.

"David Paterson has been a friend for many years," said Assembly Speaker Sheldon Silver of Manhattan, the Legislature's most powerful Democrat.

And the Senate's top-ranking Republican, Majority Leader Joseph Bruno, has hinted at cooperation with Paterson and a genuine fondness for the next governor.

Bruno and Spitzer were strident political enemies.

At the news conference in a packed Red Room, a ceremonial setting where governors frequently address the media, Paterson said he told Spitzer when he reluctantly accepted the job as lieutenant governor that "I would be prepared in the event I had to assume authority."

"I am prepared," Paterson said.

Spitzer resigned Wednesday after being exposed as a client in a high-priced prostitution ring.

"This has been a very sad few days in the history of New York, and for me, it's been sadder," said Paterson, a Harlem Democrat with a home near Albany.

"My heart goes out to Eliot Spitzer, his wife, his daughters and his parents."

"We used to call them our other family," Paterson said of Spitzer's parents.

Paterson will be officially sworn in at 1 p.m. Monday, an hour after Spitzer's resignation takes effect.

Paterson, his salt-and-pepper beard getting saltier these days, allowed for a rare moment of reflection on his rise in politics, despite long odds.

"In some ways, I feel that I'm sitting on a sand castle that other people built," Paterson said.

"There are so many African Americans, both men and women throughout the past couple of centuries who have struggled unremittingly to try to advance opportunity for all people and for themselves."

"The fact that it has taken this long is sad," Paterson said.

"But if it in any way allows for African Americans and for those who are disabled ... to whatever extent my presence impresses upon employers or impresses upon younger people who are like me in either way, or Hispanics or women we've never had a governor from one of those communities, then I would feel very privileged, very proud and very flattered to be in this position."

------

AP Writer Valerie Bauman contributed to this report from Albany.

"Eliot Spitzer prepares to leave office, but legal cloud remains"

By LARRY NEUMEISTER and DEVLIN BARRETT, Associated Press

Last updated: 5:13 p.m., Thursday, March 13, 2008

NEW YORK -- As Gov. Eliot Spitzer prepares to leave office, the disgraced politician faces a tangled battle with prosecutors that will send lawyers into murky legal territory.

A law enforcement official said Spitzer's high-powered defense team was believed to be negotiating a plea deal with prosecutors over his connection to a high-end prostitution ring, but attorneys were not commenting Friday about the discussions.

The legal battle occurred as Lt. Gov. David Paterson prepared to take over the state following Spitzer's spectacular fall from power in a prostitution scandal.

Paterson said he had spoken to Spitzer on Thursday and "told him how sorry I was this happened."

"I promised the governor yesterday that I would commit myself to the people of this great state, that we would have stability and continue in these challenges that lie ahead."

"Now we have to get New York back on track," said Paterson.

Paterson takes over on Monday, and will become New York's first black governor and the nation's first legally blind chief executive.

Spitzer, a married father of three teenage girls, faces a much more dubious future after he was accused of spending tens of thousands of dollars on prostitutes -- including a tryst with a 22-year-old call girl in Washington the night before Valentine's Day.

Officials said Spitzer initially drew the attention of authorities with suspicious money transfers that will be a key part of any possible criminal case.

But legal experts said a resolution of the case will not be easy.

They said a likely outcome could be what is called a "deferred prosecution agreement," which could leave Spitzer on probation for six months with charges dropped if he did not get into any more trouble.

Gerald Lefcourt, past president of the National Association of Criminal Defense Attorneys, said criminal charges against Spitzer would be "stretching federal statutes to a place they've never been."

Edward J.M. Little, who worked in the public corruption unit of the Manhattan federal prosecutor's office for eight years in the 1980s, said it would be "piling on" to bring charges now.

"I think it would be outrageous if they went after him any further on this," he said.

"Solicitation cases are typically pled down to minor charges and just because he was governor doesn't mean he should be treated any more harshly unless they impacted his duties as governor."

He added: "Even though I personally think it's reprehensible, it doesn't mean it's criminal."

"He's resigned which is probably the ultimate penalty in this case so we should let it be."

Spitzer could plead guilty to a charge that he evaded banking laws over the money transfers and have the whole mess just go away.

But structuring charges -- breaking sums of money down into smaller amounts to hide the true purpose of the funds -- are rarely brought by federal prosecutors on their own.

Lawyers said they are usually brought in money-laundering cases or part of some larger criminal activity like drug dealing.

Also, such cases usually involve someone hiding the source of the money.

In the case of Spitzer, a millionaire many times over, there is no reason to believe he used illegal funds to pay for anything.

Then there is the question of the Mann Act, a 1910 statute that makes it illegal to induce a woman to cross state lines for the purpose of prostitution.

Again, in Spitzer's case, it may be a stretch.

The law is not typically applied to buying sex from adult women, even if, according to court papers, the client identified as Spitzer by law enforcement officials managed to break almost every part of the law by arranging for the woman's train fare, hotel, right down to the mini-bar at the hotel.

Little said it was also possible that any prosecution decision could be brought in Washington, D.C.

"It would certainly look more fair and objective if it were out of the heat of battle," Little said.

And then there is the matter of the affidavit itself, which lays out in 47 pages of detail the hooker-procuring habits of nine other clients.

While the evidence is likely to vary widely among the clients, can prosecutors explain how it varied so much that only one was charged happens to be the governor?

Defense lawyers could easily argue to judge and jury that singling out just one of those clients is unfair and a misuse of a prosecutor's discretion.

"Corruption cases often pose a dilemma for the prosecutor," said Evan Barr, a private practice lawyer who once prosecuted public corruption cases for the Manhattan U.S. Attorney's Office.

"If you charge a public figure under an obscure or rarely used legal theory, the critics will say the prosecution is politically motivated; if you decline to charge under the same circumstances, the critics will say the prosecutor is going easy on the would-be defendant because he or she is a prominent person," Barr said.

But some lawyers take the view that the structuring case might be the most likely scenario.

Miami-based lawyer Gregory Baldwin, an expert on structuring, offered a different take, saying the key question for prosecutors looking at Spitzer's money trail would be whether they can show Spitzer was trying to avoid being linked to the money.

"The structurer ... wants to avoid one thing: being identified as part of the transaction."

"If a criminal investigator wants to, in the immortal words of Deep Throat, follow the money, when the paper trail disappears, it can only be found through a person," said Baldwin.

------

Associated Press Writer Devlin Barrett contributed to this report from Washington.

"Lawyers argue Spitzer-Bruno subpoenas in NYC courtroom"

By SAMUEL MAULL, Associated Press

Last updated: 3:42 p.m., Thursday, March 13, 2008

NEW YORK -- Gov. Eliot Spitzer is on his way out of office, but his lawyers are still arguing that a hostile Senate committee is trying to subpoena confidential executive branch documents to "harass and embarrass" his office.

The three subpoenas issued by the Republican-led committee are part of a "political operation" that had nothing to do with its duties and should be tossed out, attorney Dietrich Snell told a state Supreme Court judge on Thursday.

David Lewis, lawyer for the Senate Investigations Committee, countered that the subpoenas are in the public interest as the committee probes a scheme by Spitzer aides to embarrass his chief rival, Senate Majority Leader Joseph Bruno.

"We're not out on a frolic for the purpose of humiliating the governor," Lewis told Justice Richard Braun.

"This hasn't come up because we decided to get the governor and the executive chamber."

"It came up because of their actions."

The committee investigation is one of several involving Spitzer aides who used state police to compile records on Bruno's use of state aircraft and state police drivers on trips that mixed meetings with lobbyists and Republican fundraisers.

The data on Bruno was made public after a newspaper requested it under the state's Freedom of Information Law.

The release of the data was seen as an attempt to smear and embarrass Bruno.

Braun suggested that a delay of a week or so might be prudent, given Spitzer's resignation this week in a prostitution scandal and Lt. Gov. David Paterson's assumption of office next week.

Lewis said he wasn't sure he had the authority to agree to a postponement; the arguments went ahead.

Lewis said during the arguments and outside court, "This is not about Governor Spitzer."

"This is about the power of the legislature to make inquiry when it learns about abuses by any (other government) branch member."

Snell said subpoenas for confidential documents from the governor's office offend the doctrine of the separation of powers.

He told Braun that high levels of the executive branch must be able to communicate candidly about anything without fear that the exchanges will become public.

Snell said although the state attorney general and Albany district attorney investigated and found no crime had been committed, the committee has continued on its "fishing expedition," acting as "grand jury and grand inquisitor."

Lewis said any uses of state resources and state money fall under the jurisdiction of the Legislature and the Senate committee had a right to investigate those uses.

While the arguments centered on the validity of the Senate committee's subpoenas, some of the subpoenas concern Darren Dopp, a former Spitzer aide involved in gathering the information on Bruno.

Dopp's lawyer, Michael Koenig, said his client would not give any materials to the committee without permission from the governor's office, and so far he not received any such permission.

"Paterson: NY has to get back to work"

By VALERIE BAUMAN, Associated Press Writers

13 March 2008

ALBANY, N.Y. - New York Lt. Gov. David Paterson says it's time for the state to get back on track after Gov. Eliot Spitzer's stunning resignation because of a prostitution scandal.

The Harlem Democrat takes over Monday, becoming the state's first black chief executive and the first legally blind governor in the country.

He told reporters and others in Albany Thursday that he didn't become governor like most politicians do, but he plans to honor the promise he made when he became Spitzer's running mate in 2006.

One of his first challenges will be the state budget.

The Legislature faces an April 1 deadline to pass a plan to close a $4.7 billion deficit.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

ALBANY, N.Y. (AP) — Lt. Gov. David Paterson, who will take over as New York's governor following Gov. Eliot Spitzer's dramatic fall from power in a prostitution scandal, rushed off to meet with lawmakers Thursday as he prepared for his transition.

He was set to speak publicly Thursday afternoon, with much of the state still reeling from Spitzer's resignation.

One of his first tasks will be working with lawmakers to close a $4.7 billion deficit and broker a deal by April 1 on a $124 billion budget proposed by Spitzer.

"The message to the people of New York is that New York state government is still thriving, and we are still serving the people," Paterson said Thursday morning in his first public comments since Spitzer's implosion.

"We have a budget to pass, we have a deadline to meet," Paterson said.

"If we can do that, we'll be back on track."

Spitzer stepped down amid a call-girl scandal that made a mockery of his straight-arrow image and left him facing the prospect of criminal charges and perhaps disbarment.

Paterson takes over Monday, and requested the time lag so he could prepare and so Spitzer could say a proper goodbye to his staff.

Spitzer and his successor have starkly different leadership styles.

While Spitzer was famously abrasive, uncompromising and even insulting, Paterson has built a reputation as a conciliator, and lawmakers quickly embraced the new order.

Barely known outside his Harlem political base, Paterson, 53, has been in New York government since his election to the state Senate in 1985.

Though legally blind, he has enough sight in his right eye to walk unaided, recognize people at conversational distance and even read if the text is placed close to his face.

Paterson said he had spoken to Spitzer.

"I just told him how sorry I was this happened and how much he still inspires me," Paterson said.

Of Spitzer's disclosures and resignation, Paterson said: "I'm getting over it."

Spitzer resigned Wednesday, making an announcement without securing a plea bargain with federal prosecutors, though a law enforcement official said the former governor was still believed to be negotiating one.

The official spoke on condition of anonymity because of the sensitivity of the case.

"I cannot allow my private failings to disrupt the people's work," Spitzer said at a Manhattan news conference, his weary-looking wife, Silda, again standing at his side as he answered for his actions for the second time in three days.

The resignation brought down the curtain on a riveting drama — played out, sometimes, as farce — that made Spitzer an instant punchline on late-night TV and fascinated Americans with the spectacle of a crusading politician exposed as a hypocrite.

The scandal erupted Monday after federal law enforcement officials disclosed that a wiretap had caught the 48-year-old father of three teenage daughters arranging to spend thousands of dollars on a call girl at a fancy Washington hotel on the night before Valentine's Day.

Investigators said he had arranged for a prostitute named Kristen to take the train down from New York while he was in the nation's capital to testify before a congressional subcommittee about the bond industry.

The New York Times reported Wednesday that the woman, born as Ashley Youmans, legally changed her name to Ashley Rae Maika DiPietro and is now known as Ashley Alexandra Dupre.

She declined comment when asked by the Times when she first met Spitzer and how many times they had been together.

It was unclear whether she would face charges; attorney Don D. Buchwald confirmed that he represents the same woman in the Times story but wouldn't comment further.

Law enforcement officials said the governor had hired prostitutes several times before and had spent tens of thousands of dollars, and perhaps as much as $80,000, on the high-priced escort service Emperors Club VIP, whose women charge as much as $5,500 an hour.

After making a watery-eyed, nonspecific public apology Monday with his wife by his side, Spitzer continued to talk to family and advisers through Tuesday.

By Wednesday morning, aides said, he had decided to resign.

In a statement issued after Spitzer quit, U.S. Attorney Michael Garcia, the chief federal prosecutor in New York, said:

"There is no agreement between this office and Gov. Eliot Spitzer relating to his resignation or any other matter."

Among the possible charges that law enforcement authorities said could be brought against the former governor: soliciting and paying for sex; violating the Mann Act, the 1910 federal law that makes it a crime to take someone across state lines for immoral purposes; and illegally arranging cash transactions to conceal their purpose.

Spitzer could also be disbarred.

In New York, an attorney can lose his license to practice law for failing to "conduct himself both professionally and personally, in conformity with the standards of conduct imposed upon members of the bar."

It was a spectacular collapse for a man who cultivated an image as a hard-nosed politician hell-bent on cleansing the state of corruption.

He served two terms as New York attorney general, earning the nickname "Sheriff of Wall Street," and was elected governor with a record share of the vote in 2006.

The tall, athletic, square-jawed Spitzer was sometimes mentioned as a potential candidate for president.
___

Associated Press writers Verena Dobnik in New York City and Michael Gormley in Albany contributed to this report.

"NY lawmaker to developer, on tape: 'One hand washes the other'"

Associated Press

Last updated: 6:23 a.m., Friday, March 14, 2008

NEW YORK -- A state lawmaker described her dream house to a developer angling for city-owned land and then suggested swapping favors, according to a hidden-camera videotape played at the legislator's bribery trial.

"One hand washes the other," state Assemblywoman Diane Gordon told developer Ranjan Batheja on a tape played in court as Gordon's trial opened Thursday.

The Brooklyn legislator -- who was re-elected after her 2006 indictment -- has pleaded not guilty to bribe-receiving.

Assistant District Attorney Michel Spanakos said Thursday that Gordon demanded that Batheja build her a $500,000 house in a gated community -- specifying even the granite countertops, cherry wood cabinets and bathroom Jacuzzis -- and sell it to her for $1.

In exchange, she offered to help him secure a $2 million piece of city property in the East New York section of Brooklyn, prosecutors say.

"Since I am the assemblywoman, I definitely need a detached home," Gordon told Batheja in a 2004 conversation the developer secretly taped.

"You can make it happen."

Defense lawyer Danielle Eaddy argued in an opening statement that Gordon was entrapped by Batheja, who was cooperating with authorities to try to help his case in an unrelated legal matter.

Eaddy acknowledged her client "wanted a house either discounted or free," but said the lawmaker also wanted Batheja to get the land so he could build affordable housing for senior citizens.

Authorities say Gordon ultimately called off her deal with the developer, and Eaddy maintained the lawmaker wanted to pay for the home.

Batheja did install a pair of French doors in her office for free, Spanakos said.

If convicted, Gordon faces a maximum prison term of 5 to 15 years.

"Nude magazines salivate over 'young,' 'pretty' Spitzer call girl"

By CLARE TRAPASSO, Associated Press

Last updated: 7:02 p.m., Thursday, March 13, 2008

NEW YORK -- The woman at the center of the Eliot Spitzer call girl scandal will have no problem cashing in on her notoriety: Penthouse and Hustler are already knocking on her door.

"We've been looking at that very closely."

"She's young."

"She's pretty."

"She's a model," said Hustler magazine publisher Larry Flynt.

"We would love to do business with her, and we will approach her."

Penthouse has been trying to reach out to 22-year-old Ashley Alexandra Dupre, too, but had yet to make contact Thursday afternoon.

Penthouse Magazine Group president and publisher Diane Silberstein said she would "love to have her in the magazine" and would consider offering her a cover shot.

"She sounds like a very interesting and talented young woman, and I'm sure she has a great story to tell," Silberstein said.

"We promise to make it worth her while."

The New Jersey-born Dupre was thrust into the limelight this week when The New York Times identified her as the high-priced call girl whose arrangements for a rendezvous with New York's governor at a Washington, D.C., hotel were secretly monitored by the FBI.

So far, authorities haven't filed charges against Spitzer or Dupre, who was identified in court papers only by her escort agency pseudonym, Kristen, but she has a lawyer and hasn't been speaking about her encounter with the governor while the case is under investigation.

Flynt, who last June took out a full-page advertisement in The Washington Post offering $1 million for anyone who could prove he or she had illicit sexual relations with a prominent politician, suggested that by the time Dupre starts talking she may be too big a media phenomenon for a simple magazine spread.

"She is no doubt going to do a book."

"There will probably be a movie," he said.

"I think she is going to have so many offers coming in that it will probably be wishful thinking just to get in the door."

"Security experts doubt Spitzer's trooper detail was complicit in trysts"

By MICHAEL VIRTANEN, Associated Press

Last updated: 6:24 p.m., Thursday, March 13, 2008

ALBANY -- When the boss tells his security detail to beat it, that's what they do, according to security professionals who doubt the troopers protecting Gov. Eliot Spitzer were directly complicit in any trysts he might have engaged in.

The officers have not been publicly identified, and State Police have declined to discuss anything having to do with the soon to be ex-governor's security.

Private professionals add that client confidentiality is a job requirement, certainly until you're brought face-to-face with criminal activity, which they said was unlikely.

While Spitzer sometimes chafed publicly about close security, like previous governors he had a small group of troopers typically monitoring him around the clock with all guests to be noted.

But, as with contract clients, he was the boss.

"You're on the executive detail."

"They have a private life and if they don't want you sitting outside their room, they want you downstairs in the lobby or someplace else, that's what you're going to be doing," said Tony Strollo, owner of Independent Security Services in Albany.

"You hate to do it."

"You hate to leave them wide open."

"But it's the nature of the job."

"If you suspect your client's engaged in any criminal activity you have to distance yourself from that person."

"It's time for you to leave that detail," added Strollo, who was a trooper for 20 years.

That that might be more difficult for a sworn officer of the State Police under orders, he said.

Spitzer is resigning after federal investigators said he paid thousands of dollars for expensive prostitutes, including a tryst at the Mayflower Hotel last month in Washington, D.C., where the governor testified the next day.

"I feel bad for the guys who were protecting him."

"A lot of people are under the assumption they may have known what's going on," said Tony Strollo,

"I don't think anybody knew anything around him."

To have openly broken the law with paid sex, the governor would have put troopers directly on the spot.

"As a general premise we take an oath of office in that we wouldn't be overlooking a crime committed in our presence," said Lt. Glenn Miner, State Police spokesman.

The New York State Police Benevolent Association said Wednesday it was unaware of "any labor-related issues" for troopers from Spitzer's actions.

Union President Dan Di Federicis declined Thursday to discuss it even on background, saying it was "a highly sensitive issue, coupled with the fact that we owe our members extreme confidentiality, by law."

Carol Wigger, a private investigator for Strollo's firm with a specialty in executive security, said her brother-in-law was on the security detail for Gov. Hugh Carey, a widower.

Often the detail is just two troopers, she said, and her brother was prohibited from talking about it.

"Everything you do is confidential," Wigger said.

"If they're meeting with someone and they want you there, even if this person isn't their wife or husband, you can't say anything."

"It is private."

Wigger said she had done executive security for people well known nationally and internationally, but declined to name them.

If you can't keep their activities and conversations confidential you won't be back, she said.

She doubted any troopers saw the governor do anything illegal or that he'd have let them.

"I think anybody that does executive protection gets to be in sync with their principal and they basically know maybe there is something going on."

"But unless you see it you don't know."

"As far as the troopers and what they were doing for the governor, they were absolutely in line."

Normally the executive security involves gauging the threat level, making sure the client gets safely transported, checking out the arrangements and public areas, including exits.

"You try to keep it low-key and keep your client out of harm's way."

"You stay away from trouble," Strollo said.

Robert McCrie, professor of security management at John Jay College, said executive protection agents are not responsible for protecting that person from himself.

"They can't become emotionally involved in what's going on and they have to be discreet," he said.

President Kennedy and others since have slipped their larger Secret Service details that have more stringent requirements, McCrie said.

Typically it's with a polite brush-off like they don't need them anymore for the night.

It's also a desirable job, McCrie said.

"It puts one near the center of power and makes that person visible so they often have a post-government service career that opens up for them."

"The pay is good because of the overtime and the job is socially important."

"The officers seek out that work knowing that the scheduling might be inconvenient for their personal lives but might be rather exciting to do for a while."

"Spitzer gone,reforms remain"

By RACHEL BECK, Associated Press

Last updated: 1:02 p.m., Friday, March 14, 2008

NEW YORK -- Investors everywhere are better off today because of Eliot Spitzer.

That may be hard to see now amid the news that the so-called moral crusader was caught on a wiretap after allegedly arranging a meeting with a prostitute.

On Wednesday, he resigned as the governor of New York.

Whatever he might have done in his personal life, though, doesn't tarnish that he made the investment environment more open and friendly for individual shareholders.

Before Spitzer got involved when he was New York's attorney general, no one knew of the conflicts that existed in stock research or that mutual funds were giving trading perks to wealthy investors and hedge funds.

"He took apart a closed circle that lived on favors and back-scratching," said Barry Ritholtz, CEO and director of equity research at the investment firm Fusion IQ.

"Spitzer wasn't coming after Wall Street."

"He was coming after the bad actors."

Plenty of those actors didn't like that Spitzer -- who jumped on any opportunity he could to build his national stature -- shined a bright light on their back-room dealings.

After the dot-com bubble had burst and companies long heralded as corporate America's finest were collapsing under the weight of scandal, Spitzer went into attack mode.

His first targets were the big investment firms that had made so much money during the stock market's surge in the late 1990s.

Little did we know that much of it was at our expense.

We would soon learn that their game was fixed: Research analysts were recommending stocks so that their investment-banking colleagues could win more lucrative business from those same companies.

Spitzer subpoenaed e-mails from Wall Street firms and used those messages to build a solid case of how they misled investors.

The findings were shocking, especially for anyone who bought a high-flying Internet stock during the market boom.

One e-mail showed star Merrill Lynch & Co. analyst Henry Blodget describing InfoSpace Inc., one of the firm's highest-rated stocks, as "a piece of junk."

Another exchange had Salomon Smith Barney telecommunications analyst Jack Grubman telling a friend that his recommendation of AT&T stock helped secure spots in an exclusive Manhattan nursery school for his twin daughters.

Ten Wall Street firms eventually agreed to a $1.4 billion settlement, and new rules were put in place that separated banking and research.

Independent research was also made more available to investors, and the firms were required to disclose potential conflicts of interest.

"Sheriff" Spitzer had arrived.

Spitzer also began uncovering that mutual fund brokers had been giving special trading privileges to select clients.

One was called "late trading," an illegal practice of accepting buy and sell orders at the 4 p.m. price long after the market closes.

There were also issues of "market timing," which allowed short-term trading of funds intended to be longer-term investments.

Market timing is largely legal, but many funds prohibit it because it gives the larger firms an advantage over smaller investors.

That meant some investors were profiting at the expense of others, and mutual fund boards had fallen down on the job by not protecting the interests of all their shareholders.

The mutual funds, including Bank of America, Putnam and Janus, ended up paying multimillion-dollar fines and regulators enacted new reforms to eliminate the practices.

Spitzer kept finding new corners of the financial world to sniff out.

He was still on the prowl after leaving the attorney general's office to become governor in 2007.

Just last month, he testified before Congress about the financial woes facing bond insurers.

As his probes expanded the list of wrongdoing he uncovered, the criticism against him also grew.

Spitzer's targets would talk of his heavy-handed role and bullying demands.

Some called his attacks overzealous, nasty and personal, most notably in the case against former New York Stock Exchange Chairman Richard Grasso's $187.5 million pay package -- a case that still hasn't been resolved.

Many on Wall Street grew to fear and despise Spitzer.

That's why there were cheers on trading floors when the news broke Monday that the 48-year-old father of three -- identified in court papers as "Client-9" -- spent thousands of dollars on a call girl at Washington's swanky Mayflower Hotel on the night before Valentine's Day.

"I'm deeply sorry that I did not live up to what was expected of me," Spitzer said during Wednesday's news conference when announcing his resignation.

At that moment, much of the good he did was tainted with the whiff of scandal.

"Because of what has happened to Spitzer now, people have begun to question all the reforms that he put into place, and they shouldn't," said Charles Elson, director of the Weinberg Center for Corporate Governance at University of Delaware.

"No matter who the messenger was regarding reform, the message was right."

Whatever happened in the Mayflower Hotel on Feb. 13, it doesn't alter that plenty of people on Wall Street were cheating, and that Spitzer helped clean things up.

------

Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org

March 14, 2008

"Eliot Spitzer's 'Emperor's Club'"

By Robert Tracinski

As the political eulogies for Eliot Spitzer are written, a lot will be said about the alleged contradiction between his "righteous," "crusading" public persona and his tawdry personal life.

For example, in a remarkably insipid column today, Gail Collins of the New York Times professes utter amazement at the revelation about Spitzer, as if it came out of nowhere, like space aliens landing in the middle of Central Park.

"You never know," sighs this middle-aged naïf.

The New York Post's man in Albany, Fredric Dicker, is having none of it.

"I Knew He Was a Fraud & a Hypocrite from the Day He Swaggered into Capitol" blares his headline.

Yet even Spitzer's critics still criticize him for "hypocrisy"--which implies that he espoused the right ideals but failed to live up to them.

All of this gets the story wrong.

The real lesson here is the continuity between Spitzer's professional career and the scandal that ended it.

The common theme of his public and personal life is identified, ironically enough, in the preposterously pompous name of the call girl ring Spitzer patronized: the "Emperor's Club VIP."

That says it all, doesn't it?

Spitzer wanted to puff himself up as an "emperor," a big-shot VIP who is the center of everyone's attention, with everyone else just there to bow to his whims.

The detail that really made this psychology clear -- the detail that perfectly fit the psychological profile of a sociopath -- was the way Spitzer dragged out his ashen-faced, shell-shocked wife to appear by his side at both of his press conferences this week.

Her presence was unnecessary for any rational reason, but she was there because a sociopath views other people are mere pawns to be manipulated to serve his whims -- so if he feels he needs Silda to stand by him to show her support, out she comes, and the psychological cost to her doesn't even register on his consciousness.

The tawdry incident that touched off this scandal is, in fact, the least despicable part of the whole affair.

At least the call girl was, to all appearances, a willing participant and well paid.

Spitzer was even a generous tipper, we've been told.

But Spitzer's professional life, rather than being better than his personal life, was worse.

If in his personal life he paid money for attractive young women to create the illusion of his own supreme importance, in his professional life he achieved this illusion by abusing the power of the state, acting as a bully who threatened to "steamroller" over other people's lives and careers.

Spitzer's "crusading" career as New York's attorney general is a catalog of abuses of prosecutorial power.

He tried cases in the media instead of the courts by releasing embarrassing documents at press conferences and leaking carefully selected facts to sympathetic reporters.

This is slander under the color of law, an attempt to ruin a target's reputation without actually have to prove the allegations against him.

Spitzer smeared his victims by digging into their personal lives and spreading rumors about their infidelity (another disgusting irony of this affair).

He blackmailed businesses into paying massive fines by threatening to file corporate indictments that would cripple a firm's ability to operate, even if it were eventually acquitted.

He threatened respectable businessmen with the prospect of being hauled off in handcuffs in front of their families.

He did everything he could, in short, to bully the rest of the world into a solicitous state of submission--the state of terrorized subjects groveling before a tyrannical emperor.

A man like this is usually considered to have an ego that is too big, but the opposite is actually true.

This kind of bullying is proof that Spitzer was so insecure he needed to prop up his faltering ego by forcing others to cringe in fear before him.

His hiring of prostitutes is the dead giveaway, because it adds a touch of the pathetic: he needed the attention and adulation of others so badly that he had to pay for it.

What still generates a residue of sympathy for him among commentators on the left is Spitzer's rhetoric about being a moral crusader.

But even here, there is no real contradiction.

Spitzer's ideological appeals were always to a kind of anti-business populism; it was always about envy and resentment of the wealthy and successful.

It is a natural transition from this leftist ideology to the psychological of power-lust.

The attitude leftist class warfare encourages and enables is: Who do these Wall Street big shots think they are, acting as they're bigger and more important than me?

I'll show the bastards!

I'll tear them all down, ruin their businesses, force them out of their cushy jobs, and humiliate them.

Eliot Spitzer is a timeless example of the basic conundrum of government: the fact that anyone who really wants to wield power is, by that very fact, the last person who should be allowed to do so.

I call this the Washington Conundrum, named after George Washington--who is arguably the first man in history to demonstrate the solution: the only person who can safely be allowed to wield power is someone who seeks it out of dedication to the cause of liberty.

But take away the love of liberty--and the ideological framework of individual rights that supports it--and we return to the squalid pattern of most of human history: power not only corrupts, but attracts, rewards, and promotes the most corrupt types of human character.

Without the love of liberty and the principles of liberty, we don't get George Washingtons in public office.

Instead, we get the Emperor's Club VIPs--self-aggrandizing thugs like Eliot Spitzer.

Robert Tracinski writes daily commentary at TIADaily.com. He is the editor of The Intellectual Activist and TIADaily.com.

http://www.realclearpolitics.com/articles/...erors_club.html

THE JEWISH DAILY FORWARD

"Spitzer Has Sinned, But It’s Our Sex Obsession That’s Criminal"

Opinion By Alan Dershowitz

Wed. Mar 12, 2008

When Eliot Spitzer was my research assistant in the 1980s, he was a young man of great brilliance, high integrity, conservative demeanor and enormous promise.

It pains me deeply to see him brought down so far, and so quickly, by private sexual misconduct.

I think somewhat less of him now than I did before I heard this week’s news of his indiscretions, largely because of what he did to his family — but let’s all take a collective deep breath and try to regain a sense of proportion about the essentially private actions of this public man.

Throughout our history, men in high places have engaged in low sexual activities.

From Thomas Jefferson to Franklin Roosevelt to John Kennedy to Lyndon Johnson to Bill Clinton, great political figures have behaved like adolescent boys in private, while at the same time brilliantly and effectively leading our nation in public.

The laws criminalizing adult consensual prostitution — especially with $5,000-an-hour call girls — are as anachronistic as the old laws that used to criminalize adultery, fornication, homosexuality and even masturbation.

These may be sins, but there are no real victims, except for family members.

Our nation, unique among Western democracies, is obsessed with the private lives of public figures.

Whether it be Larry Craig soliciting favors in an airport bathroom or Rush Limbaugh getting illegal pharmaceuticals in a parking lot, this obsessive focus on the private imperfections of public figures threatens to drive many good men — and soon, good women — out of public life for fear that they will brought down by their private peccadilloes.

The back pages of a good number of glossy magazines and local newspapers openly advertise what everybody knows to be expensive call girl services.

They’re advertised on television, in tourist brochures and on the Internet.

Millions of people around the world use prostitutes and call girls.

The trade can be tawdry and sometimes exploitive, as when young girls are enslaved and prostituted against their will.

But adult women who make the choice to sell their bodies for sex for $5,000 an hour are not victims, and if the trade is tawdry, it certainly doesn’t warrant 5,000 overheard phone calls, 6,000 intercepted emails and the use of surveillance and undercover agents — all of which could have been put to better use in seeking to prevent acts of terrorism or predation against innocent victims.

We are a nation of hypocrites who publicly proclaim against acts that so many of the proclaimers perform in private.

Yes, Eliot Spitzer can be charged with hypocrisy for prosecuting prostitution rings while patronizing prostitutes himself.

The voters would have had every right to hold his hypocrisy against him had he run for office after completing his term.

They could have considered the recklessness of his conduct in evaluating his ability to perform his public functions.

But forcing him to resign constitutes an abuse of the political and criminal processes, an abuse that would only be compounded by using vague criminal statutes to prosecute him for federal crimes for which no one is prosecuted.

There is another issue that is potentially quite troubling in this case.

The story about how Spitzer’s alleged crimes were discovered does not ring true.

As a criminal defense lawyer, I have dealt with many money laundering and other bank-related cases.

The financial transactions that allegedly gave rise to the federal government’s interest in Spitzer do not generally result in a criminal investigation.

I strongly suspect that we will learn more about how the feds came to focus on Spitzer’s financial transactions.

The money laundering statute is so vague and open-ended that it can be used selectively to target political and economic opponents.

On this issue, stay tuned.

We have not heard the last of it.

As a nation we must learn how to distinguish between sin and crime, between activities that endanger the public and those that harm only the actor and his family.

The criminal law should be reserved for serious predatory misconduct.

Nor should this story of personal fallibility dominate the news, as it continues to do while our soldiers are killed in Iraq and the Democrats choose their candidate for president.

Sex sells soap, at least in the United States — but a married man going to a prostitute is simply not a big deal.

We must restore our sense of proportion and priorities.

Alan Dershowitz is a professor of law at Harvard University.

http://www.forward.com/articles/12885/

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

EB SAYS: Harvard Law Prof. Alan Dershowitz continues to be one of Spitzer's biggest defenders, writing: "A married man going to a prostitute is simply not a big deal."

JOHN GALT RESPONDS: After reading Harvard Law Prof. Alan Dershowitz's March 12, 2008 article in the JEWISH DAILY FORWARD entitled "Spitzer Has Sinned, But It’s Our Sex Obsession That’s Criminal", I have come to the conclusion that the Harvard Law professor is little more than an arrogant stupid man ...

And perhaps it is his corrosive influence on the young and impressionable Eliot Spitzer that is at least partly responsible for Eliot Spitzer's fall from grace today ...

While to the Harvard Law Professor, a "married man going to a prostitute is simply not a big deal", that is not at all what this case involving Spitzer in New York was all about ...

And you would think that an alleged intelligent man like this Harvard law professor Dershowitz would be the first, and not the very last, to be able to grasp that fact ...

But then again ...

The Dershowitz dude is a lawyer ....

And so ...

As a lifelong citizen of New York State, I am stating to this Dershowitz dude in public here that he is WAY WIDE of the mark in this matter of Eliot Spitzer PROTECTING a prostitution ring that he was then using the services of .....

This has nothing to do with whether or not prostitution is a good thing, or a bad thing, or new, or ancient, which it most certainly is, from a reading of history ...

The rebel Jesus in the Bible in one case stepped in to prevent the stoning to death of a woman thought to be a prostitute ...

"Let he who is without sin cast the first stone ..."

And that was some 2,000 years ago, now ...

In many civilizations, past or present, prostitution is a fact of life, and is not necessarily illegal or unlawful ...

BUT ...

That has nothing to do with what happened here ...

And the efforts of this Dershowitz dude to trivialize Spitzer's behavior are in fact ludicrous ....

Spitzer was not JOE CITIZEN, here ....

Some poor hapless schmoe caught with a $50 hooker down in Newark, New Jersey ...

He was the elected governor of the State of New York ...

And BY OUR New York State CONSTITUTION, which is not subject to being voted on or nullified by citizens of other states of this union, including Dershowitz over there in Massachusetts ...

When he swore his oath of office here in NYS, Spitzer swore to uphold the NYS Constitution ...

Which made it his duty to US, the CITIZENS of this state, to take care that the laws of NYS were faithfully executed ....

And there is where he failed, and miserably so ....

A point that the arrogant and ignorant Dershowitz is apparently totally unable to comprehend ...

Here, in America, for good or bad, LIBERTY is defined as:

Freedom from all restraints EXCEPT such as are justly imposed by law.

- Black's Law Dictionary

Now, there is where my disagreement with the Dershowitz dude would stem from in this specific case ...

Whether or not it should be, and that is a moral judgment, prostitution is and remains illegal in NYS and America ...

And Dershowitz can make all the arguments that he wishes to the effect that laws against prostitution in NYS or America are not in fact "JUSTLY IMPOSED BY LAW" ...

BUT ...

I myself am of the mind that once a law is made law, then until revoked or repealed or deemed unconstitutional, it is law ...

Whether or not it was "justly imposed" in my personal opinion does not alone serve to negate it ...

AND AS NYS GOVERNOR, Eliot Spitzer did not have the unilateral authority, jurisdiction or discretion to "decriminalize" prostitution so that HE could then participate in it, to the ruin of his family ...

This Dershowitz dude, on the other hand, seems to have a feel that a bunch of people like him can merely get together and decide that they don't like this or that law, such as the laws against prostitution, and thusly negate the law as if it did not exist ...

WITHOUT HAVING TO GO THROUGH THE DUE PROCESS OF HAVING THE LAW CHANGED OR NULLIFED IN COURT OR REPEALED ...

Which I believe is part of what led Spitzer to his ruin here in NYS, starting right at DAY ONE ...

When he tried to become a CAUDILLO ...

Instead of assuming the constitutional duties of a governor of the State of New York ...

And so ....

Posted by John Galt on March 14, 2008 6:37 PM

http://www.nydailynews.com/blogs/dailypoli...6.html#comments

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

March 12, 2008

"Dinallo In D.C. (This Time, Without Gov)"

Here's another one of those Department of Ironies items ...

NYS Insurance Superintendant Eric Dinallo is in Washington, DC today to deliver testimony to the House Committee on Financial Services.

Dinallo, a longtime Spitzer aide who dates back to the AG days and is widely credited with masterminding the use of the Martin Act, which enabled Spitzer to go after Wall Street, was also with Spitzer in Washington on the Feb. 13-14 trip during which he trysted with a high-priced prostitute.

Dinallo was reportedly the one requested to testify before a Congressional subcommittee on that trip, but Spitzer requested his own invitation at the last minute, enabling him to get away from home and set up a meeting with "Kristen."

During his testimony on Feb. 14, Spitzer, in his typical aggressive and accusatory style, blamed federal regulators and rating agencies for failing to stop the subprime mortgage crisis and warned of an impending "tsunami" in the financial markets.

The testimony Dinallo is scheduled to deliver today on the municipal bond market appears in full after the jump.

CONGRESSIONAL TESTIMONY BY NEW YORK INSURANCE SUPERINTENDENT ERIC DINALLO

March 12 Testimony to the Committee on Financial Services, United States House of Representatives, on The Municipal Bond Market and Bond Insurance

ALBANY, NY (03/12/2008; 0802)(readMedia)-- I would like to thank Chairman Frank, Ranking Member Bachus and the other members of the House Financial Services Committee for allowing me to testify today.

My name is Eric Dinallo and I am New York State Insurance Superintendent.

Today’s hearing is about conditions in the municipal bond market and the impact of the problems in the bond insurance industry on that market.

Your other witnesses who are directly involved in the market are better able to provide you with detailed and accurate information about the current state of the municipal bond market.

I believe that we can most contribute to today’s discussion by telling you what we have been doing to help that market by working to stabilize the bond insurance companies.

Bond insurers, also known as financial guaranty insurers or monolines, currently insure about half of outstanding municipal bonds.

The insurers, who generally have top triple-A credit ratings, promise to pay bondholders if the government or other entity that issued the bond is unable to pay.

That insurance provides the municipal bond with a top triple-A rating, which the bond itself would not have without the insurance.

Many states, municipalities and state and city authorities are willing to pay for this insurance because it increases the market for their bonds and lowers the net cost of borrowing.

Many institutional investors and retail investors have a much larger allocation to invest in triple-A rated bonds.

The lower financing cost more than makes up for the cost of the insurance, so the government issuer and the taxpayers who must repay the debt benefit from the insurance.

Investors also benefit.

While in theory investors should independently analyze the creditworthiness of issuers before they invest, practically it is difficult to study each of the thousands of small state and local government entities that issue debt.

By insuring thousands of issuers, the bond insurers take on the task of analysis and the risk of default for investors.

Gathering and analyzing information about issuers has a real cost.

By reducing those information costs, the insurers thus make investing in municipal bonds easier and less costly for investors.

The problems for the municipal bond market arose when the bond insurers’ credit rating was threatened by deterioration in the subprime mortgage market.

The bond insurers had also insured billions of dollars of subprime structured securities.

If the bond insurers were downgraded, then the municipal bonds they insured would lose their triple-A rating and would either have their own generally lower rating or in some cases no rating at all.

In fact, while the two biggest bond insurers have preserved their top ratings with the two major credit rating agencies, some other bond insurers have been downgraded.

While these downgrades and the threat of more had a serious impact on the municipal bond market, the general credit tightening put pressure on all debt securities.

It is important to understand that even restoring some confidence in the bond insurers’ credit ratings is not likely to resolve all of the current problems.

There has been a general tightening in the credit markets and a flight to safety.

In the auction rate market, investors now find that those securities are not as easy to exit as once believed.

But investors are choosing to exit the market for auction rate bonds, regardless of the insurer, for liquidity reasons, so improving the standing of the bond insurers is not likely to change the current situation in this market.

In the variable rate demand market, there is still demand for uninsured bonds or bonds not tied to weak bond insurers, but only time will tell how this market will react to the newly strengthened bond insurers.

Now, I would like to review what the New York State Insurance Department has done and is doing.

We are the primary regulator of most of the companies in this industry.

Wisconsin is the primary regulator for Ambac, but the company’s headquarters is around the corner from our office in New York City.

Maryland is the primary regulator for Assured Guaranty, but its main office is in mid-town Manhattan.

And we license both Ambac and Assured to do business in New York.

As insurance regulators, it is our responsibility to protect policyholders and ensure a healthy, competitive market for insurance products.

In the case of bond insurance, there are two main groups of policyholders.

There are the municipal governments who bought insurance for the bonds they issued and by extension the investors who bought those bonds.

Then there are the banks and investment banks who bought insurance for the structured securities, including mortgage-backed securities.

The best way to protect all the policyholders is to preserve the triple-A ratings of the bond insurers where that is possible.

So we have been facilitating additions to the capital strength of the bond insurers, not for their own sake, but to protect first policyholders and second the markets and broader economy.

This has been an extraordinarily challenging endeavor.

Every single bond insurer is in a different situation with different strengths and weaknesses.

Each has a different group of investors and owners, who have different views.

Each must deal with a different set of counterparties; that is banks, broker dealers and investment banks, each of which has a different level of exposure.

And there are different potential outside investors with differing types of offers.

The search for additional capital has been undertaken in a market for the securities of financial services companies in general and bond insurers in particular that has grown extraordinarily difficult.

Since mid-2007, as we saw the increasing problems in the subprime market and came to understand the impact on the bond insurers, we have been increasingly active and have, as of this date, made important progress, though there is more to be done.

Late last year, we developed a three-point plan for the industry.

First, bring in new capital and capacity.

Second, prepare to deal with any chronically distressed companies.

Third, develop new regulations that would seek to prevent a repeat of this problem.

Our primary focus has been on point one.

We have been working with all parties, the insurers, banks, financial advisors, private equity investors, rating agencies and federal officials, to support efforts to strengthen each individual bond insurer.

To date we have facilitated the addition of $7 billion of additional external capital into five different companies.

That includes $2.5 billion for MBIA, $1.5 billion for Ambac and the $1 billion that Wilbur Ross committed to Assured Guaranty.

In addition, we invited Berkshire Hathaway to open a new bond insurer in New York and licensed it in record time.

Berkshire has made a public commitment to add $1 billion in capital to support its new insurance company.

And we are working with the NAIC to help the company get licenses in all 50 states.

That additional capital provides three very important benefits.

Capital strength is the most effective way to protect the credit rating of the bonds insured by those companies, both the municipal bonds and the structured securities.

The entry of new, healthy guarantors ensures that, if some of the smaller bond insurers cannot be stabilized, healthy companies will be willing and able to take over at least their municipal bond portfolio.

This additional capital and market depth should help the municipal bond market stabilize over time.

Better-capitalized insurers and new entrants will guarantee a competitive market for bond insurance for those municipal issuers that want to purchase it.

Time and the market will determine the need for municipal bond insurance.

Some governments have stated recently that they believe they no longer need bond insurance and have been issuing debt without it.

That may mean that the demand for bond insurance shrinks.

But we believe that a substantial number of municipal issuers, especially the smaller ones, will continue to need bond insurance.

And, it is our job to ensure that it continues to be available for those who benefit from it.

Stabilizing the bond insurers should provide time for others to deal with the much bigger problems caused by the general subprime issue, hopefully with less pain to the economy as a whole.

The condition of the bond insurers became a focus of the broader markets because, if they lost their top credit ratings, it would have had a broad impact on other financial institutions and thus on the economy.

Preserving the insurers’ ratings was absolutely necessary to avoid worse problems, but it is obviously not sufficient to solving the much larger issues caused by subprime mortgages and other financial market problems.

We certainly hope the federal government, other regulators and the financial community will make good use of the time provided by the efforts and capital provided so far.

As for point two of our three point plan, we have been studying what steps could be necessary if one of the bond insurers is unable to find the capital it needs to maintain its ratings and stabilize its business.

Of course, we hope such steps will not be necessary.

Finally, point three, we are working on rewriting the regulations for bond insurance to prevent companies from taking on inappropriate risk in the future, while not discouraging the financial creativity that is essential to maintaining our position as the world financial capital.

Because any legislative proposal will be complex and could have a substantial impact not only on the bond insurers, but also on the public and structured finance market generally, we are proceeding carefully.

We are consulting with the full range of interested parties, including the bond insurers and their industry organization, the three major credit rating agencies, issuers and underwriters of guaranteed instruments, and other government officials.

We have begun these meetings and have an aggressive schedule in the next few weeks to gain input in this effort.

We do not yet have a final product, but I can present some of the broad ideas and concepts we are carefully considering.

In general, we believe it is important that new regulations improve transparency so that risk can be accurately evaluated.

There is nothing inherently wrong with securitization.

Properly used, it can be a valuable tool for raising capital and spreading and therefore reducing risk.

But we must understand the risk of moral hazard and other agency problems when there are large-scale transfers of risk.

Clearly, there must be a way to ensure that the risks that are securitized are accurately reported through each stage of the process so that underwriters, credit rating agencies, bond insurers and investors all understand the actual risk and make decisions on that basis.

For example, there are securities known as CDO squareds.

A collateralized debt obligation groups a large number of mortgages, credit card or auto or student loan receivables and sells bonds supported by the stream of income from those thousands of debts.

These asset-backed securities are sold in tranches ranked by predictions of their likelihood of default.

Tranches with the first right to the payments from the underlying mortgages or loans are the highest quality and have the highest ratings; those with the last rights to payments have the lowest ratings.

The more secure tranches receive a higher credit rating, but a lower interest rate.

The less secure receive a lower credit rating and a higher rate.

The CDO squared bonds are made up of middle or mezzanine tranches of the CDO asset-backed securities and are also sold in tranches.

A CDO squared groups these tranches together on the theory that the risk that all of them will default is small and so by pooling a large amount of these riskier loans into a small tranche, that tranche can be highly rated.

At this point there have been two levels of tranching, and it becomes much more difficult to accurately determine the risk of these securities.

We are considering whether bond insurers should be prohibited from guaranteeing CDO squareds.

We want to ensure that the municipal bond market will not be affected by problems in the structured securities market in future, or vice versa for that matter.

These are two very different markets with different types of risk and different payment streams.

So it is not clear that it makes sense to combine them.

We are considering whether a bond insurer should at some point in the future have to select one type of business to conduct, either public finance or structured, but not both.

Once the company made that decision, for the market it would no longer serve, it would continue to service its current clients, but would not take on any new business.

So this would not “split” the companies with all the potential issues raised by that approach.

But it would have the same end result of having companies serving only one or the other market.

Other possibilities are to limit the amount of structured business that a bond insurer could do or to increase the amount of surplus and capital that a bond insurer must hold for its structured exposure.

In general, in regulating insurance we are moving towards risk-based requirements for capital.

So it will be important to study what that means when applied to this type of insurance.

The primary goal of insurance regulation is to ensure that the insurer maintains an adequate level of solvency and is able to honor policyholders’ claims.

The business model for the financial guaranty insurance companies, however, requires that they hold levels of capital that will allow them to maintain the triple-A rating necessary to write new business.

It has become clear that the loss of the triple-A rating essentially cripples the company’s ability to do business as a going concern and puts the insurer in a “run-off’ mode.

This can lead to a downward ratings spiral that can destroy the market value of the insurance policies that issuers have purchased.

We are now considering whether the sustainability of the business model should be the regulatory standard going forward.

While we will continue to regard claims paying ability as the benchmark, our goal for the future, for all insurers, is to do higher level risk-based examinations.

Financial guaranty insurance is a complicated business, which is largely based on modeling and underwriting of complex capital market instruments.

Total reliance on the rating agencies is not prudent.

Rather an independent analysis by regulators of risk positions taken by bond insurers is more appropriate.

It would also require greater transparency between the bond insurers and their regulator, by which I mean more information and oversight regarding the nature of the risks being insured.

We are looking at ways to improve reporting requirements, so we will better understand what the bond insurers we regulate are doing and can discuss this with them before problems arise.

We welcome any suggestions about how to improve our regulations.

I welcome your questions.

###

http://www.nydailynews.com/blogs/dailypoli...ime-withou.html

THE NEW YORK DAILY NEWS DAILY POLITICS BLOG:

I'm glad you posted this, EB ...

Because one of those lingering questions left over from the MELT-DOWN of the Spitzer REGIME has to do with statements attributed to none other than "ex-DEPUTY SHERIFF OF WALL STREET" Eric "NIPS" Dinallo recently in the Financial Times of London, as follows:

"Dinallo defends monolines handling"

By Aline van Duyn, Francesco Guerrera and Ben White in New York

Published: February 21 2008 22:09 | Last updated: February 21 2008 22:09

Eric Dinallo, New York’s insurance regulator, has defended his handling of the bond insurer crisis, saying his decision to call in Wall Street’s top banks last month for talks was an effort to flag up problems and not the heavy-handed intervention portrayed by critics.

Mr Dinallo rebuffed criticism that he was focused on protecting municipal bond issuers at the expense of Wall Street institutions and investors.

Mr Dinallo has been attacked for putting pressure on Wall Street to commit up to $15bn and prevent rating downgrades of Ambac, MBIA and FGIC.

But Mr Dinallo said the liquidity injection was only one of the options discussed at the meeting, adding that his intention was to find a solution that would help all parties.

“The meeting was like Nixon going to China."

"I said at the end of the meeting ‘I am trying to get ahead of the curve and am taking a big risk here.'"

"'I hope you will reward the risk I am taking’."

"Only by rewarding regulators who take these risks will we be able to change the regulatory paradigm.”

He said it was possible banks did not fully appreciate his experience, such as his three years at Morgan Stanley and at the insurance broker Willis, and associated him with his former role at the attorney-general’s office under Eliot Spitzer, governor of New York state.

“I expect people to be judged by their actions, not their reputations,” he said.

http://www.ft.com/cms/s/fa50d510-e0ab-11dc...00779fd2ac.html

The part that has me very curious, of course, is where "NIPS" says:

"'I hope you will reward the risk I am taking’."

"Only by rewarding regulators who take these risks will we be able to change the regulatory paradigm.”

end quotes

I HOPE YOU WILL REWARD THIS RISK I AM TAKING ....

I have to say, I keep turning that phrase over and over and over ....

Especially in light of these revelations about Spitzer and his prostitutes ...

And I have to wonder ....

WHAT DOES ERIC "NIPS" DINALLO MEAN WHEN HE TALKS ABOUT REWARDING HIM FOR RISKS THAT HE IS TAKING?

IS HE ASKING FOR SOME KIND OF GRATUITY HERE?

OR WHAT?

And so ...

Posted by John Galt on March 12, 2008 3:22 PM

http://www.nydailynews.com/blogs/dailypoli...ime-withou.html

"Lawyer for call girl says photos used without consent"

Associated Press

Last updated: 6:42 p.m., Friday, March 14, 2008

NEW YORK -- A lawyer for the call girl linked to the downfall of Gov. Eliot Spitzer says the 22-year-old has been thrust into the "public glare" without her consent.

Don D. Buchwald says some publications have used Spitzer's "political misfortunes" as an excuse to exploit Ashley Alexandra Dupre's persona for commercial reasons.

Newspapers and Web sites splashed photos of the woman, known as "Kristen" in court documents accusing Spitzer of paying more than $4,000 for prostitutes' services, in suggestive poses.

Buchwald says she did not consent to the use of her photos "in this manner" and the usage may be a violation of federal copyright laws.

He stopped short of saying they would sue media outlets, but noted she is not a public figure.

Spitzer resigned earlier this week amid the prostitution scandal.

Lt. Gov. David Paterson is taking his place Monday.

"Holding Spitzer to account - Bank that held campaign funds also tipped off IRS"

By JAMES M. ODATO, Capitol bureau, Albany, New York Times Union

First published: Saturday, March 15, 2008

ALBANY -- The Long Island bank that reported Gov. Eliot Spitzer's suspicious payments to the IRS is the repository for the Spitzer 2010 campaign and holds $3 million the governor collected for his political operations.

Officials at North Fork Bank in Melville and the Spitzer campaign would not discuss the matter.

Jonathan Rosen, a spokesman for the campaign, referred questions to the campaign's lawyer, Kenneth Gross, who did not return a call.

Rosen would not say why the bank became the primary repository and funds were moved there from JP Morgan Chase Manhattan Bank sometime during Spitzer's gubernatorial campaign.

He would not say if Spitzer tapped the campaign account for personal expenses.

Expenditure reports do not identify funds going to sex-for-hire enterprises or affiliates.

Spitzer's campaign fundraising manager, Cynthia R. Darrison, was the senior vice president of private banking at North Fork Bancorp. Inc., a unit of Capital One.

Spitzer and his father, a wealthy real estate owner, also had personal accounts at the bank, according to published reports and financial disclosure documents.

Darrison could not be reached at her bank office.

She started working at the bank after Spitzer became governor.

Federal investigators have been scrutinizing Spitzer's withdrawals from an account at North Fork, reportedly to pay for prostitutes hired from Emperor's Club VIP.

Principals of the alleged pricey call girl service were arrested March 6 after a federal probe, and sources have identified Spitzer as an unnamed client referred to in court papers.

The criminal investigation stemmed at least partly from an IRS examination into Spitzer's use of the bank, triggered by suspicious activity with his accounts, according to published reports and an affidavit from the U.S. Attorney's New York City office.

The bank reportedly notified the IRS about such transactions in one of the governor's accounts.

Darrison, on the board of the Citizens Budget Commission, which often criticized Spitzer's budgeting, apparently still works at the bank.

North Fork's former chief executive officer, John Kanas, has been a very generous contributor to Spitzer and other politicians, including former Gov. George Pataki.

Kanas, still associated with the bank in an advisory role, did not return a message left with his secretary.

"If any of these campaign funds were used for this stuff, that is a crime," said Sen. Hugh Farley, R-Niskayuna, the chairman of the Senate banking committee, also a recipient of contributions from Kanas.

Rosen on Wednesday said the campaign had not been subpoenaed, but Thursday and Friday he would not comment when asked.

The New York Times reported Friday that investigators are looking at whether Spitzer used campaign donations to pay prostitutes.

"That would certainly make our case for reforming uses of campaign finances," said Barbara Bartoletti, legislative director for the League of Women Voters.

"This would be one more very perfect storm for dealing with lapses in use of campaign finance dollars."

"It goes well beyond pool covers and tickets to sporting events."

James M. Odato can be reached at 454-5083 or by e-mail at jodato@timesunion.com.

"Feds pull Spitzer's security clearance"

Posted on Friday, March 14, 2008 12:24 PM

By Jonathan Dienst, WNBC Investigative Correspondent

The FBI and Homeland Security officials revoked Governor Eliot Spitzer's security clearance early this week as the criminal investigation into Spitzer's alleged use of prostitutes broadened, according to officials familiar with the case.

As a result, Spitzer no longer has access to classified intelligence and security briefings, federal officials told WNBC on condition of anonymity.

A spokeswoman for Spitzer did not return calls for comment.

Spitzer's security clearance was pulled on Tuesday, just one day after his alleged connection to the alleged prostitution ring became public.

One federal source said Lt. Governor David Paterson is now being cleared for security briefings.

Spitzer still can be told of potential threats, such as the new but uncorroborated Al Qaeda threat against Wall Street and other financial institutions, in order to help deploy resources if necessary.

This latest non-specific threat information about New York suggests a possible attack sometime in March, officials have said.

Spitzer is set to resign from office on Monday.

Federal prosecutors in Manhattan continue to look into whether the Governor committed crimes when he allegedly paid thousands of dollars to have a prostitute meet him at a Washington, D.C., hotel.

He allegedly paid $4,300 for the February 13 rendezvous.

Investigators are looking into whether Spitzer illegally tried to conceal at least $15,000 in payments to the escort service, sources familiar with the case have said.

Spitzer has not denied the escort-service allegations in his public comments to date, instead referring only to his "personal failings."

Investigators also want to know if Spitzer used any campaign cash or state funds for the alleged trysts, the sources added.

http://deepbackground.msnbc.msn.com/archiv.../14/769923.aspx

"Century-old law tied to Spitzer scandal"

By MARCUS FRANKLIN, Associated Press Writer

16 March 2008

NEW YORK - Among the charges Gov. Eliot Spitzer could face in the call-girl scandal that has cost him his job is one that has been brought against a slew of other prominent men in the past century.

In court papers, Client 9, identified by law enforcement officials as Spitzer, paid for a prostitute to take a train in February from New York to Washington and have sex with him at an upscale hotel.

Spitzer has not been charged with a crime, but four people accused of running the prostitution operation that authorities say he used have been charged with violating the Mann Act, a federal law that bans carrying women or girls across state lines for "prostitution or debauchery, or for any other immoral purpose."

The 1910 act has been amended and used for purposes ranging from the political to the racist, said David Langum, author of "Crossing Over the Line: Legislating Morality and the Mann Act."

The act also thrust vice crimes, once the domain of states, under the purview of federal authorities.

Entertainer Charlie Chaplin, architect Frank Lloyd Wright, musician Chuck Berry and heavyweight champ Jack Johnson all were accused of violating the act; Berry and Johnson, a bareknuckle fighter who held the title from 1908 to 1915, served prison time over it.

Johnson, a black man who often faced racial hostility because of resentment over his dominance of white opponents and flamboyant relationships with white women, was accused of transporting a prostitute from Pittsburgh to Chicago.

"He really was charged because he was a black guy who married white women," said Langum, a research professor of law at the Cumberland School of Law at Samford University in Birmingham, Ala.

Afterward, a prosecutor said Johnson's conviction was the "foremost example of the evil in permitting the intermarriage of whites and blacks," Langum said.

"It was very racial," the professor said.

In recent years, the Committee to Pardon Jack Johnson — which includes Ken Burns, who made the documentary "Unforgivable Blackness" about Johnson, and former New York Mayor David Dinkins — was established.

FBI Director J. Edgar Hoover was said to have instigated the charge against Chaplin because of the entertainer's left-leaning political views.

Rock'n'roll pioneer Berry, who's also black, was convicted of transporting an underage girl across state lines.

The charge against Wright concerned a child-custody dispute.

The act, named for Illinois Congressman James Robert Mann, grew out of hysteria during the turn of the last century over fears that immigrant men were abducting white women and girls who were leaving rural farm areas to work in cities, and forcing them into prostitution, historians said.

There were government vice commissions and reports.

Novels about "white slavery," or sexual slavery, appeared.

Langum wrote in his book that the act was "laden with presumptuous moralism."

Officially known as the White-Slave Traffic Act, it was amended in 1986.

The words "debauchery" and "any other immoral purpose" were replaced with "any sexual activity for which any person can be charged with a criminal offense."

Conviction carries a maximum penalty of 10 years in prison.

But legal precedent is on Spitzer's side when it comes to the Mann act: It hasn't been used to prosecute individual customers of prostitutes for years, Langum and other experts said.

Spitzer, a moral crusader who humbly announced his resignation days ago, effective Monday, could face other charges too, including soliciting and paying for sex, and illegally arranging cash transactions to conceal their purpose.

"If he's prosecuted under the Mann Act, it's because of who he is rather than what he did," Langum said.

"Because he's the governor of New York and because he was a hard-liner on crime."

"Spitzer's resignation as NY governor is final after sex scandal"

By MICHAEL GORMLEY, Associated Press

Last updated: 12:44 p.m., Monday, March 17, 2008

ALBANY -- Eliot Spitzer's resignation as New York's governor was final at noon Monday, completing a stunning fall after he was implicated in a prostitution investigation.

His lieutenant governor and 2006 running mate, David Paterson, was scheduled to be sworn in as New York's 55th governor at 1 p.m.

Spitzer left the governor's office in disgrace after 14 months and as federal authorities continue to investigate a high-priced call girl operation he was accused of using.

The Democrat is not charged with a crime, but four people accused of running the prostitution operation have been charged with violating the Mann Act.

The federal law bans carrying women or girls across state lines for prostitution or any immoral purpose.

Spitzer says he's leaving politics, but his law license could also be in jeopardy.

The resignation blunts one of the nation's most promising political careers.

Widely regarded as perhaps the state's best attorney general after two terms in which he forced reforms on Wall Street, Spitzer earned international fame as a crusader against corporate misconduct.

He was elected governor in 2006 with a record share of the vote, nearly 70 percent, largely on his promise to reform Albany.

He stumbled in his freshman year, getting tangled up in a plot by his aides to smear his chief political rival.

But after the rough start, things looked like they were turning around for Spitzer in early 2008.

Then came last Monday's bombshell report linking the governor to prostitutes.

After a brief and vague apology, Spitzer hunkered down for two days in his Manhattan apartment with his wife, three teenage daughters and trusted advisers.

By Wednesday, he was done.

Spitzer announced he would quit and give Paterson five days to get ready to take over.

"Paterson proposes cutting NY budget increases amid Wall Street woes"

By VALERIE BAUMAN, Associated Press

Last updated: 5:32 p.m., Tuesday, March 18, 2008

ALBANY -- Citing troubles on Wall Street, Gov. David Paterson is taking the extraordinary step of calling for an $800 million cut in the proposed state budget increases.

Paterson wants to cut the almost 5 percent spending increase in former Gov. Eliot Spitzer's $124 billion plan to 3.7 percent.

His proposal includes an across-the-board 2 percent reduction in operating spending for all state agencies, and another 2 percent reduction in the funds that the state contributes to local governments and programs.

Under the state consitution, lawmakers must reach a final budget by April 1.

"We've got to do, maybe, something we've never really done before so that next year we're not in the same situation," Paterson said.

"We're going to be in the same situation either way, based on where the national economy is going, but we don't want to be where California is."

California lawmakers approved emergency cuts and new borrowing last month as part of their plan to cut an estimated $16 billion shortfall in half by this summer.

Since then Gov. Arnold Schwarzenegger has called for 10 percent, across-the-board budget cuts to cope with a projected deficit in the 2008-09 fiscal year.

That includes a $4.3 billion reduction in education spending.

Nearly 20 percent of New York state's revenues come from Wall Street.

The state is directly affected by layoffs in the financial world and JP Morgan's acquisition of the investment firm Bear Stearns Companies Inc. Monday at a fraction of its worth from a week ago.

Senate Majority Leader Joseph Bruno, a Republican, says he would be open to a hiring freeze for state workers -- an idea suggested by Assembly Minority Leader Jim Tedisco.

The state has about 1,400 job vacancies right now.

Paterson said he probably wouldn't consider a hiring freeze, but perhaps would look at cutting some of those positions.

Assembly Speaker Sheldon Silver is seeking a tax increase for New Yorkers who make $1 million or more.

Bruno rejects any tax increases.

"We realized there was a gap," Silver said.

"We proposed for this time of economic downturn that we would provide a revenue source for that downturn."

The biggest conflict is that lawmakers can't agree on how much revenue they have to work with while planning a budget.

"We all just count differently," Bruno said.

"It's kind of hard for the public to understand how we arrive at such different conclusions from what should be the same information."

Paterson and lawmakers were tackling the budget in meetings Tuesday.

"Woman charged in prostitution ring that snared Spitzer free"

By LARRY NEUMEISTER, Associated Press

Last updated: 4:52 p.m., Tuesday, March 18, 2008

NEW YORK -- A 23-year-old woman accused of controlling the money for the high-priced escort service that led to Eliot Spitzer's downfall has been released on bail, nearly two weeks after her arrest.

A smiling Cecil "Katie" Suwal left U.S. District Court in Manhattan Tuesday, and has three weeks to pay $50,000 in cash.

She declined to comment as she stepped in to a dark sedan.

Suwal lived in Cliffside Park, N.J., with 62-year-old Mark Brener before they were arrested along with two others on charges they ran the Emperors Club VIP.

They were accused of conspiracy to violate federal prostitution laws and conspiracy to launder more than $1 million in illicit proceeds.

Brener remains incarcerated.

Charges were unveiled four days before it was revealed that Spitzer was accused of being a client, and may have paid to meet a prostitute from the Emperors Club in a Washington hotel room.

He stepped down as governor on Monday.

Prosecutors say Suwal, who graduated from the prestigious Blair Academy in New Jersey, handled the day-to-day operations for the escort service.

"Upstate NY fruit growers unsettled by virus and market worries"

By CAROLYN THOMPSON, Associated Press

Last updated: 4:13 p.m., Tuesday, March 18, 2008

APPLETON, N.Y. -- Three weeks before the peach growing season gets under way with the labor-intensive hand pruning of thousands of trees, growers don't know whether they will have a buyer for their crop at harvest time.

And that's not the only problem in what are increasingly unsettled times for western New York fruit growers.

The anticipated closing of a Canadian processing plant that has been buying tons of New York peaches is just the latest in a series of challenges that include a potentially devastating virus, persistent labor shortages and competition from abroad.

"What saves us is we're diversified," said James Bittner, an ownership partner at Singer Farms LLC and one of the largest growers in the Lake Ontario fruit belt.

"None of us put our eggs in one basket."

CanGro Foods announced in early January that it will sell or close its St. Davids, Ontario, fruit processing plant by March 31, severely diminishing the market for canning peaches that construction of the plant helped create.

CanGro markets the peaches under the Del Monte label.

About 26 growers in Niagara, Orleans, Monroe and Wayne counties were contracted with CanGro to sell their peaches for $500 per ton.

Now they are scrambling to find other markets.

"Nothing's going to be as good as the deal we had, that's for sure," said Bittner, who has spent the last three months contacting potential buyers.

Another looming challenge for growers is the spring start of testing for plum pox virus and the serious measures in place to stop the invasive species from spreading.

The virus, spread by tiny aphids to peach, nectarine, apricot and plum trees, was detected for the first time in the United States -- in Pennsylvania -- in 1999 and has been found in Canada since 2000.

It was found in two locations in Niagara County in 2006 and five more places, in Niagara County and neighboring Orleans County, in 2007.

No one knows what 2008 will bring.

Once plum pox virus is found in a tree, growers have to rip out all susceptible trees within a roughly 150-foot radius and are barred from planting new trees in a 1 1/2-mile radius.

The restrictions must stay in place for at least three years.

Six growers, including Bittner, have had to destroy some 26 acres of trees, said Robert Mungari of the state Department of Agriculture and Markets.

A compensation program reimburses growers for lost trees but provides no relief for neighboring farms who fall into the no-plant zone.

So far, between $750,000 and $800,000 has been paid out, with about $259,000 coming from the state and the rest from the federal government, Mungari said.

While posing no threat to humans, plum pox virus shortens the life expectancy and productivity of trees, Mungari said, "and more importantly, it was a disease we didn't have here in North America, so it's an actionable pest by federal and state standards."

In the coming weeks, state inspectors will collect leaves from thousands of commercial trees across the state to be analyzed.

The United States Department of Agriculture, meanwhile, will conduct its own survey of backyard fruit trees on homeowners' property.

In Pennsylvania, after a concerted eradication effort, there were no positive findings in 2007, authorities said.

Canada, however, reported about 261 detections in Ontario, leading to increased sampling and the removal of higher numbers of trees across the border.

The closing of the CanGro processing plant may inadvertently help with eradication efforts by forcing Canadian farmers out of peach-growing or to reduce their tree stock.

The CanGro plant received more that half its inventory from Canadian growers.

New York farmers were happy to supply some of the rest, especially after the company offered farmers $1.50 per tree in the late 1990s to plant processing peaches, Bittner said.

The state harvested about 7,000 tons of peaches from 1,700 acres in 2006.

Bittner's farm was set to grow 800 tons of processing peaches, worth $400,000, mainly for CanGro in the coming season.

That represents about a third of the farm's income.

"For them to close up has really put a crimp on us, and it's sad," Bittner said, "because it's been a bright spot for the farm, profit-wise."

"It's been a bright spot for the last five or six years."

Bittner has canceled plans to plant an additional 15,000 peach trees this year and is planning to pull the developing fruit off his youngest trees to reduce the crop size and expenses.

"I can't invest the money in spraying and hand thinning and harvesting if we don't know where they're going," he said.

There are not many options for growers.

A Michigan processing plant may take some peaches, but shipping costs would eat into the profits.

There has been talk of a plant opening in the state, but nothing has been finalized.

Good thing about it...if growers shift to crops to support their families and their communities
they will be well served no matter what "the market" does. The most important folks in this
country are growers. All those city folk that talk...postulate...argue and debate...
don't feed anyone...any maybe it's time that America learns the lesson...that we are blessed
with good land...good weather...and smart growers...the value of the dollar...the markets...
the government...don't hold a candle to those who can feed themselves and their neighbors.

THE WASHINGTON POST

"Predatory Lenders' Partner in Crime - How the Bush Administration Stopped the States From Stepping In to Help Consumers"

By Eliot Spitzer

Thursday, February 14, 2008; Page A25

Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders.

Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks.

These and other practices, we noticed, were having a devastating effect on home buyers.

In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners.

In fact, the government chose instead to align itself with the banks that were victimizing consumers.

Predatory lending was widely understood to present a looming national crisis.

This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government.

Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices.

Several state legislatures, including New York's, enacted laws aimed at curbing such practices.

What did the Bush administration do in response?

Did it reverse course and decide to take action to halt this burgeoning scourge?

As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC).

The OCC has been in existence since the Civil War.

Its mission is to ensure the fiscal soundness of national banks.

For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function.

But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative.

The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks.

The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks.

In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect.

But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans.

Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.

When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably.

The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits.

So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.

The writer is governor of New York.

http://www.washingtonpost.com/wp-dyn/conte...8021302783.html

Well said, Indianhead ...

I'm a simpleton...but if you get hungry brother...985-429-1810.
Rave on against the machine...Rebels ain't regional...that's a
neo-con, liberal, racial, regional myth. We're just outside.

Me, too, Indianhead ...

Must be why we can get along without rancor in here ...

And so ....

An interesting article, Snuf ...

Especially from the perspective that it appeared the same weekend that Spitzer was "trysting" in Washington with his high-priced "lady of the evening" ...

But based on a review of the facts in New York State, this can easily be seen as nothing more than BLUSTER and OBFUSCATION and HYPE and POLITICAL BLAME-LAYING and yet more HYPOCRISY from Spitzer ...

Because in New York State, Spitzer as Attorney General was also defending and PROTECTING the FRAUD that underlies a lot of these worthless mortgages ....

And in doing so, Spitzer chose to align himself with the system that was victimizing consumers ....

And so ...

Sauce for the goose, sauce for the gander is my thought ...

And so ....

THE WASHINGTON POST

"Predatory Lenders' Partner in Crime - How the Bush Administration Stopped the States From Stepping In to Help Consumers"

By Eliot Spitzer

Thursday, February 14, 2008; Page A25

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners.

In fact, the government chose instead to align itself with the banks that were victimizing consumers.

end quotes

With respect to this above, these following are relevant facts, Snuf, from a March 31, 2005 decision of Bush-judge Gary L. Sharpe in federal District Court for the Northern District of New York in Albany that Spitzer defended before the federal 2d Circuit Court of Appeals in NYC in November 0f 2005 in Matter of Paul R. Plante, NYSPE v. Kathleen Jimino, Rensselaer County Executive et al, 05-2133-CV ...

III. FACTS:

On May 22, 2001, Jeffey Pelletier was issued a sewage system construction permit by the County of Rensselaer.

On July 7 (2001), PLAINTIFF (Paul R. Plante, NYSPE) conducted an investigation of defendants Aiken (engineer) and McGrath’s “deliberate falsification of inspection data and fraudulent submissions” resulting in the issuance of the Pelletier permit.

During PLAINTIFF'S investigation, Pelletier assaulted him.

On August 9 (2001), defendant Reiter (Rensselaer County Director of Veterans’ Services Robert "BOB" Reiter) warned PLAINTIFF to “back off” the Pelletier investigation because he (Pelletier) was a “protected person” in the county.

On August 17 (2001), defendant Jimino (Rensselaer County Executive Kathleen Jimino) allegedly phoned PLAINTIFF threatening to harm him if he did not stop his investigation.

end quotes

"DELIBERATE FALSIFICATION OF INSPECTION DATA AND FRAUDULENT SUBMISSIONS" RESULTING IN THE ISSUANCE OF A RENSSELAER COUNTY HEALTH DEPARTMENT SEWAGE SYSTEM CONSTRUCTION PERMIT ......

There is the GAME as Spitzer was defending it in NYS, Snuf ...

THERE IS THE SCAM ....

BOGUS APPRAISALS OF LAND ....

And as I have said before ....

It never was a secret .....

Just a story not widely told before this ....

And so ....

And I am surprised at the FREE RIDE Spitzer got on this case from the press ....

"MR. CLEAN" DEFENDING THOSE WHO WERE DIRTY WITH THE FULL POWER OF THE STATE OF NEW YORK ....

In November of 2005 ....

And then in September of 2006, while he was still NYSAG ....

Spitzer appeared before the NYS Business Council at Bolton Landing on Lake George in NYS, and this is what he promised the NYS Business Council on that evening:

"Improving the Business Climate"

by New York State Attorney General Eliot Spitzer

New York State Business Council, Bolton's Landing, NY

[As Prepared for Delivery]

September 21, 2006

Thank you, Peter, for that kind introduction, and thank you all for inviting me here today.

I want to recognize Dan Walsh and thank him for his leadership over the past 18 years as President and CEO of the Business Council.

Dan, you have been an outstanding advocate for New York's private-sector business community, and you will be missed.

I also want to welcome Ken Adams as the Business Council's new President.

Ken, I look forward to working with you to make New York the best place to do business in the world.

As Governor, I will ensure that the Governor's Office of Regulatory Reform places renewed focus on breaking the regulatory logjam in the State's permitting process for new development.

end quotes

Put that statement by Spitzer to the NYS Business Council in September of 2006 together with the findings of federal District Court in 2005, and couple that with the fact the Jeffrey Pelletier was a member of the NYS Business Council through the Rensselaer County Chamber of Commerce, and you begin to get a more complete picture of where Spitzer himself really was in connection with this whole financial mess ...

Spitzer was a PLAYER, Snuf ...

Spitzer wasn't trying to clean things up ...

Spitzer was trying to take things over ....

To be the boss of bosses ....

Instead of just being a bit player ....

And so ...

The "MACHINE" eats it young, Indianhead ...

THE CONSERVATARD

"The Entrapment of Eliot"

By ALAN M. DERSHOWITZ

March 13, 2008; Page A19

The federal criminal investigation that has led to Eliot Spitzer’s resignation as governor of New York illustrates the great dangers all Americans face from vague and open-ended sex and money-transaction statutes.

Federal law, if read broadly, criminalizes virtually all sexual encounters for which something of value has been given.

Federal money-laundering statutes criminalize many entirely legitimate and conventional banking transactions.

Congress enacted these laws to give federal prosecutors wide discretion in deciding which “bad guys” to go after.

Generally, wise and intelligent prosecutors use their discretion properly — to target organized crime, terrorism, financial predation, exploitation of children and the like.

But the very existence of these selectively enforced statutes poses grave dangers of abuse.

They lie around like loaded guns waiting to be used against the enemies of politically motivated investigators, prosecutors and politicians.

There is no hard evidence that Eliot Spitzer was targeted for investigation, but the story of how he was caught does not ring entirely true to many experienced former prosecutors and current criminal lawyers.

The New York Times reported that the revelations began with a routine tax inquiry by revenue agents “conducting a routine examination of suspicious financial transactions reported to them by banks.”

This investigation allegedly found “several unusual movements of cash involving the Governor of New York.”

But the movement of the amounts of cash required to pay prostitutes, even high-priced prostitutes over a long period of time, does not commonly generate a full-scale investigation.

We are talking about thousands, not millions, of dollars.

We are also talking about a man who is a multimillionaire with numerous investments and purchases.

The idea that federal investigators would focus on a few transactions to corporations — that were not themselves under investigation — raises as many questions as answers.

Even if Mr. Spitzer’s derelictions were serendipitously discovered as a result of routine, computerized examination of bank transactions, the dangers inherent in selective use of overbroad criminal statutes remain.

Money laundering, structuring and related financial crimes are designed to ferret out organized crime, drug dealing, terrorism and large-scale financial manipulation.

They were not enacted to give the federal government the power to inquire into the sexual or financial activities of men who move money in order to hide payments to prostitutes.

Once federal authorities concluded that the “suspicious financial transactions” attributed to Mr. Spitzer did not fit into any of the paradigms for which the statutes were enacted, they should have closed the investigation.

It’s simply none of the federal government’s business that a man may have been moving his own money around in order to keep his wife in the dark about his private sexual peccadilloes.

But the authorities didn’t close the investigation.

They expanded it, because they had caught a big fish in the wide net they had cast.

In this case, they wiretapped 5,000 phone conversations, intercepted 6,000 emails, used surveillance and undercover tactics that are more appropriate for trapping terrorists than entrapping johns.

Unlike terrorism and other predatory crimes, prostitution is legal in many parts of the world and in some parts of the U.S.

Even in places like New York, where it is technically illegal, johns are rarely prosecuted.

Prostitution rings operate openly, advertising “massage” and “escort” services in the back pages of glossy magazines, local newspapers and television sex channels.

If the federal government really wanted to shut down these operations, they could easily do it without a single wiretap or email intercept.

All they would have to do is get an undercover agent to answer the ads, arrange for the “escort” to go from New York to New Jersey and be arrested.

But many in law enforcement would much rather reserve these statutes for selective use against predetermined targets.

In this case, if the serendipitous bank audit really led federal agents to Mr. Spitzer, and Mr. Spitzer led them to the Emperor’s Club, and federal prosecutors really wanted to get the Club, they could easily have sent an undercover cop to pose as a john, instead of tapping phones and reading emails — tactics designed to catch and embarrass Mr. Spitzer with his own recorded words, which could be, and were, leaked to the media.

As this newspaper has reported: “It isn’t clear why the FBI sought the wiretap warrant."

"Federal prostitution probes are exceedingly rare, lawyers say, except in cases involving organized-crime leaders or child abuse."

"Federal wiretaps are seldom used to make these cases . . .”

Lavrenti Beria, the head of Joseph Stalin’s KGB, once quipped to his boss, “show me the man and I will find the crime.”

The Soviet Union was notorious for having accordion-like criminal laws that could be adjusted to fit almost any dissident target.

The U.S. is a far cry from the Soviet Union, but our laws are dangerously overbroad.

Both Democrats and Republicans have targeted political adversaries over the years.

The weapons of choice are almost always elastic criminal laws.

And few laws are more elastic, and susceptible to abuse, than federal laws on money laundering and sex crimes.

For the sake of all Americans, these laws should be narrowed and limited to predatory crimes with real victims.

Mr. Dershowitz teaches law at Harvard University and is the author of “Finding Jefferson” (Wiley, 2007).

http://conservatard.wordpress.com/2008/03/...y-rat/#more-347

Mar 20, 2008

ASIA TIMES

"Why Spitzer was Bushwhacked"

By F William Engdahl

The spectacular and bizarre release of secret FBI wiretap data to the New York Times exposing the tryst of New York State governor Eliot Spitzer, the now-infamous client "No 9", with an upmarket call-girl had relatively little to do with the George W Bush administration’s pursuit of high moral standards for public servants.

Spitzer was likely the target of a White House and Wall Street dirty tricks operation to silence one of the most dangerous and vocal critics of their handling of the current financial market crisis.

A useful rule of thumb in evaluating spectacular scandals around prominent public figures is to ask who might want to eliminate that person.

In the case of former governor Eliot Spitzer, a Democrat, it is clear that the spectacular "leak" of the government's FBI wiretap records showing that Spitzer paid a high-cost prostitute US$4,300 for what amounted to about an hour’s personal entertainment, was politically motivated.

The press has almost solely focused on the salacious aspects of the affair, not least the hefty fee Spitzer apparently paid.

Why the scandal breaks now is the more interesting question.

Spitzer became governor of New York following a high-profile record as a relentless state attorney general going after financial crimes such as the Enron fraud, and corruption by Wall Street investment banks during the 2002 dotcom bubble era.

Spitzer made powerful enemies by all accounts.

The former head of the large AIG insurance group, Hank Greenburg, was among his detractors.

He was bitterly hated on Wall Street.

He had made his political career on being ruthless against financial corruption.

Most recently, from his position as governor of the nation’s second largest state, home to its financial industry, Spitzer had begun making high-profile attacks on the complicity of the Bush administration in covertly arranging bailouts of its Wall Street friends at the expense of ordinary homeowners and citizens, all paid for by taxpayer funds.

Curiously, Spitzer, who had been elected governor in 2006, defeating a Republican by winning nearly 70% of the vote, has not been charged with any crime.

However, the day the scandal broke, New York Assembly Republicans immediately announced plans to impeach Spitzer or put him on public trial were he to refuse to resign.

Spitzer could be asked to testify in any trial involving the Emperors Club prostitution ring.

But so far he hasn’t been charged with a crime.

Prostitution is illegal in most US states, but clients of prostitutes are almost never charged, nor are their names usually leaked in a case in process.

The Spitzer case is in the hands of Washington and not state authorities, underscoring the clear political nature of the Spitzer "Watergate".

The New York Times said Spitzer was an individual identified as Client 9 in court papers filed last week.

Client 9 arranged to meet with "Kristen", a prostitute who officially charged $1,000 an hour, on February 13 in a Washington hotel.

Whatever transpired, Spitzer paid her $4,300, according to the official documents.

The case is clearly political when compared with more egregious recent cases involving Republicans.

Republican Mark Foley was exposed propositioning male interns in Congress and Rudolph Giuliani was discovered cheating on his wife, but no or few Republican calls for resignations were heard.

Why the attack now?

Spitzer had become increasingly public in blaming the Bush administration for the nation’s current financial and economic disaster.

He testified in Washington in mid-February before the US House of Representatives Financial Services subcommittee on the problems in New York-based specialized insurance companies, known as "monoline" insurers.

In a national CNBC TV interview the same day, he laid blame for the crisis and its broader economic fallout on the Bush administration.

Spitzer recalled that several years ago the US Office of the Comptroller of the Currency (OCC) went to court and blocked New York State efforts to investigate the mortgage activities of national banks.

Spitzer argued that the OCC did not put a stop to questionable loan marketing practices or uphold higher underwriting standards.

"This could have been avoided if the OCC had done its job," Spitzer said in the interview.

"The OCC did nothing."

"The Bush administration let the housing bubble inflate and now that it's deflating we're dealing with the consequences."

"The real failure, the genesis, the germ that has spread, was the subprime scandal," Spitzer said.

Fraudulent marketing and very low "teaser" mortgage rates that later ballooned higher, were practices that should have been stopped, he argued.

"When mortgages are being marketed, there is a marketplace obligation to ensure the borrower can afford to pay back the debt," he said.

That TV interview was only one instance of Spitzer laying blame on the Bush Republicans.

On February 14, Spitzer published a signed article in the influential Washington Post titled, "Predatory Lenders' Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers."

That article, laying clear blame on the administration for the development of the subprime crisis, appeared the day after his ill-fated tryst with the prostitute at the Mayflower Hotel.

Just a coincidence?

Spitzer wrote, "In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act pre-empting all state predatory lending laws, thereby rendering them inoperative."

"The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks."

In his article, Spitzer charged, "Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye."

Bush, said Spitzer right in the headline, was the "predator lenders' partner in crime".

The president, said Spitzer, was a fugitive from justice.

And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

Spitzer wrote, "When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably."

With that article, Spitzer may well have signed his own political death warrant.

F William Engdahl is author of the book Seeds of Destruction: The Hidden Agenda of Genetic Manipulation, about to be released by Global Research Publishing, and of A Century of War: Anglo-American Oil Politics and the New World Order, Pluto Press. He may be reached via his website, www.engdahl.oilgeopolitics.net.

http://www.atimes.com/atimes/Global_Economy/JC20Dj04.html

"Ohio Gov. Strickland gives $10,000 campaign contribution from Spitzer to food bank"

Associated Press

Last updated: 4:33 p.m., Wednesday, March 19, 2008

COLUMBUS, Ohio -- Ohio Gov. Ted Strickland is giving a food bank $10,000 in campaign cash he got from former New York Gov. Eliot Spitzer.

Spitzer resigned last week in a prostitution scandal.

He gave Strickland the contribution for the Ohio governor's 2006 campaign.

It was the biggest of the out-of-state political contributions Spitzer had handed out to Democratic candidates and causes across the country since 2004.

Strickland donated the money to the Tri-County Food Pantry in southeast Ohio.

Strickland has been floated as a possible vice presidential running mate for Sen. Hillary Rodham Clinton should she win the Democratic nomination.

"Top state staffers asked to resign - Paterson aide says request does not mean there will be 'mass departures;' top state cop quitting"

By JAMES M. ODATO, Capitol bureau, Albany, New York Times Union

First published: Thursday, March 20, 2008

ALBANY -- Less than a week after telling state agency heads he's keeping the Spitzer team intact, Gov. David Paterson on Wednesday asked all commissioners, directors and top staff to submit their resignations.

The requests from the new governor arrived as Acting State Police Superintendent Preston Felton, 49, advised Paterson he is retiring effective April 4 from his $157,000-per-year post.

An administration official said he believes Paterson's staff will contact executives soon and let them know that most of their resignations won't be accepted because the move is only a formality.

"This is a typical step in the transition of one administration to another," said Paterson spokesman Errol Cockfield Jr.

"This is not a signal there will be mass departures throughout the administration."

Some people have already been informed they will be allowed to move on, including Felton.

"The resignation was offered and accepted," Cockfield said.

Others resigning include senior adviser Lloyd Constantine, chief of staff Richard Baum and scheduling officer Marlene Turner.

Felton's retirement announcement is his second.

He planned to begin collecting his pension 13 months ago when he retired as the first deputy superintendent of the State Police.

He rescinded his retirement at Gov. Eliot Spitzer's request.

"He was not asked to resign," said Lt. Glenn Miner, a spokesman for the 5,000-member force.

"I'm sure it's personal reasons."

Under Felton, the State Police were accused by Senate Republicans of being used for political ends by Spitzer to help attack Senate Majority Leader Joseph L. Bruno.

More recently, critics attacked the force for not knowing about or disclosing information about Spitzer's meetings with prostitutes.

Felton had hoped to be considered for the superintendent's job.

A possible successor is Col. Pedro Perez, the next-highest ranking officer and the field commander, stationed at division headquarters in Albany.

Others mentioned as potential replacements include Harry Corbitt, a retired State Police colonel, and some active chiefs with the New York City Police Department and the Metropolitan Transit Authority.

Dan De Federicis, president of the trooper's union, said Felton is appreciated for improving safety equipment and weaponry.

James M. Odato can be reached at 454-5083 or by e-mail at jodato@timesunion.com.

"Judge: dam suit can proceed - Residents who lost waterfront after failure may now file action"

By JIMMY VIELKIND, Staff writer, Albany, New York Times Union

First published: Thursday, March 20, 2008

FORT ANN -- Residents who lived upstream of a dam that collapsed in 2005 have a legitimate claim for damages, a judge has ruled.

Supreme Court Justice David B. Krogmann denied a motion to dismiss a lawsuit by more than 100 residents who live around Hadlock Pond.

The residents saw views of a quiet pond turn into vistas of a mud pit when the Hadlock Pond dam collapsed in July 2005, destroying four homes and washing out a road.

The dam had been reconstructed in May of that year by order of the state Department of Environmental Conservation but it failed after a heavy rain.

A subsequent state report found the structure failed due to construction flaws.

Until the structure burst, Hadlock pond was about a mile-long body of water ranging from 12 to 15 feet in depth.

A new dam was built last summer, and the lake has slowly begun to fill.

While there was little dispute that those downstream had grounds to sue, those living around the lake also suffered damages, attorney Paul H. Wein said.

"If you've ever been on a lakefront property, this is their sanctuary, and it was taken away from them," he said.

"They've lost the ability to enjoy their properties."

Krogmann agreed, saying "it cannot be said as a matter of law that plaintiffs, as riparian owners, suffered absolutely no damage to their property when their docks and lakefront beaches and retaining walls became adjacent, for an extended period of time, to a mud pit."

The collapse spurred multiple legal actions.

The suit names the Town of Fort Ann, Kubricki Construction, the builder, design firm HTE Northeast and Atlantic Testing Laboratories as defendants.

Fort Ann Town Attorney John Aspland Jr. said the defendants haven't yet seen the decision, and reserved comment.

He also said other suits -- including one in which the town of Fort Ann is a plaintiff -- are pending.

The 13-page decision also grants a motion for bifurcation, meaning the upstream residents' claims will be heard in two separate proceedings: one to determine who, if anyone, is liable for the collapse, the second to determine the amount of any damages.

Wein said there was also a possibility that a settlement could be reached.

Jimmy Vielkind can be reached at 454-5043 or by e-mail at jvielkind@timesunion.com.

"Frank calls for more gov't bank powers"

By ALAN ZIBEL, Associated Press

Last updated: 3:24 p.m., Thursday, March 20, 2008

WASHINGTON -- A key House Democrat is calling for tougher and broader regulations of the financial system after the fall of investment bank Bear Stearns.

Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, wants to give either the Federal Reserve or a new regulator the power to oversee the activities of major financial players, regardless of whether they are a bank, securities firm or hedge fund.

Frank, who made the proposal Thursday in a speech to a business group in Boston, also suggested that investment banks be required to hold cushions against losses, a mandate that currently only applies to commercial banks.

The concept, if enacted, could reshuffle the existing landscape of financial regulators, whose duties are split among several federal agencies, including divisions of the Treasury Department, the Fed and the Securities and Exchange Commission.

Lawmakers are due to return from a two-week recess later this month, and the events leading to Bear Stearns buyout will top many an agenda.

Like Frank, other congressional members aren't waiting return to the nation's capital to weigh on Washington's role in steadying the financial sector.

Some fear that the bargain-basement sale of Bear Stearns Cos. to JPMorgan Chase & Co., engineered by the Federal Reserve and Treasury Department, opens the door to more government efforts to aid troubled financial players, ultimately putting taxpayers at risk.

The Fed, which is providing $30 billion in backing for that deal, could wind up turning a profit, but could also see its payments to the Treasury diminished if the investments it is backing do not pay off.

In addition, the Fed's historic decision Sunday night to allow investment banks to borrow directly from the central bank through its discount window is heightening concerns that taxpayers will wind up on the hook for Wall Street losses.

Frank said in a prepared statement that, in exchange for giving investment banks access to lending from the Federal Reserve, the new regulator should be able to limit risky practices and "protect the integrity of the financial system."

The call for a clearer window into the investment bank world resonated with commercial banks, which are more tightly regulated and whose depositors are insured by the Federal Deposit Insurance Corp.

"We do understand the concern about providing access to the discount window to institutions that do not have the same regulatory examination," as federally insured banks, said Floyd E. Stoner, executive director for congressional relations and public policy at the American Bankers Association.

However, he added: "We also are always concerned about new, potentially intrusive regulation."

Wall Street's biggest lobbying group, the Securities Industry and Financial Markets Association, welcomed Frank's comments, especially his focus on the overlap of existing regulations.

Scott DeFife, the trade group's senior managing director for government affairs, said in a statement that doing so could "help reduce the current turmoil and build a better regulatory future,"

Republicans are rolling out their own proposals, with Rep. Vito Fossella, R-N.Y., saying Thursday he will introduce legislation to reduce duplication among banking regulators, which he said makes it difficult to monitor risks to the system.

The Treasury Department has been working on its own plan for banking industry reforms over the past year.

A department spokeswoman, Jennifer Zuccarelli, said in an e-mail that "we are considering all issues as we propose broad changes to our regulatory structure in the near and short term."

Daniel Forte, president of the Massachusetts Bankers Association, said government backing for troubled investment banks industry should be coupled with stricter regulations.

"If we're going to put our money at risk, we should have some protections and greater oversight," Forte said.

----

AP Business Writer Mark Jewell in Boston contributed to this report.

"NY budget behind schedule, leaders not agreeing on much"

By VALERIE BAUMAN, Associated Press

Last updated: 6:52 p.m., Thursday, March 20, 2008

ALBANY -- The New York budget process is behind schedule in a Capitol distracted by sex scandals, with lawmakers unable to agree even on how much they have to spend.

Budget conference committees were supposed to begin a week ago, but they still haven't met.

Under the state constitution, lawmakers must reach agreement on a 2008-09 budget by April 1.

"We're hearing they aren't making any great progress," Assemblyman William Parment, a Jamestown Democrat, said of the legislative leaders and governor.

"I'm disappointed they are not because I thought, with the disruption going around us, there would be an effort to close things down and pass it."

Former Gov. Eliot Spitzer proposed a $124 billion budget that would have increased spending by 4.8 percent while the state faced a growing deficit estimated in February at more than $4.6 billion.

State revenue is declining amid trouble on Wall Street -- which generates 20 percent of state revenue -- and Gov. David Paterson says New York is likely suffering because of a national recession.

Soon after Paterson replaced the disgraced Spitzer earlier this week, he met with legislators to work on spending cuts.

He said he wanted the spending increase limited to 3.7 percent by cutting $800 million from the proposal.

Paterson said Thursday he doesn't support an Assembly bill that would raise taxes for New Yorkers who make $1 million or more.

"I am in a budget negotiation right now, and if one of the leaders puts it on the table then it's something we will discuss," Paterson said.

"But it is not my intention to come in here and to start raising taxes because, in my opinion, that's what got us into this trouble in the first place."

Assembly Speaker Sheldon Silver, a Democrat, has said the new and temporary tax would be a way to fill in gaps in the budget.

Republican Senate Majority Leader Joseph Bruno said he would reject any tax increases.

Until lawmakers can agree on how much money is available, not much can happen, but they hadn't accomplished that by this time last year either.

Just because leaders are behind on scheduled budget talks doesn't mean the budget won't come through in time.

Parment said lawmakers hope to avoid the election-year wrath of constituents who pay attention to whether a budget is passed on time, if little else in Albany.

"I do not want to be walking down a Memorial Day parade without a budget," he said.

"People will shout: 'Why aren't you back in Albany doing a budget?'"

The state budget had been late for 20 straight years until 2005.

After a frenzy of last minute negotiations last year, the budget didn't get passed until late morning on April 1, missing the midnight deadline.

There is increasing talk of passing a partial budget to meet the deadline and then passing the balance of the budget in coming months.

Nationally, states are projected to increase spending an average 4.7 percent, according to the National Association of State Budget Officers.

New York has rarely been below the national average.

During the past two decades state spending growth across the U.S. has risen an average of 6.4 percent per year, according to the association.

------

Associated Press Writers Ben Dobbin and Michael Gormley contributed to this report.

"Inspector arrested in NYC crane collapse"

By KAREN MATTHEWS, Associated Press Writer

20 March 2008

NEW YORK - A city inspector has been charged with lying about checking on a construction crane that later collapsed, killing seven people in a dense Manhattan neighborhood.

Edward Marquette, 46, was arraigned and released without bail Thursday on charges of falsifying business records and offering a false instrument for filing.

"We will not tolerate this kind of behavior at the Department of Buildings," buildings Commissioner Patricia Lancaster said at a news conference.

"I do not and will not tolerate any misconduct in my department."

Marquette, who earns $52,283 a year as an inspector in the department's division of cranes and derricks, was arrested while being questioned Wednesday night, said Barbara Thompson, spokeswoman for the Manhattan district attorney.

If convicted, Marquette faces up to four years in prison.

His lawyer, Kate Moguletscu, had no comment Thursday.

The 20-story crane broke away Saturday from an apartment tower under construction and toppled over, killing six construction workers and a visitor in town for St. Patrick's Day.

A complaint about the crane was logged March 4 to a city hot line, officials said, and Marquette said he inspected it.

It was later determined he had not.

Lancaster said it is very unlikely an inspection would have prevented the accident because the equipment that failed was not on site March 4.

In addition to suspending Marquette, Lancaster said, she has ordered a full audit of his inspection reports over the past six months, and also of the cranes and derricks unit.

The crane collapse caused a swath of destruction along a full city block not far the United Nations, pulverizing a four-story brownstone and damaging at least seven other buildings.

The gigantic piece of machinery toppled over when a six-ton steel collar used to secure the crane to the building came loose, plunging into another collar that acted as a major anchor.

Without that support, the spindly structure came tumbling down with terrifying force.

The collapse followed weeks of complaints by neighbors that the crane didn't appear safe.

Bruce Silberblatt — a retired contractor who called in the complaint that the crane might not be sufficiently braced against the building — said the arrest stunned him.

"My first reaction was astonishment."

"My second reaction is anger that a person would have the gall to do this," said Silberblatt, vice president of the Turtle Bay Neighborhood Association.

City officials would not discuss Marquette's possible motive.

Investigators first interviewed him Sunday and got a copy of his route sheet.

He told them that he had conducted the March 4 inspection and that it revealed no problems with the crane.

Marquette was also listed in city records as having responded to a Jan. 22 complaint by another caller who complained about the safety of workers assembling the crane.

Marquette said in his report, filed two days later, that he examined the crane and found no violation.

Other safety complaints were called in by neighbors on Jan. 10 and Feb. 11, according to city records.

Residents said they weren't surprised by the arrest.

"It makes me very suspicious of the whole situation."

"I'd like to feel that it's safe to live in this neighborhood with all the construction going on," Sandra Graham said.

"If he's been arrested, I think he should be made an example of."

Earlier, city officials said they had started inspecting every construction crane in use around New York City, though authorities have said there's no indication that Saturday's accident points to a larger problem.

The inspections began Wednesday, Buildings Department spokeswoman Kate Lindquist said.
___

Associated Press writers David B. Caruso and Samuel Maull contributed to this report.

"Spitzer probe all but ordinary - Justice Department tactics went far beyond recent prostitution cases"

By DAVID JOHNSON and PHILIP SHENON, New York Times

First published: Friday, March 21, 2008

WASHINGTON -- The Justice Department used some of its most intrusive tactics against Eliot Spitzer, examining his financial records, eavesdropping on his phone calls and tailing him during its investigation of the Emperor's Club VIP prostitution ring.

The scale and intensity of the investigation of Spitzer, then the governor of New York, seemed on its face to be a departure for the Justice Department, which aggressively investigates allegations of wrongdoing by public officials, but almost never investigates people who pay prostitutes for sex.

A review of recent federal cases shows that federal prosecutors go sparingly after owners and operators of prostitution enterprises, and usually only when millions of dollars are involved or there are aggravating circumstances, like human trafficking or child exploitation.

Government lawyers and investigators defend the expenditure of resources on Spitzer in the Emperor's Club VIP case as justifiable and necessary since it involved the possibility of criminal wrongdoing by New York's highest elected official.

Bradley D. Simon, a veteran Justice Department trial lawyer who was a federal prosecutor in Brooklyn throughout the 1990s, said that although it was rare for the department to use so many resources on the workings of a prostitution ring, the involvement of such a high-level politician must change the equation.

"If they've got some evidence of a high-ranking public official involved in violations of federal criminal code, it may not be unreasonable for them to pursue it,'' he said.

Still, he said, "I don't think prostitution has been a high priority at the Justice Department.''

Senior political appointees at the Justice Department have said they had little involvement in the case.

Attorney General Michael B. Mukasey was not told about the case until shortly before March 5, when the complaint was filed against four of the prostitution ring's employees.

The government has not accused Spitzer, a Democrat, of any wrongdoing.

The top federal prosecutor in Manhattan, Michael J. Garcia, issued a statement saying there had been no deal with Spitzer's lawyers, suggesting that a prosecution of some kind might still be a possibility.

FINDLAW

"Client 9 and President 42: Drawing Parallels Between Spitzer and Clinton"

By SHERRY F. COLB

Thursday, Mar. 13, 2008

On March 11, New York Governor Eliot Spitzer's fall from grace topped the news.

Federal investigators had caught Spitzer -known to them as "Client 9" -- arranging for a prostitute named "Kristen" to meet him for an assignation at the Mayflower Hotel in Washington.

Ten years ago, in 1998, as readers will doubtless recall, a different sex scandal made headlines across the globe.

Then, it was President Bill Clinton who stood in the glare of the cameras.

As he finally admitted, months after the allegations first surfaced, he had engaged in an inappropriate (i.e., sexual) relationship with Monica Lewinsky, a White House intern in her early 20's.

In this column, I will consider some similarities and differences between the two scandals.

Spitzer's Fall

As Attorney General, Spitzer had pursued the prosecution of sex rings.

As governor, he played a pivotal role in passing a human trafficking law that would punish prostitutes' clients.

In so doing, he had evidenced an understanding for the claims of human rights organizations that sex traffic begins with demand, and that criminal penalties must therefore target consumers rather than sex workers.

As it has emerged, however, following the shocking announcement on March 11, Spitzer had himself contributed to the demand that fuels the sex trade -an industry that Spitzer had called "modern-day slavery" - and had spent tens of thousands of dollars purchasing the services of the Emperor's Club V.I.P., an online prostitution ring.

Moreover, it seems he may have even put sex workers in some danger.

In a conversation that followed Kristen's meeting with Spitzer, the booking agent - Temeka Lewis - told Kristen that Client 9 sometimes had requests for women "to do things that, like, you might not think were safe."

After the story broke, Spitzer confessed to having "acted in a way that violates my obligations to my family and that violates my, or any, sense of right and wrong."

As of Wednesday, March 12, the 48-year-old governor had announced his resignation from office, effective March 17, at which point his current Lieutenant Governor will take his place.

Clinton's Fall

Like Spitzer's, Clinton's admission of sexual misconduct included an acknowledgment of the pain that his behavior had caused his family.

Clinton also indicated that his actions were wrong.

He did not, however, resign from office and allow his vice president - Al Gore - to continue the important work of running the country.

A Republican-controlled House of Representatives subsequently impeached Clinton for perjury and obstruction of justice (in connection with his misleading statements about his relationship with Lewinsky in response to questions posed in the course of Paula Jones's separate sexual harassment lawsuit against Clinton).

The Senate, however, acquitted Clinton of the charges, and he continued in office until the end of his term, though he had his license to practice law in Arkansas suspended and his membership in the U.S. Supreme Court bar revoked in the aftermath of the trial.

Similarities and Differences Between the Spitzer and Clinton Scenarios

Although both Clinton and Spitzer were brought low by sex scandals, one could draw some distinctions between the two men.

First, though both Clinton and Spitzer appeared to have been repeat players in the marital infidelity game, Clinton's conduct generally did not violate the criminal law, while Spitzer's did.

I say "generally," because one woman did accuse Clinton of raping her in a hotel room in 1978, an allegation corroborated by a friend who had met with the woman immediately after the alleged attack.

Clinton denied the accusations, which never faced the test of a trial.

Other alleged Clinton relationships, however, appeared to qualify as consensual, at least for purposes of the criminal law (sexual harassment does, of course, raise some issues of coercion).

This distinction, however, may in some ways support a comparison between the situations in which Clinton and Spitzer have, respectively, found themselves embroiled.

For the most powerful man in the world to have sexual relations with an intern (who was apparently in love with the President) might be consensual, but it does exploit a power imbalance that could hardly be more stark.

Similarly, we have no evidence that Spitzer compelled Kristen or other sex workers to engage in conduct against their will.

Nonetheless, the role of a prostitute - being offered to a client for his sexual gratification in exchange for money (in this case, at least $1000 an hour) - does not exactly place the man and the woman in the relationship on reciprocal footing.

And, as Spitzer seemed to understand when he supported and signed the human trafficking law, coercion and brutality - toward minors and adult women - are endemic to the sex industry.

Another obvious distinction between the two scandals is that Spitzer very quickly announced his resignation, but Clinton chose to stay on and fight.

Because of the extremely humiliating nature of the disclosures, and because of the sense that political foes had exploited a sex scandal for partisan gain, many of Clinton's allies sympathized with him and resisted calls for his resignation.

Clinton had never claimed to be a model of sexual fidelity or propriety, after all, having previously as much as admitted cheating on his wife.

In a way, then, it appeared that the humiliation of Bill Clinton was really only an attempt to destroy the Democratic Party itself.

Clinton - as the Republicans' target - was therefore able to garner the loyalty of most vocal Democrats.

Spitzer, by contrast, had betrayed principles that he had strongly pressed, both as Attorney General and as Governor of New York State.

Though Spitzer, too, had his political enemies, there was not the same Republican/Democratic warfare to rally the troops to his cause.

Indeed, the only ally of Spitzer's in the end appeared to be his wife, Silda, who stood by his side as he confessed his misdeeds and as he announced his resignation.

Doing the Honorable Thing in the End

In retrospect, however, many of the people who once stood by Bill Clinton may have come to see things in a new light.

While hardly criminal, Clinton's relationship with Lewinsky was troubling and was symptomatic of a willingness to use power to exact sexual favors, often in contexts in which his partners were apparently less enthusiastic about participating than Monica was.

Perhaps more importantly, the entirely foreseeable circus surrounding Clinton's affair with Monica had the effect of distracting his and everyone else's attention from the important work of the nation.

As Clinton said on the night that he apologized to the nation, "Now it is time - in fact, it is past time to move on."

"We have important work to do - real opportunities to seize, real problems to solve, real security matters to face."

As he did not say, it would have been far easier to accomplish that work had Clinton stepped down and allowed Al Gore to become president.

In the years that followed, of course, many other things would likely have been different if Clinton had taken that route.

It is difficult to praise Eliot Spitzer for resigning, because we cannot know what he would have done if he had had more friends willing to stand by him, as Bill Clinton did.

He certainly behaved recklessly, just as Clinton had, and in a manner that would - once exposed - predictably undermine the force of the work that he and others had tried to do.

But in stepping down, regardless of his motives, Spitzer has acted honorably and has paved the way for a new governor, David A. Paterson, to move Albany beyond the events of the last few days.

http://writ.news.findlaw.com/colb/20080313.html

"No red flags in Spitzer campaign, state expense reports"

By DAVID B. CARUSO, Associated Press

Last updated: 2:02 p.m., Friday, March 21, 2008

NEW YORK -- Ever since the news broke that former Gov. Eliot Spitzer was a client of a high-priced prostitution ring, people have wondered: Did he use taxpayer dollars or campaign committee money to subsidize his trysts?

An analysis by The Associated Press of a year's worth of expense reports for Spitzer's office and his 2010 campaign shows little sign that those funds were used to pay for illicit activities.

Federal prosecutors have yet to weigh in on the matter; so far, only the alleged organizers of the prostitution ring have been charged.

Spitzer resigned last week just days after he was identified as a client.

Expense reports filed by Spitzer's campaign committee show plenty of far-flung travel for the governor, but nothing in them overtly suggests that he was taking prostitutes along or making frivolous jaunts as an excuse to be alone in a hotel room.

There are no payments from the committee to any companies that have been identified by federal authorities as fronts for prostitution.

The committee's lawyer, Kenneth Gross, said he has seen no evidence that the organization paid for hotel rooms for people who weren't on legitimate campaign business.

"We had a really good system, and we carefully reviewed not only the contributions coming in ... but also on the expenditure side," Gross said.

Records of Spitzer's state-issued credit card also show no obvious sign of having been abused for extracurricular pursuits.

Between September and February, the governor charged $4,056 in travel-related expenses to the state, including three trips to Washington D.C. and another to a conference with Hispanic lawmakers in Puerto Rico.

But he did not use his state card to pay for the two rooms that FBI agents said he used to arrange a Feb. 13 encounter with a call girl named Kristen at Washington's Mayflower hotel.

Spitzer's campaign didn't pay for the rooms either, suggesting that the governor -- a millionaire -- paid with his own money.

That doesn't mean that taxpayers were spared any expense associated with the trip; records filed with the state comptroller's office show that the government paid Spitzer's air fare and for hotel rooms for two aides and two State Police troopers who accompanied him on the trip -- all at a cost of about $1,070.

The governor's official business in Washington that week was testifying before a congressional committee about problems in the bond insurance market.

Spitzer has told aides and his legal team that he never spent public or campaign dollars on prostitutes.

What all this means for the federal inquiry into Spitzer's conduct is unclear.

Even if authorities find that Spitzer had trysts in hotel rooms that were paid for by his campaign, a prosecution may be difficult.

Using campaign money for private purposes is illegal, but candidates are generally given wide leeway on spending that may have a dual purpose.

For example, a committee wouldn't normally face sanctions for flying a candidate to the Caribbean for a long weekend, as long as he or she attended a bona fide political fundraiser on the same trip.

"The definition of 'personal use' is so weak that candidates can justify just about anything," said Richard Dadey, executive director of the government watchdog group Citizens Union.

"Basically, if you can make any theoretical case that the expense was tied to running for office or holding office, then it's OK," said Russ Haven, legislative counsel for the watchdog group NYPIRG.

Remarkably, Spitzer's successor as governor, David Paterson, disclosed shortly after taking office that he also had had extramarital affairs, and may have improperly billed his campaign committee for hotel rooms used in the flings.

Some of those payments were later reimbursed, and a fuller accounting is now under way.

Federal prosecutors in New York, who are leading the prostitution investigation, have not said whether they intend to charge Spitzer with any crimes.

The day Spitzer resigned, U.S. Attorney Michael Garcia said the governor's departure was not part of a plea bargain.

A senior law enforcement official speaking on condition of anonymity said "it's doubtful" that the U.S. attorney in the District of Columbia will bring prostitution charges against Spitzer in connection with his tryst the day before Valentine's Day, although the topic is still being discussed.

Potential violations in D.C. would be a misdemeanor charge and a requirement to attend so-called "johns school," aimed at rehabilitating prostitution solicitors.

The law firm representing Spitzer in the case referred inquiries to a publicist, who declined to comment.

Spitzer 2010 had about $2.9 million in unspent campaign funds when he resigned.

A spokesman for the committee, Jonathan Rosen, said the money will be distributed "in accordance with all applicable laws" but didn't outline where it would go.

He said it will not be used for the ex-governor's personal legal fees.

State law would allow the committee's millions to be spent in a variety of ways, including on donations to other Democrats or contributions to charity.

He also could return it to donors.

The New York State Republican Party said the committee should give the money to a charity "committed to helping young women avoid self-destructive lifestyles."

"Bouts of fury preceded governor's fall - Aides say frustration led Spitzer to grow ever more ambivalent about his job"

By DANNY HAKIM and MICHAEL POWELL, New York Times

First published: Sunday, March 23, 2008

The e-mail message was time-stamped Dec. 18, 2007.

It was sent at 5 a.m.

It did not mince words.

"I've been up all night, I haven't been able to sleep thinking how we've gotten to this position," it began, according to one recipient's recollection.

The author of the e-mail message was Eliot Spitzer, the 54th governor of New York.

His administration was just days from the end of its first year, and his poll numbers were abysmal.

And now the morning newspapers had another report of another set of subpoenas issued as part of an investigation into the administration's effort to tarnish a Republican rival.

The heat of Spitzer's frustration and anger, according to two senior aides who read the early morning message, all but radiated off their computers and BlackBerrys.

Spitzer ordered a 7:30 a.m. conference call.

He canceled plans to attend a forum in the Bronx on predatory lending in poor neighborhoods, suggesting it was a waste of time when "everything was falling apart."

One aide recalled the thrust of Spitzer's fury: We're disasters; I am surrounded by idiots.

Another remembered it this way: Rome is burning, and I'm supposed to be up in the Bronx talking about predatory lending.

Spitzer announced his resignation 11 days ago after reports of his involvement as a client of a high-priced prostitution ring.

Interviews in recent days with a handful of people close to Spitzer suggested that no one had figured out, for certain, what had happened.

Was Spitzer's conduct an aberrant episode?

Or had the man they had served with passion and devotion been living a secret second life for years?

"Nothing from my experience meshes with this, so it's hard not to feel badly for him," an aide said.

"As torn as we are and confused by it all, he was great to work for and it's a loss."

It is hard to say what role, if any, Spitzer's escalating disappointment in Albany played in his self-destructive behavior, and it remains unclear when his once seemingly idyllic life went so awry.

But the interviews with his aides and others who encountered him over the last several months made it clear that he had come to feel deeply ambivalent about his job as governor, the latest, grandest political prize in what many calculated would be a rise that could take him to the White House.

In fact, several aides said that 14 months into his term, he felt profoundly exasperated with the experience of trying to bend a powerful and divided State Legislature to his will.

He just could not accept the way things worked, or didn't work, in Albany, the aides said.

He was offended to the point of distraction by the fact that his chief rival, Joseph L. Bruno, the Senate majority leader, was seen by many to have outmaneuvered and outwitted him.

Bruno had taken to calling him "a spoiled rich-kid brat."

And the aides, all of whom spoke on condition of anonymity out of deference to Spitzer, said the former governor, for all of his estimable brilliance, was often a poor chief executive: combative, micromanaging, and unable to take a long view when things went wrong.

Despite Albany's often dysfunctional ways, there were allies to be had, coalitions to be assembled.

But he most often saw them as enemies, all part of a system that had thwarted reform.

Fury and moments of surrender characterized his last nine months, but his legendary outbursts seemed particularly ill-suited for the role of executive.

Spitzer's unhappiness generated its own collateral damage.

One aide said Spitzer had developed an appetite for more than the nightly glass of scotch.

And his wife, a loyal and reliable support during Spitzer's years of unchecked success, appeared to find the role harder to play when each month seemed to bring some fresh setback.

But if much of Spitzer's undoing remains hard to fathom, there are, for those who worked with him or encountered him of late, indelible images of a man who had seemed so suited to his last job, struggling to find his way in his new one.

Albany, July 9: The Capitol

Eliot Spitzer sat in his office on the second floor.

He began talking with his usual bravura and staccato pace about the ugly breakdown in budget negotiations.

Republicans had been spreading word that the governor had called Bruno "senile."

They said he had sent his men to spy on Bruno, too.

Spitzer seemed customarily confident, even defiant.

However, the life in his voice, like the sunlight late that afternoon, soon began to drain.

And then he was asked a question about his wife.

In that moment the veneer of toughness that he and his handlers had taken years to build up fell away almost completely.

There was quiet for several seconds.

"This, this is harder," he said, speaking with care about his wife, Silda, "because she looks at me and she says, 'Do you really want this stuff?"

"And do you want this for your kids and do you want them to see this stuff?"'

He paused again.

The reporter started to continue.

"Just all the ---- "

"Yeah," Spitzer said.

"It's ugly."

For a second, he flashed again with enthusiasm, speaking of a run he'd taken with one of his daughters the day before.

"We had a great time," he said.

"I ran with Sarabeth in Utica, and it was spectacular."

"She beat me, which was great."

"But then you pick up the papers and you see this stuff."

He paused again, looking nothing short of fragile.

"Well, you know," he said.

"There it is."

His eyes were moist.

Manhattan, Sept. 21: The Grand Hyatt Hotel

The governor's old allies had in mind tough love, not an arm-breaking session.

Dan Cantor, executive director of the labor-backed Working Families Party, and Bob Master, another Working Families Party leader, walked into the lobby of the Grand Hyatt New York.

Spitzer was holding a morning of political meetings upstairs.

The Working Families Party had endorsed Spitzer and worked hard for his election.

But in the last eight months he had fought with the party over his effort to push through a campaign finance bill that would limit union spending on elections and he had repeatedly insulted the powerful health care workers' union and the Democratic-controlled State Assembly.

Richard Baum, the secretary to the governor, greeted them in the lobby, three people who were at the meeting recalled.

Cantor previewed his talk in the elevator: The governor had to massage his allies; he had to move on issues like family leave, which played to his political base.

And he should not view the political world as divided between the virtuous and the venal.

Baum smiled, warily.

"This should be interesting," one person recalled him saying.

The governor was not used to hearing that sort of criticism.

They took their seats in the governor's suite, seven or eight men in a tight cluster.

Cantor cataloged their discontents.

At the end the governor leaned in, his face less than 12 inches from Cantor's.

And Spitzer began screaming.

"You have no standing to lecture me," he said, expletives punctuating virtually every third syllable.

"You're part of the system that is the whole problem in this state."

A year's worth of perceived slights poured out.

Curse piled upon curse, spittle flying.

"In the world of politics, calculated rage is really common," recalled a man who was in the room.

"But this was not calculated; this was pure rage and kind of scary to watch."

Manhattan, March 12: Office of the governor

Eliot Spitzer had taken roughly 100 seconds to announce his resignation before a mob of TV cameras.

He exited the media room into an office hallway.

The corridor was lined with young people -- staff members, secretaries, idealists and overachievers.

He could have easily averted them and walked directly to his office.

But if Spitzer was disgraced, he did not shrink from the challenge.

"He was at the far end, and he made the point of walking down the length of the hallway," said one aide who was there.

"There was a gantlet of people, and he said what he said."

"I don't know how you find the words to talk to a young staff at a moment like that," the aide noted, "but he did it."

Spitzer reassured the young people that their futures were still ahead of them.

He warned against making the same mistakes he had, from the modest to the catastrophic.

"People think it was hubris and that he must have been a fraud, but that's not right," another aide said of the former governor.

"He was a very good man who lost himself due to a combination of factors.

"He wanted so much to change things in Albany, but it didn't work out the way he planned."

"He couldn't meet the expectations of the public or the expectations he set for himself."

"They said he was pushing too hard and not pushing hard enough, that he was Mr. Softee and a steamroller."

"He felt damned if he did and damned if he didn't at every turn."

In such circumstances, without the ability to adjust or relax, "it's only a matter of time before you self-destruct," the aide said.

"Ironically, he knew full well that he was being watched."

"He even talked about it."

"He said: 'If we ever stumble, they'll be merciless.'"

"Those were his words."

The walk down the hallway over, Spitzer cried, one of the aides said.

"I couldn't look," the aide said

"Felton leaving state police after bumpy year"

By MICHAEL VIRTANEN, Associated Press

Last updated: 1:42 p.m., Sunday, March 23, 2008

ALBANY -- Preston Felton's year leading New York's 5,000 members of the state police was tumultuous: A tactical team member was killed by friendly fire; he was criticized for his role in a political scandal; and a security detail is under scrutiny in the prostitution scandal that toppled Gov. Eliot Spitzer.

Still, his resignation announced last week and effective April 4 caught many by surprise.

That's because Felton, 49, still has supporters.

The New York State Troopers Police Benevolent Association calls him "a good man" who had worked closely with the union and upgraded weapons and safety equipment.

"For that, the PBA applauds his efforts," President Dan De Federicis said.

Gov. David Paterson, who succeed Spitzer last week, said he didn't know if Felton's departure was related to the scandal in which two Spitzer aides were accused of misusing state police records to embarrass Senate Republican leader Joseph Bruno use of state aircraft on trips that involved GOP fundraisers.

That 2007 case remains under investigation by the state Public Integrity Commission.

"I have no idea because I didn't ask him to resign," Paterson said.

"Although I asked all of the agency heads to resign, which is standard when someone new comes in."

"We will keep most of them, and most of them had sent their resignations in, he included, even before we asked for them," he said.

Felton's resignation, however, was accepted.

As acting superintendent, he was the first black to head the force, withdrawing his own retirement papers while a national search was done to replace retiring then 61-year-old Superintendent Wayne Bennett.

When the Spitzer administration appeared ready to consider nominating Felton himself, the scandal involving Bruno's use of state aircraft complicated possible confirmation by the Senate, which is led by Bruno.

Attorney General Andrew Cuomo, a Democrat, concluded in July that Felton created the records for public disclosure at the request of the governor's office, deviating from standard procedures and disregarding security considerations.

Felton responded that he didn't realize he was part of a political scheme.

"I have never, in my 26-year career with the state police, knowingly undertaken any such action and never would," Felton said in a written statement.

"To the extent that circumstances previously not known to me have now given rise to that appearance, I am particularly saddened."

That report led to Senate Investigations Committee hearings, which Felton declined to attend, instead sending the State Police attorney.

Committee Chairman George Winner threatened to subpoena Felton, but never did.

Winner, an Elmira Republican, said Thursday that Felton's retirement won't change his committee's focus, which includes legislative responses to Cuomo's report.

They intend to pursue subpoenas of Spitzer administration testimony and records, which are being challenged in court, he said.

The latest turn for the State Police came with Spitzer's resignation following disclosures he patronized expensive prostitutes, raising questions about what was known by the trooper detail responsible for his security around the clock.

State Police have declined to comment.

The first major incident during Felton's tenure was more deadly.

When 29-year-old trooper David Brinkerhoff died April 25 after a shootout in an upstate farmhouse, Felton immediately ordered an administrative investigation into the shooting that also left suspected gunman Travis Trim dead and Trooper Richard Mattson wounded.

Two days later, Felton stood in front of television cameras and disclosed that Brinkerhoff, a member of the heavily armed SWAT-style unit, was shot in the back of the head by another trooper's assault rifle.

He also said the farmhouse was destroyed that night by a fire apparently ignited by tear gas from police that landed on a bedspread hours after the shootout.

The troopers' union, which harshly criticized the state police leadership under Bennett in the manhunt for Ralph "Bucky" Phillips that left another trooper dead and one badly wounded months earlier, here praised Felton for his honesty to the troopers' families, the PBA and the public.

"This is never going to be an easy job for us."

"When you get up and you put your pants on, you recognize you might not come home that day," Felton said.

He ordered officers on patrol to wear the bullet-resistant vests that previously were optional, while acknowledging some troopers, investigators and higher-ranking officers might ignore the requirement.

But equipment upgrades, following internal reviews and union meetings, included stronger vests for all troopers, and heavier armor for the tactical unit, as well .45-caliber handguns that replaced the 9mm sidearms, 1,400 defibrillators for marked patrol cars, light bars atop cars that include blue lights easier to see in fog, bright yellow reflective vests for highway investigations and directing traffic, fire suppression systems similar to those in race cars in all new Crown Victorias, and two Bearcat armored vehicles.

Felton has declined requests for interviews.

"My observation to Preston Felton was he was doing a very good job under some very difficult circumstances," said Assemblyman James Parment, a Jamestown Democrat.

But he noted agencies are staffed with professionals and they will continue to their job even during a transition.

"Analysis: Historic time reveals Albany's historic secret"

By MICHAEL GORMLEY, Associated Press

Last updated: 10:13 a.m., Saturday, March 22, 2008

ALBANY -- In two historic weeks, the most popular governor ever elected in New York resigned after he was linked to a prostitution investigation and his successor's administration was immediately weakened when he revealed his own extramarital affairs.

And some individuals, finally fed up with it all, said Albany's age-old mix of politics and sex has gone on too long.

There's a federal investigation into former Democratic Gov. Eliot Spitzer, the former crusading attorney general, and his connection to a $5,500-an-hour call girl ring.

Meanwhile, Gov. David Paterson, despite his extraordinary news conference last week to disclose his extramarital affairs, can't shed questions about whether any of the women received state or campaign money or help in getting public sector jobs.

On Friday he agreed to repay his campaign $250 for two questionable nights' stay at a Manhattan hotel years ago.

Oh, and New York is facing one of its most frightening fiscal crises in history.

Despite alarm on Wall Street, which provides 20 percent of state government's revenues, and an all-but declared recession that could make the big spending in recent years unaffordable, the scandals have helped stall budget talks with a little more than a week to go before the April 1 budget deadline.

"It's pretty devastating right now," said a longtime lobbyist and former legislative staffer who spoke on the condition of anonymity because of the sensitivity of the cases.

"We have a $5-plus-billion deficit, Wall Street is heading south, and the economy is heading south, but all we want to know about is who the governor is" having sex with.

Sex has long been part of Albany's politics, but the time honored "wall of silence" was pierced this week by veterans who are fed up after trying to ignore the string of arrests, resignations, romantic banter in elevators, and rumors that have been part of state government since Gov. Grover Cleveland in the 19th century.

Even lawmakers, staffers and lobbyists who spoke only on the condition of anonymity this week represented a sea change in Albany, where rumors when chased vaporize behind denials, never leaving the capital city.

"You almost have to play that game at the bar to really have access," said one former lobbyist who recently worked Albany as a young woman.

"Some people feel you need to sleep with someone to have influence, or wear short skirts."

"Otherwise, you are looked at as just a little girl ... it's the sex card."

You could hear the Albany culture in the defense of Paterson by lawmakers: At least he didn't pay for sex or break any laws, the lawmakers argued.

Yet what Paterson admitted to is the misdemeanor crime of adultery, still active on the books.

"Elected officials are really just reflections of the people we represent," Paterson said.

Maybe.

But it's easy to see Albany the way one disgusted and longtime legislative staffer described it: A cesspool.

Yet that's not true, either.

As in most cases where groups have a tarnished reputation -- be it the legislature or recent revelations by The Associated Press about the extent nationwide of sex between teachers and students -- the few define the many.

What's also true is no one is publicly standing up to defend the people they serve and who pay their salaries: New Yorkers.

In many cases, however, disclosure could cost them access to power, or their jobs.

Why did Paterson have to reveal extramarital affairs he had when his marriage was headed toward divorce years ago?

Why did his wife have to acknowledge she had one?

Did the Spitzer and Paterson kids have to get smacked this hard by all of this?

"I was puzzled a bit by Paterson and that he somehow felt -- he and his wife felt -- they should go public with their extramarital relationship because as far as I know, there was no conflict with his public responsibilities," said Tom Fiedler, visiting lecturer at the John F. Kennedy School of Government at Harvard University.

Perhaps these extraordinary two weeks also revealed something about the character of two men and a capital city.

Spitzer, after all, is a fighter.

He fought anyone who challenged him to become, perhaps, the best attorney general this state or nation has ever seen.

But within three days of being linked to prostitution, he quit.

He gave up forever the political life that he loved, ending some additional pain to the state and his family.

And Paterson, perhaps, didn't have to make the excruciating disclosures of his affairs at all.

He said he didn't want to compromise the office, or get blackmailed into decisions.

If it weren't for the Spitzer scandal, perhaps those rumors would have remained among so many others involving so many other politicians.

But in the end, the sex card was overplayed these last two weeks.

And it collapsed on Albany.

------

Michael Gormley is the Albany, N.Y., Capitol editor for The Associated Press. He can be reached by e-mail at mgormley(at)ap.org.

"Lawyer says top Spitzer aide cleared in plot against Bruno"

By MICHAEL GORMLEY, Associated Press

Last updated: 4:23 p.m., Monday, March 24, 2008

ALBANY -- The top aide that former Gov. Eliot Spitzer blamed and disciplined for a plot to smear Senate Republican leader Joseph Bruno won't face criminal charges in the scandal, according to the ex-aide's attorney.

The former aide, Darren Dopp, was Spitzer's communications director in the governor's office and for two terms in the attorney general's office.

Dopp has said he was following orders and the law when he compiled and disclosed to a reporter state police travel records concerning Bruno when he used state aircraft on days he attended Republican fundraisers.

"The district attorney and I met today in person," said Dopp's attorney, Michael Koenig of Albany, on Monday.

"He advised me that all matters between his office and my client are now concluded."

A spokeswoman for Albany County District Attorney P. David Soares, Heather Orth, wouldn't comment.

She said the investigation is expected to be complete this week.

Spitzer's spokeswoman, Anna Cordasco of the public relations firm of Sard Virbinnen & Co., wouldn't comment.

Spitzer resigned March 12 after being linked to a prostitution ring.

That unrelated investigation came as his popularity was dragged down following the state aircraft scandal, which Bruno claimed was political espionage by Spitzer using state police.

In July, Attorney General Andrew Cuomo, a Democrat, concluded Dopp and another aide, William Howard, committed no crime, but engaged in misconduct by plotting to discredit Bruno.

In September, Soares also concluded the aides didn't commit any crime, but he disagreed with Cuomo, saying there was no evidence of a plot against Bruno.

Soares, however, took another look at Dopp's testimony after there appeared to have been conflicts between what Dopp told Soares and what he told the state Public Integrity Commission in its continuing investigation.

Koenig's statement on Monday came as a published report stated that, contrary to Spitzer's public comments, the former governor directed and pushed Dopp to compile the travel data about Bruno.

The New York Times, citing unnamed sources, reported Monday that Spitzer ordered Dopp and another aide to release the travel data from state police.

In July, when the scandal broke, Spitzer apologized for what he called overzealous conduct by his two aides. The former governor suspended Dopp and transferred and demoted Howard.

Dopp eventually left the executive chamber, while Spitzer insisted he had only cursory knowledge of the effort to compile the travel records.

Koenig wouldn't reveal Dopp's testimony about what the Democratic former governor knew about the effort against Bruno.

Dopp spoke to Soares after he was granted immunity.

"I was not going to allow Darren to get involved in the cross hairs of a politically charged investigation," Koenig said.

He said Dopp's statements had to be truthful, based on documents and other witness accounts, in exchange for immunity.

THE NEW YORK TIMES

"GOP advisor set up tip on Spitzer - Roger Stone Jr., who allegedly left a threat in a voice mail for ex-governor's father, had lawyers alert FBI"

By DANNY HAKIM and FERNANDA SANTOS, New York Times

First published: Monday, March 24, 2008

A Republican political consultant said Sunday that his lawyers wrote a letter to federal investigators in November stating that Gov. Eliot Spitzer had patronized high-priced prostitutes during trips to Florida.

But the consultant, Roger J. Stone Jr., said he did not know if the letter played any role in helping investigators link Spitzer to a prostitution ring.

An affidavit filed in federal court in Manhattan in the prostitution case said that agents from the Federal Bureau of Investigations and the IRS began investigating the Emperors Club VIP in October as part of an inquiry of Spitzer that began last summer when a bank reported what seemed to be suspicious transactions involving the then-governor.

Stone, who has referred to politics as "performance art," is known for hardball politics and a cloak-and-dagger sensibility.

He started out as a teenager in the campaign of Richard M. Nixon, working for the Committee to Re-elect the President, and has a tattoo of the former president's head on his back.

Stone was fired as a consultant to New York state Senate Republicans last summer after allegations arose that he left a threatening voice mail message for Spitzer's father, Bernard.

Stone has denied making the call.

In a series of e-mail messages on Sunday, Stone said that his lawyers were contacted by federal investigators three weeks after the allegations about the call surfaced.

He said he was never interviewed by federal officials and said he was unsure whether the reason his lawyers were contacted was because of the call.

Stone said he told his lawyers to send the letter in November regarding Spitzer's use of prostitutes after meeting a woman at an adult-themed club in Florida who told him that she had knowledge of Spitzer's assignation.

James Margolin, a spokesmen for the New York FBI office, would not comment on whether the bureau received Stone's letter.

The Miami Herald reported on Stone's letter to the FBI on Saturday.

Since the story about Spitzer's connection to the prostitution ring broke on March 10, rumors have been proliferating on the Web and in Democratic circles that the case was motivated by politics.

Investigators have maintained that the case was prompted by suspicious banking transactions.

Spitzer resigned March 12.

THE NEW YORK TIMES

"Spitzer role in Bruno smear? - People close to probe say that despite denials, ex-governor was involved in bid to discredit foe"

By RAYMOND HERNANDEZ and DANNY HAKIM, New York Times

First published: Monday, March 24, 2008

Former Gov. Eliot Spitzer was deeply involved in his administration's efforts last year to discredit state Senate Majority Leader Joseph L. Bruno, holding detailed discussions with senior aides, ordering damaging information about Bruno released and calling an aide at home repeatedly to check on the progress, according to several people with direct knowledge of the investigation.

The governor has previously said he was not personally involved in the effort, suggesting only that he was vaguely aware that his aides had responded to a reporter's inquiry about Bruno's travels on state aircraft.

But testimony and other information gathered by the Albany County district attorney, David Soares, indicate that the governor's participation was extensive and reflected Spitzer's intense desire to damage Bruno, the people with knowledge of the case said.

The investigation was based on examination of e-mail messages, along with interviews with about a half-dozen senior administration officials, chief among them Spitzer's former communications director, Darren Dopp, whom prosecutors decided last month to give immunity from prosecution.

A spokeswoman for Spitzer, who resigned March 12 after reports that he had patronized a high-priced prostitution ring, could not immediately comment on Sunday night.

Heather Orth, a spokeswoman for Soares, said:

"As with all cases of public integrity, we will not comment on an ongoing investigation."

"We expect to be completed with our investigation at the end of the month, and will report our findings then."

The effort to tarnish Bruno was the first major blunder of Spitzer's first term.

A report by the attorney general, Andrew M. Cuomo, on July 23 said that the Spitzer administration had improperly used the State Police to assemble records on Bruno's flights.

Spitzer apologized, placed Dopp on indefinite unpaid leave, and said he would not tolerate such behavior.

But according to the people with knowledge of the investigation, who spoke on the condition of anonymity because the inquiry is not over, Dopp described a meeting he had with Spitzer just before releasing the records assembled on Bruno to Times Union reporter James Odato.

Around June 25 or June 26, Dopp told prosecutors, he first met with Richard Baum, the governor's chief of staff, who told Dopp that the governor wanted the records on Bruno released to the media.

"Eliot wants you to release the records," Baum told him.

But Dopp, mindful of the political war that would erupt between the governor's office and Bruno, hesitated and decided to check with the governor.

He told the governor that Bruno would be furious, according to people familiar with his account.

Spitzer responded with expletives about Bruno and belligerently dismissed the warning.

The governor was so angry, Dopp recalled, that he turned red and spit out coffee he was sipping as he directed him to release the records immediately.

"As he was saying it, he was spitting a little bit," Dopp said.

"He was spitting mad."

The report by Soares is unlikely to settle the matter, known in Albany as Troopergate, which multiple investigative bodies are still reviewing.

Soares himself released a report in September that exonerated Spitzer, but he reopened his inquiry in the fall after testimony Dopp gave seemed inconsistent with a statement he gave to Cuomo's office, in which he accepted responsibility for the plan to damage Mr. Bruno.

Soares' office has been pursuing the second investigation for several months.

Though Soares interviewed Spitzer last fall, he did not interview him as part of the second investigation.

In Dopp's account, he described a meeting during which he showed Spitzer the records he had assembled on Bruno's travels, arraying them on a table in a conference room so Spitzer could inspect them.

Another time, Dopp said, Spitzer dropped by Dopp's office, picked up the records and looked at them briefly.

Dopp, and his wife, Sandy Dopp, who also met with investigators from Soares' office, said that after the meeting in late June in which Spitzer angrily urged the release of the records on Bruno, Spitzer repeatedly called the Dopp home in the early morning hours checking on the status of the effort to get a story published in The Times Union, when it might be printed and how Dopp believed the story would turn out.

Ms. Dopp said she was struck by how often Spitzer called Dopp at home during that time.

"Little travel probe fallout - Sources: DA unlikely to prosecute anyone over Bruno records scandal"

By RICK KARLIN and BRENDAN LYONS, Staff writers, Albany, New York Times Union

First published: Tuesday, March 25, 2008

ALBANY -- Former Gov. Eliot Spitzer's top spokesman will face no charges stemming from last year's travel records scandal, and Albany County District Attorney David Soares is unlikely to prosecute anyone in the affair, according to people familiar with the investigation.

With the probe coming to an end, one person familiar with the investigation said other Spitzer aides questioned by Soares' office had frequent memory lapses and appeared intent on protecting the former governor.

It also was learned Monday that Attorney General Andrew Cuomo, who last year issued a scathing report on the scandal, had gotten wind of the plan by Spitzer's office to look into Senate Majority Leader Joseph L. Bruno's use of state aircraft months before Bruno's records were released.

Cuomo's office insisted it was a casual conversation that the attorney general only vaguely recalls.

Michael Koenig, the attorney for former Spitzer spokesman Darren Dopp, said his client's role in the investigation is done.

"The district attorney advised me today in person that all matters between his office and my client are concluded," Koenig said.

"Darren is very relieved and grateful that this matter is now behind him."

Last fall, after issuing an initial report that found no wrongdoing in the scandal, Soares reopened his inquiry after learning that Dopp's testimony was at odds with that given by others.

By February, Soares had granted immunity to Dopp, who subsequently implicated Spitzer in the affair.

In contrast, other Spitzer aides had on numerous occasions told investigators that they didn't remember what happened during the effort to release Bruno's travel records.

Among the top aides who testified were Peter Pope, Spitzer's policy director; Sean Patrick Maloney, his first deputy secretary; and David Nocenti, his counsel.

"There were a lot of 'I can't recalls,' " said a person familiar with the investigative records.

The scandal erupted last summer when Bruno charged Spitzer with spying on him, after the governor's office released to the Times Union travel records of Bruno's trips to New York City aboard a State Police helicopter.

The records showed that several of the trips, also involving State Police drivers, coincided with major political fundraisers in New York.

Bruno refused to divulge details of the trips, but insisted they involved legitimate public business.

The state has since tightened its travel policy.

In a July 23 report, Cuomo found no laws were broken by either Bruno or Spitzer's aides, but that the governor's office acted improperly by having State Police put together the records from memory, and involving police in a political matter.

Soon after, the newly formed Public Integrity Commission and Soares were looking into the affair as well.

Both the commission and Soares have continued their investigations, although Soares said he expects to finish by the end of March.

Dopp's testimony, first described in a story in Monday's New York Times, revealed that Spitzer was deeply involved in releasing the travel records in an effort to damage Bruno's image.

Some unanswered questions or loose ends remain, however.

For example, a person close to the investigation said Soares has not interviewed Spitzer in his second look at the affair.

Sen. George Winner, R-Elmira, who heads the Investigations Committee, questioned the timing of Soares' pending report, now that Spitzer has resigned after a prostitution scandal.

"Now he's acknowledging what 70 percent of everybody in New York knew," said Winner.

Soares gave Dopp immunity weeks before Spitzer was brought down in a separate scandal involving high-priced call girls.

Soares' spokeswoman Heather Orth said the district attorney planned to release his findings soon, but she wouldn't comment further.

Meanwhile, a Cuomo aide confirmed that months before the scandal erupted, Dopp mentioned the plan to look into Bruno's travel records in a conversation with Cuomo.

The aide said, however, that it was mentioned only in passing, and the attorney general barely remembers the conversation.

"Mr. Dopp has characterized this remark as innocuous and made in passing during a conversation about numerous issues," said the Cuomo aide.

Rick Karlin can be reached at 454-5758 or by e-mail at rkarlin@timesunion.com.

"Albany DA seeks to make Spitzer scandal documents public"

By MICHAEL GORMLEY, Associated Press

Last updated: 5:34 p.m., Tuesday, March 25, 2008

ALBANY -- Albany County District Attorney P. David Soares on Tuesday asked Gov. David Paterson to waive executive privilege for former Gov. Eliot Spitzer so Soares may release publicly all findings, testimony and records related to his probe of a travel scandal.

Soares wants to release all material, including e-mails, involving Spitzer during the time two of his top aides are accused of compiling records that would embarrass Senate Republican leader Joseph Bruno.

Soares made his request Monday to Paterson, who referred it to the attorney general on Tuesday.

Spitzer said he had only cursory knowledge of the plot and blamed the aides.

He granted only a limited waiver of privilege to deny Soares' access to some records.

Spitzer resigned March 12 amid a prostitution investigation.

"The public has expressed great interest in this matter, and we believe the people of the state of New York and the county of Albany have a right to a full airing of the events surrounding this case," said Soares, a Democrat.

"We believe this is especially so because this matter involves the state's highest office."

"The people have put their trust in your office," Soares wrote Paterson, "and transparency is the most honorable way of reciprocating that trust."

Paterson's chief of staff, Charles J. O'Byrne, asked Attorney General Andrew Cuomo for a legal opinion on the request Tuesday.

Soares' letter to Paterson asked for a response by 5 p.m. Tuesday, but officials in the attorney general's office were still talking with Soares and Paterson's office after the 5 p.m. deadline.

However, a senior member of Cuomo's staff said because of the information Soares requested, the deadline won't likely be met.

"Given the complexities of the legal issue and the fact that the D.A. Soares has been in possession of the documents for months, we don't understand the 24-hour deadline," said the senior staffer on the condition of anonymity because of the sensitivity of the case and interagency discussions.

"It's important that we understand the history of the assertion of these privileges and it's also important that we understand whether or not the D.A. and the state Public Integrity Commission accepted the privileged assertions," the senior staffer told The Associated Press.

The state Public Integrity Commission that rules on the conduct of executive branch employees continues to investigate the case.

Cuomo issued a report in July that found misconduct by the two aides in a plot to smear Bruno for his use of state aircraft on days he attended Republican fundraisers.

Cuomo found no crimes were committed, but he didn't compel testimony and the Spitzer administration wouldn't allow the top aide in the scandal, communications director Darren Dopp, to testify.

Soares' investigation, released in a report in September, found no evidence of a plot and no misconduct by the aides, who had argued they were following directions, policy and the state Freedom of Information Law by compiling the travel records and providing them to a reporter who sought them.

Soares recently returned to the case, however, and further questioned and investigated Dopp's role.

Soares' final report is due this week.

Dopp's attorney, Michael Koenig of Albany, said Monday that Soares told him Dopp is cleared of any crime in the case.

Soares' spokeswoman wouldn't comment on the investigation.

Soares' conclusions in the September report were based on the voluntary testimony and surrender of e-mails from Spitzer, Dopp, Secretary to the Governor Richard Baum, Spitzer press secretary Christine Anderson and William Howard, a former top public security aide in the governor's office.

There was no immediate comment from Spitzer's spokeswoman, Anna Cordasco.

"Audit cites problems with dam safety programs"

By MICHAEL VIRTANEN, Associated Press

Last updated: 4:44 p.m., Tuesday, March 25, 2008

ALBANY -- A state audit released Tuesday identified major problems with the state's dam safety programs, including lax oversight, staff shortages and outdated policies from 2004 through early 2007.

"The dams we focused on, with most of them there wasn't the imminent threat of failure in any way," said Jennifer Freeman, spokeswoman for the state Comptroller's Office.

"The concern is the DEC does not have the enforcement power to ensure those owners make the necessary repairs."

The state Department of Environmental Conservation has responsibility for dam safety.

In February, the DEC proposed new regulations that would require owners of about 1,000 dams in New York to keep detailed design and modification records, as well as operation, maintenance and emergency action plans available for state inspection.

Many of the 4,000 others are small and pose little hazard.

"There were literally no enforcement actions for years," said Jim Tierney, DEC assistant commissioner for water resources.

"In the last year we have issued administrative consent orders for remedial work at 15 dams."

"We have 12 other enforcement actions under way."

Citing a high-profile dam failure and some dangerous deficiencies found the past few years, the agency in February said it has increased its dam safety staff statewide from three to 20, and the proposed regulations clarify that its enforcement authority applies even to smaller dams.

That proposal followed the audit of dam safety programs under three years of Gov. George Pataki's and two months of Gov. Eliot Spitzer's administration.

Freeman said it addresses many of the auditors' concerns.

Comptroller Thomas DiNapoli said given the number of dams identified as in continuous disrepair, DEC enforcement authority should be expanded so the agency can take action against owners who fail to fix deficiencies within a reasonable amount of time even if there's no imminent threat of dam failure.

The DEC said last month its staff has completed inspections over the past few years of all 389 high hazard dams, those whose failure would pose a serious threat to downstream communities.

The agency proposed that owners of larger dams have to schedule inspections by a professional engineer at least every 10 years to determine if their classification remains accurate.

The DEC is taking public comments until May 17 on its proposal and scheduled hearings.

In July 2005, about 200 homes in a northern New York village were evacuated after a recently rebuilt dam crumbled.

It was at the south end of the mile-long Hadlock Pond in Fort Ann, about 55 miles north of Albany.

The same year, emergency repairs began on an aging dam just north of the Catskills that serves New York City's drinking water supply to protect 2,500 upstate households and businesses.

They would have been in the path of some 20 billion gallons of water if the 80-year-old Gilboa Dam failed.

The $24 million project, finished in 2006, included installing 80 anchoring cables to pin the dam to the bedrock.

A $315 million reconstruction project is scheduled to start this year.

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On the Net:

Comptroller: http://www.osc.state.ny.us/audits/allaudits/093008/06s61.pdf.

DEC: http://www.dec.ny.gov/regulations/propregulations.html