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Eliot Spitzer

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Eliot Spitzer

Eliot Laurence Spitzer (born June 10, 1959) is the current Attorney General for New York State and a candidate for the 2006 Democratic nomination for Governor of New York.

Background

Spitzer was born and raised in the affluent Riverdale section of the Bronx, by observant Austrian Jewish parents. He is a graduate of Horace Mann School. He attended Princeton University and was elected chairman of the undergraduate student government, graduating in 1981. He then went to Harvard Law School, where he joined the Harvard Law Review and became an editor. At Harvard Law, he met and married Silda Wall. They have three daughters, Elyssa, Sarabeth and Jenna, who all currently attend the Horace Mann School.

Upon receiving his Juris Doctor (J.D.) degree, Spitzer clerked for Judge Robert W. Sweet in Manhattan, then joined the law firm of Paul, Weiss, Rifkind, Wharton & Garrison. He stayed there for less than two years before leaving to join the Manhattan district attorney's office.

Spitzer joined the staff of Manhattan District Attorney Robert M. Morgenthau, where he spent six years pursuing organized crime. His biggest case came in 1992, when Spitzer led the investigation that ended the Gambino organized crime family's control of Manhattan's trucking and garment industries. Spitzer left the DA's office in 1992 to join the law firm of Skadden, Arps, Slate, Meagher & Flom, where he worked until 1998.

Political career

In 1994 Spitzer put aside his private practice to concentrate on attaining the elected office of New York Attorney General. He failed in the 1994 election, but was successfully elected in the next election in 1998. He has since become one of New York's most recognizable Democratic politicians.

Campaigns for Attorney General

In 1994, long-serving Democratic New York State Attorney General Robert Abrams decided to vacate the office after unsuccessfully challenging Al D'Amato for the seat of U.S. Senator from New York in 1992. Perceiving the weakness of Abrams's replacement as Attorney General, G. Oliver Koppell, several Democrats ran for the party's nomination, Spitzer among them. At the time he was young and unknown, and despite a war chest funded heavily by his family's wealth, Spitzer had his campaign ended early by placing last among the four candidates for the Democratic nomination, with Judge Karen Burstein the winner. Burstein eventually lost to Dennis Vacco in the general election, part of a Republican electoral sweep that also elected George Pataki.

The election of a Republican in 1994 allowed Spitzer to seek the Democratic nomination again in 1998. More experienced in party politics, and again relying heavily on family wealth, he won the Democratic primary defeating Koppell, State. Sen. Catherine Abbate, and former Governor's Counsel Charles Davis. He then narrowly defeated then-incumbent Vacco, with 48.2% of the vote to 47.6% for Vacco. He ran for re-election in 2002, facing token opposition from Republican Judge Dora Irizarry, and won with 66% of the vote.

Work as Attorney General

As Attorney General, Spitzer has stepped up the profile of the office, taking on cases that an Attorney General would normally avoid. Traditionally, state attorneys general have pursued consumer rights cases, concentrating on fraud that is local and unique, while deferring national issues to the federal government, which traditionally holds jurisdiction over them. Breaking with this traditional deferrence, Spitzer has taken up civil actions and criminal prosecutions of white-collar crime, securities fraud, internet fraud, and environmental protection.

A number of experts, including economists, lawyers, and political analysts have offered explanations for Spitzer's active role in public policy debates. The New York Attorney General's office has the unique advantage of having Wall Street (and thus many leading corporate and financial institutions) within its jurisdiction. In addition to this, the New York Attorney General wields greater than usual powers of investigation and prosecution with regard to corporations under New York State's General Business Law. In particular, under Article 23-A, § 352 (more commonly known as the Martin Act of 1921) the New York Attorney General has the power to subpoena witnesses and company documents pertaining to investigations of fraud or illegal activity by a corporation.

In practice, Spitzer has used this authority as leverage in his civil actions against corporations and criminal prosecutions against their officers. It proved its usefulness in the wake of several American corporate scandals that began with the collapse of Enron in 2001. In these scandals, several corporations, as well as the brokerage houses that sold their stock, were accused of having inflated stock values by unethical means throughout the 1990s. When inquiries into the allegations by the SEC and the Congress failed to gain traction, Spitzer's office used its subpoena power to obtain corporate documents, building cases against the firms both in courtrooms and in public opinion.

Through this public approach, Spitzer has won settlements and plea deals from prospective defendants. The ability of the Attorney General's office to obtain and publicize embarrassing or incriminating internal documents carries with it the implicit threat that a defendant's reputation may be damaged. This has been demonstrated in Spitzer's investigations of public corporations, in which the very issuance of subpoenas have been enough to drive down stock prices of the corporation in question. The daunting prospects of a Spitzer investigation has led corporations facing civil action to choose to settle, and suspects in criminal investigations to seek plea bargains. Supporters have hailed Spitzer's use of this tactic as an innovation in dealing with white collar crime that threatens investor confidence; critics maintain that Spitzer engages in legal blackmail that damages the economy, while only benefitting his own political ambitions.

Notable cases

In addition to prosecutions and civil actions in the financial sector, Spitzer has pursued cases in both state and federal courts involving pollution, entertainment, technology, occupational safety and health and other fields in which New York plays a part in setting and maintaining national standards of conduct.

Securities

  • Global Settlement (2002): Spitzer sued several investment banks for inflating stock prices, using affiliated brokerage firms to give biased investment advice and "spin" initial public offerings of stock by offering them to CEO's and other influential members of the business community. In 2002, a settlement of these lawsuits was negotiated by Spitzer, federal regulatory bodies, stock exchanges, and the investment banks and brokerage houses in question. The result was $1.4 billion in compensation and fines paid by the brokerages and investment banks ; new rules and enforcement bodies created to govern stock analysts and IPO's ; and the insulation of brokerage firms from pressures by investment banks.
  • Late Trading & Market Timing Investigations (2003): In this farcical crusade, investigations by the office of Eliot Spitzer beginning in 2003 uncovered mutual fund brokers allowing select clients privileges deprived to ordinary customers. Spitzer targeted two practices in particular: "late trading" which allows hedge fund investors to file trades at the previous day's price after the market close, something ordinary customers cannot do; and "market timing" which allows privileged investors to buy and sell shares in funds more frequently than allowed under the fund's rules. The implications of these practices are that the brokerages and a small number of investors profit at the expense of other fund shareholders. In essence, by placing winning trades the privileged investors diluted the profit pool available to all fund shareholders while they sidestepped their share of the pool's losses. Their trading also increased administrative fees borne by ordinary customers and caused fund managers to increase the cash they held to meet liquidity needs. Through a number of prosecutions and lawsuits, Spitzer forced anyone he chose, guilty or innocent, to resign and face jail time, while securing more than one billion dollars in fines and remuneration for investors as well as forcing absurd and industry-damaging reforms to eliminate the practice.

Insurance

  • Contingent commissions (2005): In the commercial insurance business "contingent commissions" or "overriders" are fees paid based on the volume and profitability of insurance business generated by brokers. They provide an incentive for insurance brokers to recommend more costly insurance to their clients, presenting a conflict of interest. While many large brokerages such as Marsh & McLennan Companies (against whom Spitzer filed his original suit), Aon and Willis announced plans to stop the practice of contingent commissions, many argued that the practice was not to blame for the rigged bids uncovered by Spitzer. Indeed, the practice accounted for about only five to seven percent of total revenues for brokers and did address a traditional misalignment of interests in insurance between the carrier and the producer. Under a traditional flat commission structure the latter has less incentive to submit risks with an eye for long-term loss potential in mind. So-called finite insurance products, which may more closely resemble a loan than insurance, were also investigated, even if there was "transferrence of risk" involved.

Entertainment

  • Music Royalty Settlement (2004): Through an investigation of music industry practices, Spitzer's office uncovered $50 million in royalties owed to musicians whose record labels had failed to keep in contact with them. Spitzer reminded label executives that under New York State's Abandoned Property Law, those royalties not being sent to their rightful owners would have to be surrendered to the state. Under a settlement, the labels were required to take measures to contact artists owed royalties.
  • Payola Settlement: The office of Eliot Spitzer served subpoenas against record labels in an investigation into "payola", the illegal compensation of radio stations for playing certain songs. These subpoenas uncovered deals for disc jockeys to receive gifts from promoters in exchange for playing the songs a certain number of times during the day. On July 25, 2005, Spitzer announced an agreement with Sony BMG Music Entertainment to halt the practice. In November 2005, a similar settlement was announced with Warner Music Group. [1]

Safety and health

  • In 2002, Spitzer's office issued subpoenas to 24 non-profit crisis pregnancy centers that sought to dissuade women from having abortions. Anti-abortion groups criticized Spitzer, charging that he was harassing the centers on behalf of a political ally, NARAL Pro-Choice America. Spitzer's office argued that the centers used deceptive advertising and practiced medicine without licenses. [2] The centers often use graphic videotapes and photographs to dissuade women from having abortions, and have been accused of deceiving women who come to them for advice. [3]

Campaign for Governor of New York

For more details on this topic, see New York gubernatorial election, 2006.

On December 7, 2004, Spitzer announced his intention to seek the Democratic nomination for the 2006 election for Governor of New York. While long rumored, Spitzer's announcement was nevertheless considered unusually early—nearly two years before the day of the gubernatorial election. Political analysts believe the announcement's timing was due to Spitzer's desire to see if fellow Democratic Senator Charles Schumer would run. Schumer, who was largely favored in opinion polls in a hypothetical matchup against Spitzer, announced in November that he would not run for Governor, instead accepting an offer to sit on the powerful Finance Committee and head the Democratic Senatorial Campaign Committee. After Schumer announced he would maintain his Senate seat, another Democrat, Andrew Cuomo, announced his plans to run for Spitzer's vacated Attorney General's seat.

Spitzer won an early vote of confidence in January 22, 2005 by gaining the endorsement of the Working Families Party, which has taken advantage of New York's electoral fusion system to act as a kingmaker over Democratic nominees. It is backed heavily by figures from community group ACORN and labor unions, particularly those that broke from the AFL-CIO to form the Change To Win Federation. In the months after the WFP endorsement, several Change to Win unions have announced that they are endorsing Spitzer under their own name, including UNITE HERE, the Teamsters, and the United Food and Commercial Workers.

In the latter half of 2005, Spitzer sought to further solidify support for his campaign by touring several parts of the state, seeking and giving political endorsements. These included cross endorsements with former-Bronx Borough President Fernando Ferrer in the New York City Mayoral election, and State Senator Byron Brown in the Buffalo Mayoral election. The benefit to Spitzer in these endorsement deals is valuable media attention as he stumped for the candidates.

As a result of Spitzer's relative speed in uniting state Democrats to his side, he has gained the respect of Democratic leaders nationwide. Bill Richardson dubbed Spitzer the "future of the Democratic Party", at a fundraiser held in June 2005 for Spitzer's gubernatorial campaign [4].

Lacking a credible opponent for a Democratic primary (a December 2005 Quinnipiac poll shows him leading Nassau County Executive Thomas Suozzi by 69-11%), much of the attention of watchers of New York politics turned to the state Republican Party, especially the future of three-term governor George Pataki. Polling throughout 2004 and into 2005 consistently showed Spitzer defeating Pataki in theoretical matchups. Such a scenario may have proved unappealing to Pataki, as he is rumored to be seeking the Republican nomination for the presidency in 2008. Whether or not these rumors are true, Pataki announced on July 27, 2005 that he would not seek re-election and would step down at the end of his term in January 2007.

The open-seat nature of the election, along with Spitzer's positive poll numbers, and the advantage Democrats have in New York State has fueled discussion of the Republican leadership's active pursuit of candidates to run against Spitzer. Thus far, only two persons have announced their intent to run for the nomination: New York Secretary of State Randy Daniels, and former Massachusetts Governor (repatriated native New Yorker and businessman) William Weld.

An additional consideration for Spitzer was the status of billionaire businessman Tom Golisano, a three-time candidate on the Independence Party ballot line. It was rumored that Golisano might run again, and that Republican Party insiders would seek to nominate him on their own party's line, thus fusing the Republican and Independence tickets for the first time in a gubernatorial election. Golisano recently switched his party affiliation to the GOP. However, on February 1, 2006, Golisano announced that he would not run for the governorship.[5]

Spitzer selected New York State Senate minority leader David Paterson as his choice for Lieutenant Governor and running mate in January 2006. In New York gubernatorial elections, the most important factor in the gubernatorial candidate's choice of a Lieutenant Governor is the need to "balance the ticket"—that is, to widen the candidate's appeal, whether by reaching out to someone from a different geographic area, ethnic background, or has a different political base.

As of late 2005, Spitzer holds a comfortable lead in polls of possible scenarios for the 2006 general election. According to an December 14 Quinnipiac University poll of likely voters, Spitzer holds a 60%-to-22% lead against Golisano, and a 63%-to-16% lead against Weld. [6] As can be ascertained by the numbers, a sizable portion of voters remains undecided in the early going of the campaign.

Since announcing his candidacy, Spitzer has been endorsed by numerous New Yorkers including Alan Hevesi, the state Comptroller, Former New York City Mayors David Dinkins and Ed Koch (who endorsed President Bush in 2004). In February, 2006, Spitzer received the endorsement of life-long Republican businessman Donald Trump who had been courted by the Republicans to run against him.

On March 4, 2006, Spitzer won the New York State Democratic Rural Conference Straw Poll 148 to 7.

Whitehead threat allegation

On December 22, 2005, John C. Whitehead, chairman of the Lower Manhattan Development Corporation and former chairman of Goldman Sachs, alleged that Spitzer had threatened him during a telephone call that took place in April 2005. Whitehead published his allegation in the Wall Street Journal.

Whitehead alleged that Spitzer called him regarding a Wall Street Journal opinion piece that he wrote about Spitzer's public comments regarding Maurice R. "Hank" Greenberg (who Spitzer would later charge with fraudulent business practices, securities fraud, common-law fraud, and other violations of insurance and securities laws).

Whitehead alleged that Spitzer said, "Mr. Whitehead, it's now a war between us and you've fired the first shot. I will be coming after you. You will pay the price. This is only the beginning and you will pay dearly for what you have done. You will wish you had never written that letter." [7] Spitzer has denied the allegation.[8]

Statewide tickets Spitzer has run on

1998 Democratic ticket

1998 Liberal Party ticket

2002 Democratic ticket

2002 Independence Party ticket

See also

Official sites

Biographies and profiles

Interviews

Media coverage

Critics

Preceded by New York State Attorney General
1998- 		Succeeded by
incumbent
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