Or maybe this is more accurately tagged an update of my post from yesterday.
Spitzer last year had wanted to wire transfer more than $10,000 from his branch to what turned out to be the front for the prostitution ring, QAT Consulting Group, which also uses a number of other names, in New Jersey, the sources said.
But Spitzer had the money broken down into several smaller amounts of less than $10,000 each, apparently to avoid federal regulations requiring the reporting of the transfer of $10,000 or more, the sources said. The regulations are aim to help spot possible illegal business activities, such as fraud or drug deals.
Apparently, having second thoughts about even sending the total amount in this manner, Spitzer then asked that the bank take his name off the wires, the sources said.
A friend in the financial industry emails:
As to those speculating that some of this reflects the justice
department stretching to get at a political enemy (something that I
wouldn’t put past this administration), money laundering is something
that all brokers and bankers have been taught about…we have refresher
courses and this was one of the most basic cases that we are required to
More reporting from TIME’s Jeninne Lee-St. John after the jump.
This from an interview Walter Pagano, former IRS agent and head of Eisner LLP’s Forensic Accounting department:
The whole scandal is a result of initial, routine suspicious activity
reports filed by financial institutions, a requirement of the Bank Secrecy
Act and the Patriot Act. All banks etc have anti-money-laundering software,
filters that identify high-probability illegal disbursements and analysts
that evaluate whether the odd cash flows are just the result of, say,
someone selling his home.
Pagano, who has read the complaint, says it alleges American Express charges
being converted to cash for shell companies. FYI, other examples of triggers
-unusual deposits deviating, in quantity or amount, from the norm
-substantial cash deposits or withdrawals from ATMs or bank tellers
-unusual wire transfers coming from unknown sources
“This particular type of investigation is not unusual,” Pagano says. “The
case has nothing to do with the fact that it was a prostitution ring. It
could have been gambling or anything.” Spitzer wasn’t a target, per se. “But
if an agent identifies the name of a potentially important source, it may
lend more heft to the inquiry. In this case, the question was, Is there any
potential violation of campaign finance laws?”
What really threw up a red flag to investigators, who reportedly initially
thought they were dealing with bribery or corruption, was when they figured
out that QAT Consulting Group and QAT International and Protech Consulting
had no function, other than to be bank accounts from which someone was
withdrawing lump sums of money. “This generated questions about the business
purpose of the wire transfers and American Express charges when there was no
evidence at all of a legitimate business. Why is this source sending money
to this location when we already know the location doesn’t do any business?
That piques the interest of the investigating agents,” Pagano says. “Then,
they just followed the money.”