The Wild Eliot Spitzer

Eliot Spitzer says he’ll do in the New York City comptroller’s office what he did in the New York State Attorney General’s office.  Assuming he is not lying, that would be a very dangerous thing. New York City voters should remember what he did as AG.  Here is a sampling.

As AG, Spitzer twisted a Depression-era law called the Martin Act, intended to police bootleggers, into a despotic sword against corporate New York—the “legal equivalent of King Arthur’s Excalibur,” an informed legal analyst wrote.[i]  Writers at Forbes summarized the modus operandi: “The hallmark of a Spitzer trophy is victory by intimidation.”[ii] To give some examples, AG Spitzer:

● coerced Marsh & McLennan’s board to oust CEO Jeff Greenberg, an abuse of power that prompted corporate governance expert Richard I. Beattie, chairman of Simpson Thacher, to condemn Spitzer’s misconduct.[iii]

● pressured AIG’s board to oust CEO Hank Greenberg, an abuse of power that prompted Stanford law professor and former SEC Commissioner Joseph A. Grundfest to lament that if a government official insists that a board fire a CEO, the CEO will be fired, even before any investigation or hearing and even if evidence later shows the government was wrong.[iv]

● blackmailed Merrill Lynch’s board into settling a civil case by saying he would otherwise file assorted criminal charges, dubious as a matter of legal ethics.[v]

● threatened John C. Whitehead, former deputy secretary of state and chairman of Goldman Sachs, for a Wall Street Journal op-ed questioning Spitzer’s tactics, yelling “there is now a war between us and you’ve fired the first shot. I will be coming after you. You will pay the price. . . . You will pay dearly.” [vi]

● bullied friends of  Kenneth R. Langone, co-founder of Home Depot and benefactor of NYU medical school, cornering Jack Welch, former chairman of GE, to say he “was so mad that he was going to put a spike through Langone’s heart.”[vii]

● ranted to former New York State Attorney General Dennis C. Vacco about  Hank and Jeff Greenberg, that he was going “to take those mother fuckers down.”[viii]

● screamed at a law partner of David Boies, the prominent lawyer who represents Hank Greenberg: “Because your firm is in bed with someone like Hank Greenberg, you have to bear the consequences and I have a bazooka pointed at David Boies, you and everyone else at your firm who is involved.”[ix]

Spitzer brought many down and rattled innocent good citizens.  Everyone in New York City should worry that Spitzer will find ways, as he threatens, to radically expand the power of the comptroller to do equally dangerous things in the City.  That will include trampling on due process rights and instilling in people fear of out-of-control government officials such he aspires once again to be.



[i] Nicholas Thompson, “The Sword of Spitzer,” Legal Affairs (May/June 2004).

[ii] Daniel Fisher, Carrie Coolidge, and Neil Weinberg, “The Battle of the Titans over AIG: Superlawyer David Boies Takes on Eliot Spitzer,” Forbes (May 9, 2005).

 [iii] Cunningham interview with Richard I. Beattie, New York, May 2, 2012; see Brooke  Masters, Spoiling for a Fight, p. 236.

 [iv] Joseph A. Grundfest, “Over Before It Started,” New York Times (June 14, 2005).

 [v] See New York Code of Professional Responsibility, Disciplinary Rule 7-105 (“A lawyer shall not present, participate in presenting, or threaten to present criminal charges solely to obtain an advantage in a civil matter.”).  The New York code of legal ethics was revamped in 2009, omitting this prohibition, but did not change the law retroactively.  The critical issue is “probable cause.” See New York Code of Professional Responsibility, Disciplinary Rule 7-103 (“A public prosecutor or other government lawyer shall not institute or cause to be instituted criminal charges when he or she knows or it is obvious that the charges are not supported by probable cause.”).

 [vi] John C. Whitehead, “Mr. Spitzer Has Gone Too Far,” Wall Street Journal (April 22, 2005); John C. Whitehead, “Scary,” Wall Street Journal (December 22, 2005); Cunningham interview with John  C. Whitehead, New York, October 3, 2011. 

 [vii] Cunningham telephone interview with Jack Welch, March 6, 2012; Cunningham interview with Kenneth R. Langone, New York, October 3, 2011; see also Charles Gasparino, “Wall Street: This Case Is Personal,” Newsweek (September 27, 2004); Opinion, “Spitzer’s Rise and Fall,” Wall Street Journal (March 11, 2008).  Spitzer has equivocated or obfuscated concerning this incident. For example, in a Fox Business News interview of November 9, 2011, after the moderator played a clip of Welch quoting Spitzer’s menacing words—that he “will put a spike through Langone’s heart”—the following exchange occurred:

 Moderator: “Is that true or not?”

Spitzer: “Not true. But here’s what are the facts.”

Moderator: “Jack Welch is lying here?”

Spitzer: “Jack was not there. Look, Jack and I got along well most of the time. We also pursued GE.  Silly little kids stuff. They had some dishwashers that burst into flames when they hit the dry cycle. . . . ”

http://video.foxbusiness.com/v/1300170404001/spitzer-private-sector-should-determine-pay.

[viii] See Paul Tharp, “AG Snit Has Hit the Fan,” New York Post (July 10, 2012); CNBC, “Spitzer’s Vendetta vs. Greenberg” (July 10, 2012), available at www.cnbc.com/id/15840232?video=3000102000&play=1; affidavit of  Dennis C. Vacco in Smith v. New York State Office of the Attorney General, Index No. 3670-08 (Cahill, J.) (September 27, 2012).

 [ix] E-mail from Nicholas Gravante to David Boies, July 10, 2012.

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16 Responses

  1. nidefatt says:

    Huh. So, no one went to jail and waited years for their charges to be dropped? Can’t say I feel bad for any of the richy rich you mention. Sounds like the kiddie version of what the government does to the working class on a daily basis.

  2. Lawrence Cunningham says:

    Nidefatt: So you justify these tactics because (a) the targets are “richy rich” and (b) the government does such things to the working class on a daily basis?

  3. Peter Johnson says:

    I’ve never seen such a one-sided laundry list of what Spitzer did as NYAG.. . .[Portions of this comment have been omitted as objectionable.]

  4. Lawrence Cunningham says:

    Peter Johnson:
    Please feel free to provide the other side of the laundry list. These are my objections. To me, these tactics are objectionable without regard to what accomplishments you’d like to cite. But you are welcome to list them here.
    LC

  5. Frost says:

    Actually, re-reading this, virtually none of the tactics on the list sound the least bit unethical, especially when translated to the blue-collar criminal context:

    1 & 2: The prosecutor cut a deal with suspects premised on the condition that they would clean up their act. No different than letting a suspect go without prosecution provided that he stays away from gangs and other bad influences. Any one of them could have refused and faced Spitzer in court if they were clean.

    3: Basic plea bargaining. Meryl Lynch, like any other criminal defendant, could have refused to deal and demanded their day in court, but instead they looked at their chances and decided it was in their best interest to plead to a lesser (non-criminal) charge. No problem there.

    4,5, and 6: He used salty language?! Good heavens! Why is there never a fainting couch around when you need one? If this is shocking, don’t watch “The Wire” — you won’t be able to sleep at night.

    7:Smearing an attorney merely for representing a certain client sounds bad. I would like to know the context in which Spitzer believed Boise’s firm was “in bed” with Greenberg. If he thought that Boise was aiding and abetting AIG in circumventing the law, then Spitzer was justified; if he thought Boise was merely providing ethical, zealous, after-the-fact representation, not so much.

  6. Lawrence Cunningham says:

    Frost:

    Re 7 Greenberg retained Boies after leaving AIG; Spitzer made the menacing phone call on July 9, 2012 (last summmer) in response to a comment David Boies had given on a television show about the affidavit Vacco filed and noted in item 6.

    Re 1 and 2, your view that such things are fine as a matter of legal ethics does not confront the complaint I raise about these problems by Mr. Beattie and Prof. Grundfest on corporate governance. Spitzer crossed a line.

    Re 3, please read my footnote in this post which lays out the ethical case that Spitzer clearly failed.

    Re 4, 5 and 6 the serious problems are Spitzer harassing innocent third parties, especially Whitehead (for exercising First Amendment rights) and Welch.

  7. Frost says:

    Re 1 and 2, you don’t really articulate much of a point, but I assume that you mean that prosecutors should take no role in who is CEO of a corporation, which should be the sole decision of the board. If reality reflected theory (that the board represents the interests of the stockholders and the customers of the company), that might make sense, but the reality is that the board does not in the least bit represent the interest of small stockholders nor the people who put their money into AIG as a financial institution, so I have no problem with an aggressive DA using what you yourself conceded were legally ethical means to regulate their behavior in the interests of the citizens hurt by AIG’s unethical behavior.

    Re 3, you don’t understand Rule 7-105, which means that lawyers are not allowed to threaten to report crimes in order to get a better result (i.e., I won’t tell the cops that you perjured yourself if you settle now). This is because lawyers have an obligation to report all crimes. It is not applicable here because the facts are already known to the authorities (Spitzer), and it is merely a matter of what charges to bring. Rule 7-103 in inapplicable if Spitzer believed there was a valid ground for bringing criminal charges, and you have nothing to suggest that he did not.

    Re 4,5,6, if the best you’ve got is that the rich shouldn’t have to listen to mean words from their prosecutors, I’m not impressed. While some heated comments may have breached the tenets of Emily Post’s formal rules of etiquette, there was nothing unethical about it, nor do I think most people would say it constituted “harassment.” Show me any follow up, either in repeated threats or wrongful use of his office, show me anything other than a passionate prosecutor losing his cool letting his mouth run ahead of his brain.

  8. Lawrence Cunningham says:

    Frost:

    Thanks for the thoughtful engagement.

    Re 1, 2 and 3 we disagree.

    Re 4, 5 and 6, please read John Whitehead’s op-eds cited in the footnotes to the post. Please also read the relevant parts of the book by Brooke Masters cited. You may also read the relevant parts of the book by Peter Elkind about Spitzer. They all side with me on this point, not you.

    Re 7, I take it from your silence, that you concede the point.

    Spitzer is a loose cannon.

  9. Joe says:

    I oppose Spitzer on other grounds, but this might be a reason to oppose him, though various voters probably (for good or ill) appreciate such tactics against those parties.

    He is a “loose cannon” generally. His reckless behavior put the state in the hands of someone unready to be governor (though he did make a good choice with Gillibrand once in office), putting aside his hypocrisy. Even while in office, he was an overbearing ass that made it harder to negotiate with NY legislature. Similar tactics would likely be apparent, even if ethical, in a local context.

    The alternative is a good progressive choice with the experience and skills necessary. This post would be gravy.

  10. Frost says:

    Re 7, I would like to know more — I don’t know enough, which is not the same as adopting your stance at face value, particularly as you seem biased in favor of seeing the parties at issue as innocent victims, whereas I am biased in favor of seeing them as unethical actors that need to be better regulated.

    Re 1 and 2, I’m not sure if you disagree on the grounds that prosecutors should never be able to place conditions on their decisions on their decision to bring charges, or only if corporate governance is a sacrosanct area that they may not venture into. Re 3, I think your application of the ethical rules is either a deliberate or wildly uninformed application of them. I don’t think anyone with even a basic understanding of rule 7-105 could in good faith apply it to this context.

    Re 4, 5 and 6, I’m glad that Whitehead, Lagone, and the Greenbergs have friends like you, Masters, and Elkind. That’s pretty much all your evidence amounts to, otherwise whether its a matter of harassment is subjective, and I notice that none of them have brought either criminal or civil charges.

    Don’t get me wrong — I think Spitzer is a whoremongering hypocrite. I just hope the next AG is as zealous and creative in going after the architects of the financial crisis as he was instead of adopting the laissez faire stance that you seem to think is merited.

  11. Lawrence Cunningham says:

    Frost:
    You see much in my post and comments that isn’t there, including concerning biases, friendships and enforcement philosophies. I’ll leave the open points open and thanks again for contributing.
    LC

  12. Lawrence Cunningham says:

    AYY:
    Thanks. Tweeted and linked.
    LC

  13. Douglas Levene says:

    Prof. C – If anything, you have understated the case against Spitzer. He has never tried and won a serious case. Instead, he shakes down reputable businesses whose existence would be jeopardized by a frivolous or unjustified criminal prosecution. It is difficult for me to understand how the voters of New York could consider putting this unprincipled, corrupt, richie-rich-boy in a position where he could repeat his prior offenses.

  14. Douglas Levene says:

    Frost,
    If by the “architects” of the financial crisis, you mean Messrs. Dodd and Frank, Jim Johnson (Fannie Mae boss to 1998), Angelo Mozilo (Countrywide), Andrew Cuomo (HUD secretary), et al., I’m with you.

  15. Brennan says:

    “The New York code of legal ethics was revamped in 2009, omitting this prohibition, but did not change the law retroactively.”

    This appears to be incorrect. See NY Rules of Prof. Resp. 3.4(e). “A lawyer shall not: … (e) present, participate in presenting, or threaten to present criminal
    charges solely to obtain an advantage in a civil matter”