Spoiling for a Fight: The Rise of Eliot Spitzer

by: Brooke A. Masters
Published by: Times Books, 2006

"This guy, his tactic is, if you kick him in the shins, he'll kick you in the teeth, and he's better at it than you are." (A defense attorney who went up against Eliot Spitzer)

This biography of Eliot Spitzer, erstwhile Governor of New York, former Attorney General, and infamous Client 9, was written soon after he was elected Governor, and well before his storied fall from grace this year.

Were the seeds of his fall there in the story of his rise? Were there hints of his fatal flaw lurking in the same personality traits that shot him upward - some even speculating poised for the presidency?

The answer is an equivocal and predictable: yes and no.

If alienating and angering powerful people is a predictor of ultimate disaster, then all the signs were there. If a single-minded focus on winning is a two-edged character trait, then yes indeed. If a "focus on public shaming and (a) wont for making threats" is a warning that something is slightly "off" in a man, then Spitzer was off in spades.

But were there any signs in the life of the whiz kid, married-his-college-sweetheart father of two, stellar success story, more than a little priggish and self-righteous Spitzer that he harbored a dangerous predilection for prostitutes? No, there was nothing that gave any hint of the impending tragedy of Eliot Spitzer.

And tragedy it is, in the classical sense of the word. Here, let Aristotle explain it to us: "(Tragedy is a)form of drama characterized by seriousness and dignity and involving a great person who experiences a reversal of fortune (Peripeteia). This reversal of fortune must be caused by the tragic hero's hamartia, which is often mistranslated as a character flaw, but is more correctly translated as a mistake."

If the tragic hero is not the victim of a character flaw, but of hubris, or pride, in which case the role of Spitzer as tragic hero is more than apt.

Unfortunately, and perhaps because the writer could not possibly predict her subject's ultimate disgrace, Masters makes little attempt to understand Spitzer, focusing instead on the intricate machinations of his legal maneuverings. And while these detailed descriptions of the legal thrusts and parries are initially fascinating, after about the fourth such blow-by-blow, the approach loses its appeal.

Moreover, Masters had me muttering savagely as early as page 16, when she described New Jersey governor Christie Todd Whitman as a "moderate."

The first chapter of the book traces the ebb and flow of "federalism," and how the movement toward strong central controls (in the early part of the last century) was countered by a movement toward state control during the Reagan era (what Masters describes as a Republican effort to "dismantle" the federal government). It was during this time of weak federal regulation (particularly of business) that progressive Democrat Spitzer joins the fray.

"By the time Spitzer ran for office (New York State Attorney General) in the 1990s, the balance of responsibilities between the states and the federal government was shifting back again (toward the states). In the 1970s, federal officials, acknowledging that they couldn't do everything, gave grants to the states to beef up consumer and investor protection."

Rather than be chagrined, Spitzer chooses to take aim at several birds at once: bring cases far beyond the nominal scope of the State Attorney General's office, get in the papers (especially the national press), and practice what he calls "new federalism." That is, he intends to use the tactics of the Right against them. If they want to put power into the hands of the states, then so be it. "If the federal government wasn't going to do it, he reasoned, New York State would."

Spitzer charges in. While this "willingness to overturn established norms...left Spitzer open to charges that he was an interfering hothead, convinced of his own righteousness and more interested in headlines than in forging compromises that would bring substantive changes," as it happens Spitzer's timing is nothing short of miraculous.

First elected to office in 1998 (using highly questionable campaign funding from his father), Spitzer was no sooner in office than the dot com bubble burst, emptying the retirement accounts of millions of smaller investors, and igniting the righteous ire of hundreds of politicians.

"Spitzer would become the avenging angel for millions of small investors who were angry that their dreams of easy wealth had vanished along with the 1990s bubble."

A Princeton undergraduate, a Harvard Law review lawyer, Spitzer interned for Ralph Nader and was research assistant to Alan Dershowitz. He hung posters of trust-buster Teddy Roosevelt on his walls, and like turn of the century reformer Louis D. Brandeis, believed that the law is "a dynamic thing, that should be an effective instrument for change."

Born to an intellectually combative family, Spitzer is a star debater and evidently, born to to be a litigator.

Before making his name in the Nasdaq crash, Spitzer cuts his "new federalism" teeth on an interstate air pollution case. Normally the turf of Congress and the EPA, Spitzer feels that the EPA has been slow to act to correct the "bad behavior" of 14 midwestern power plants, whose effluvia were poisoning the down-wind air, notably in New York State.

With this action, Spitzer sets the standard for most of his subsequent big cases: step (in the name of New York State) into territory normally occupied by a federal regulator, file suits, agree to play nicely with the regulators (who then rush to "follow suit"), and then steal their thunder at every turn, while allowing them to handle most of the gut work of slogging through reams of documents.

Spitzer soon perfects two other trademark approaches: subpoena emails (companies had not yet developed careful email policies), and cut right to the "remedy." "Courts are about remedies," said Spitzer. "What can we ask for if we bring a suit?"

Spitzer, whose office was accused by some of being "lazy," was also a fan of finding one smoking gun (of whatever caliber) and then using it to demand that the accused do all the work of incriminating himself.

Where the SEC, for example, would require a suspect organization to turn over a specific list of documents, and then plow through them to locate the evidence, Spitzer would threaten his victim with ruination, but agree to settle for only partial ruination if said victim would turn over just the paper trail that led to his conviction.

Amazingly, people did just as he asked.

Another Spitzer shorthand method was to find an old (and often barely used) law, and bring it to bear on the instant situation. If he can't force gun manufacturers to "make better guns," (some would argue they perform the intended function all too well), he instead goes for the public nuisance theory - guns are a danger to public health and safety.

"At the gun meetings, Spitzer came on strong. In a style that would become his trademark, he bluntly laid out the consequences of the manufacturers' not coming to a settlement. There would be hundreds and hundreds of expensive lawsuits filed by cities and states all over the country, he said. He even warned Glock vice president Paul Jannuzzo to expect 'bankruptcy lawyers knocking at your door' if the company didn't sign on to what Spitzer was calling a 'code of conduct.' "

It was this "code of conduct" clause that was perhaps a signal that Spitzer was riding for a fall. For he didn't just want justice: he wanted to control behavior, and personally dictate the specific regulations by which various companies would do business. In fact, he didn't seem to care much about making the victims of these heinous crimes whole: of New York's lion's share of $1.4 billion dollars recovered from the investment industry in one action, not one penny went to the "defrauded investors." All the money went into the New York State treasury.

Heavy-handed tactics might have derailed Spitzer's career sooner, had he not become the darling of many investors following the dot com debacle. It is undisputed that Wall Street was culpable. Analysts, inappropriately tied to investment banks, were issuing rosy reports on stocks of businesses that had no business plan, let alone product. Until the crash, however, everybody is making money, so nobody seems to care. After the crash, everyone became a reformer.

Where the SEC normally handled investment misbehavior with warnings to straighten up - in the light most favorable to that organization, perhaps reluctant to alarm small investors every time rich and greedy men stepped over the line - Spitzer "challenges not only the SEC's primacy but also the wisdom of congressional leaders." Spitzer doesn't just want to turn over the rocks and expose the vermin, he wants all of them to dance to the tune that he, Eliot Spitzer, composes.

SEC chairman Pitt tells Spitzer: "Eliot, as long as you go after fraud, I'm perfectly happy, because it adds a lot to the mix. But when you try to affect the way people are regulated, you go too far."

Spitzer: "The SEC has become lethargic, lazy, and inattentive. Unless you rattle the cage with some rhetoric that isn't the traditional, inside-the-beltway rhetoric, they won't change. I'm trying to say when the federal agencies are failing the public, I will step in."

New York Stock Exchange Richard Grasso: "Spitzer was intent upon driving both the timing and shape of any global settlement."

Over the years, Spitzer manhandled and alienated the SEC, FEMA, the EPA, Congress, the New York State Labor Department, The Red Cross, the New York State Stock Exchange, Rudolph Guiliani, the Justice Department, and any number of individuals and businesses. It is perhaps no wonder, then, that the FBI, getting the scent of something not quite right about Spitzer's finances, "
took the unheard of step of wiretapping 5,000 hours of phone calls and reading 6,000 e-mails - not to shut down the organization providing the service (the Emperor's Club) but to publicly trample a single, high-profile client." (Palm Beach Post Editorial)

It's hard to feel a great deal of sympathy for a man who, at the height of his career, told one mutual fund manager to plead to a felony or Spitzer would have him arrested in front of his child and pregnant wife. Spitzer's pitilessness, and unhealthy emphasis on public shaming, were matched only by his interest in punishment. "We always avoided the merits of the case," he said, "and focused on the penalties."

Still, however much a man may have sown the wind, it is never a pleasure to watch him reaping his whirlwind.


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