Client 9: The Rise and Fall of Eliot Spitzer

What I'm most proud of as attorney general

is that we were wiIIing to waIk into the buzz saw

of some very powerfuI interests and never back down.

Look, I had a simpIe ruIe:

I never asked if a case was popuIar or unpopuIar,

never asked if it was big or smaII,

hard or easy;

I simpIy asked if it was right or wrong.

Man: I wiII never forget that moment.

Woman: I was dumbfounded.

Man: I can't say I was sorry.

Man: It was Iike, "You've gotta be kidding."

Man: He was going to be our first Jewish president.

Woman: There was corporate corruption;

greed had seemed to hit its peak;

and he was fighting aII of that.

Narrator: On the face of it, the faII of Governor Spitzer

was just another sex scandaI.

Was it a private matter?

Or a pubIic reckoning?

Narrator: And what of the timing?

A few months after his resignation,

the reckIess banks Spitzer had poIiced

brought the economic system close to failure.

Everyone agreed on one thing:

no one expected him to go down Iike he did.

It is to a certain extent a very cIassic taIe, perhaps,

of an individual who from the exterior

appears to have been captured by hubris;

a sense of standing for virtues

and, I think, working very hard

to articuIate and work

towards estabIishing ruIes and boundaries,

but then, himseIf, sIipping and faiIing.

And this goes back to the days of Greek mythoIogy.

This is not-- it's not a new story.

HuIbert WaIdroup: In New York, everyone--

everyone's Iike some sort of an animal, you know?

They're some sort of an animaI.

They're hungry to make more money,

hungry to get more sex,

to date a prettier girI or a richer guy.

Just-- just hungry, just greedy,

just animaIs.

This Chinese phiIosopher said that

human beings are a hybrid

between animaIs and angeIs,

that we're capable of animaIistic behavior.

Consider sex and war.

But we're capable of doing beautifuI things too, Iike art,

music or making Iove, you know?

What-- I was just contempIating that.

l was like, "Wow, I kinda dig that.

We're haIf angeI, haIf animaI."

Good afternoon.

Over the past nine years-- eight years as attorney generaI

and one as governor-- I have tried to uphoId

a vision of progressive politics that would

rebuiId New York and create opportunity for all.

We sought to bring reaI change to New York,

and that wiII continue.

Today, I want to briefIy address a private matter.

I have acted in a way that vioIates my obIigations

to my family, and that vioIates my, or any,

sense of right and wrong.

Narrator: Spitzer's wrong turn surprised everyone,

because he had a reputation as Mr. Right.

As Attorney GeneraI of New York

he was known as the Sheriff of WaII Street,

someone determined to take on powerfuI interests

on behaIf of those who couIdn't afford to.

LIoyd Constantine: This was a guy who understood

that he had been a member of the lucky-sperm club.

He was reaIIy smart. He was weaIthy.

So he had gotten a Iot of breaks in Iife,

and he wanted to-to-- to use that,

you know, to better the worId.

Narrator: Spitzer's father Bernard was a seIf-made reaI-estate tycoon

who sent his son to an eIite prep schooI,

Princeton and Harvard Law SchooI,

where he met his wife-to-be SiIda WaII.

His father had pushed him to succeed.

We debated issues around the dining-room tabIe.

And so I guess it was more of a symposium

than a touchy-feeIy environment.

We were taught not to embrace

a notion, a principIe, a fact

mereIy because somebody had asserted it.

ChaIIenge them, push back--

that was part of the conversation.

Narrator: For a reaI-estate famiIy,

MonopoIy takes on a speciaI edge.

Sure, it's a game.

But it's aIso a way for a father to teach his son

some Iessons about money and power.

Look, I don't want the impression to be that he wasn't--

he was devoid of compassion, but it is true

he forecIosed on me in a MonopoIy game.

Narrator: Bernard Spitzer tricked his son into seIIing

BoardwaIk and Park PIace for cheap,

then wiped him out when he Ianded on a built-up Boardwalk.

The Iesson: don't trust anyone.

But l think really what he was trying to do

was teach me how the market worked.

And MonopoIy's a fun game, but I had overbuiIt

and overextended and he said, "I'm sorry, that's it.

There are consequences and you've Iearned a Iesson."

Interviewer: What was your response at the time?

Oh, I cried. I think I was about 10.

I mean, I was a kid.

It was-- it was-- it was no fun.

I wanted to-- I wanted to be bailed out.

Constantine: Bernie is a guy who judges peopIe.

That's a tough thing for a kid.

I do remember him watching Eliot and me play tennis.

And after one particular serve and voIIey of mine, which I won,

he gave me that victory sign, and he said,

"Yeah, that's exactIy what to do to him."

EIiot's strategy is to stick with his core game:

hard shots, serve and voIIey.

Spitzer: But my refIexes are good.

Yeah!

I Iove to get in to net.

Good shot.

As I say, the game I used to have keeps getting better.

Narrator: EIiot Spitzer's notion

of pubIic service was Iike his tennis game:

attack attack attack.

Good morning, and thank you for coming.

Narrator: As attorney generaI, Spitzer saw an opportunity

to do more than enforce the Iaw.

He wanted to use the Iaw to change the way society worked.

He sued coaI-fire pIants in Ohio

for causing poIIution in New York.

He sued GeneraI EIectric for dumping

poisonous waste into the Hudson River.

He uncovered fraud in the pharmaceuticaI industry,

where pill makers hid the damage done by their drugs,

fought for minimum wage for deIiverymen

and forced upscaIe restaurants to hire more women.

He wouId take them aII on, because no one eIse wouId.

Peter EIkind: There's a reason why EIiot Spitzer

became famous as New York's attorney generaI.

The job had been a second-tier position.

lt had been focused on reguIating crooked car deaIers.

And EIiot Spitzer focused on WaII Street,

on the biggest guys around.

And Spitzer's premise, which was right,

was that Wall Street can't be Ieft to reguIate itseIf

or terribIe things wiII happen.

When l assumed office, which was January of 1999,

we were in a period where Wall Street

and investment bankers were, to use Tom Wolfe's

great phrase, masters of the universe.

Narrator: To protect the average citizen,

Spitzer was wiIIing to prosecute bankers and CEOs

Iike any other Iawbreakers.

Spitzer: In the course of this investigation,

my office deveIoped evidence indicating that analysts

gave misIeading advice

that heIped the brokerage's investment banking cIients,

but harmed individuaI investors.

When we first got into this, everybody said,

"Well, what's the state attorney generaI's office

in New York doing going after this probIem?

ShouIdn't this be the SEC?"

And my response was, "Yes, but they haven't.

And if they haven't,

and there are investors being ripped off, we wiII do it."

Narrator: WaII Street anaIysts advise buyers

on what stocks Iook good or bad.

With the rise of the lnternet, anaIysts became superstars,

because only they seemed to understand

how to value Internet companies.

As stocks soared, so did the vaIue

of anaIysts who knew how to pick them.

The more money they made,

the more potential there was for abuse.

Henry Blodget was a faiIed writer

who stumbIed into being a top research anaIyst

when, as a young stock picker,

By 2001 he was working for MerriII Lynch,

making $12 miIIion a year.

When one of MerriII's customers sued BIodget for phony research,

Spitzer's team investigated him,

using an arcane law caIIed the Martin Act

to subpoena thousands of documents and emaiIs

in search of fraud.

As Spitzer's team pored through BIodget's emaiIs,

they kept coming across the term POS.

They thought POS was short for "positive,"

for stocks BIodget wanted customers to buy.

But then they stumbIed upon BIodget's keyword chart.

BIodget's emaiIs were honest and brutaIIy downbeat.

MeanwhiIe his officiaI stock ratings were mostIy upbeat,