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View Full Version : Do you think its fair that Eliot Spitzer was brought down due to the Patriot Act?


Philbo
Apr 29th, 2008, 02:44 PM
http://www.newsweek.com/id/123489

Unintended Consequences

Spitzer got snagged by the fine print of the Patriot Act.
Something Strange: After 9/11, Treasury issued stringent new regulations that required banks to look for unusual transactions
By Mark Hosenball (http://services.newsweek.com/search.aspx?q=Author:^) and Michael Isikoff (http://services.newsweek.com/search.aspx?q=Author:^) | NEWSWEEK
Mar 24, 2008 Issue


When Congress passed the Patriot Act in the aftermath of the 9/11 attacks, law-enforcement agencies hailed it as a powerful tool to help track down the confederates of Osama bin Laden. No one expected it would end up helping to snag the likes of Eliot Spitzer (http://www.newsweek.com/related.aspx?subject=Eliot+Spitzer). The odd connection between the antiterror law and Spitzer's trysts with call girls illustrates how laws enacted for one purpose often end up being used very differently once they're on the books.

The Patriot Act gave the FBI new powers to snoop on suspected terrorists. In the fine print were provisions that gave the Treasury Department authority to demand more information from banks about their customers' financial transactions. Congress wanted to help the Feds identify terrorist money launderers. But Treasury went further. It issued stringent new regulations that required banks themselves to look for unusual transactions (such as odd patterns of cash withdrawals or wire transfers) and submit SARs—Suspicious Activity Reports—to the government. Facing potentially stiff penalties if they didn't comply, banks and other financial institutions installed sophisticated software to detect anomalies among millions of daily transactions. They began ranking the risk levels of their customers—on a scale of zero to 100—based on complex formulas that included the credit rating, assets and profession of the account holder.

Another element of the formulas: whether an account holder was a "politically exposed person." At first focused on potentially crooked foreign officials, the PEP lists expanded to include many U.S. politicians and public officials who were conceivably vulnerable to corruption.

The new scrutiny resulted in an explosion of SARs, from 204,915 in 2001 to 1.23 million last year. The data, stored in an IRS computer in Detroit, are accessible by law-enforcement agencies nationwide. "Terrorism has virtually nothing to do with it," says Peter Djinis, a former top Treasury lawyer. "The vast majority of SARs filed today involve garden-variety forms of white-collar crime." Federal prosecutors around the country routinely scour the SARs for potential leads.



One of those leads led to Spitzer. Last summer New York's North Fork Bank, where Spitzer had an account, filed a SAR about unusual money transfers he had made, say law-enforcement and industry sources who asked not to be identified because of the sensitivity of the probe. One of the sources tells NEWSWEEK that Spitzer wasn't flagged because of his public position. Instead, the governor called attention to himself by asking the bank to transfer money in someone else's name. (A North Fork spokesperson says the bank does not discuss its customers.) The SAR was not itself evidence that Spitzer had committed a crime. But it made the Feds curious enough to follow the money.

Philbo
Apr 29th, 2008, 02:46 PM
Whilst its hard to feel sorry for Spitzer personally, something about this whole story really bothers me and doesnt sit well at all with me.

I just think its a slippery slope the USA is on. Good example of how laws sold to us under the guise of war on terror, making us safer etc are actually used in ways that were never part of the original intention....

samsung101
Apr 29th, 2008, 03:29 PM
Banks have been under strict rules for a couple of decades because of the drug money laundering going
on, i.e., the reporting of cash deposits of $10K and such, etc. That's not new. He would have been
busted at some point, because the banks have to report any funny or odd 'cash' transfers and money
movements - add in crossing borders w/banks, and it's a double whammy.

The Patriot Act helped to catch him as well. Because the Patriot Act, as many have noted, but, few
have paid attention to...did not create a whole new area of laws - it added to existing laws, and
combined departments authority to use those laws. Like the banking laws.


If you go into a bank today and deposit $9,500.00, you don't have to fill out a certain govt. form.
You deposit $10,000.00, you get asked to fill out a special form, and you're told it may be reported
to the govt. Not a secret.



Eliot Spitzer was brought down by his stupidity.

If you're a guy disliked by the politicians in both parties,
because you're an arrogant jerk, who treats people like dirt,
big and small fish, you're not going to get any sympathy from
anyone when they find out you like to hire hookers, and make
them do some very strange things.

You'll just get laughed at.

Philbo
Apr 29th, 2008, 03:44 PM
Banks have been under strict rules for a couple of decades because of the drug money laundering going
on, i.e., the reporting of cash deposits of $10K and such, etc. That's not new. He would have been
busted at some point, because the banks have to report any funny or odd 'cash' transfers and money
movements - add in crossing borders w/banks, and it's a double whammy.



Yes that partically correct, but after the Patriot Act the number of SARS went from 200K in 2001 to 1.3 million in 2007 - a 600% increase. So the patriot act and the banks worked together to ensure an individuals privacy was further eroded.

My point is, Spitzer was caught doing something illegal so its hard to have a lot of sympathy for him - there is sense in the argument of 'dont break the law, nothng bad will happen' - but I just see it as a slippery slope and wonder much worse it will get in the future...