Client 9 - The Call Girl and the Governor Storyville


Client 9 - The Call Girl and the Governor

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This programme contains some strong language

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What I'm most proud of as Attorney General

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is that we were willing to walk into the buzzsaw

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of some very powerful interests,

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and never back down.

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Look, I had a simple rule.

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I never asked if a case was popular or unpopular.

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Never asked if it was big or small.

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Hard or easy.

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I simply asked if it was right or wrong.

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I will never forget THAT moment.

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I was dumbfounded.

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I can't say I was sorry.

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# Start spreading the news

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# I'm leaving today... #

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It was like, "You gotta be kidding!"

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# ..I want to be a part of it

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# New York, New York... #

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He was going to be our first Jewish President.

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# ..These vagabond shoes... #

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There was corporate corruption. Greed had seemed to hit its peak.

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And he was fighting all of that.

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# ..Right through the very heart of it

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# New York, New York

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# I want to wake up in a city that doesn't sleep

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# To find the cream of the crop at the top of the heap

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# These little town blues

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# I'm walking away

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# I'll make a brand-new start... #

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On the face of it, the fall of Governor Spitzer

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was just another sex scandal.

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Was it a private matter or a public reckoning?

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And what of the timing?

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A few months after his resignation, the reckless banks

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Spitzer had policed brought the economic system close to failure.

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# ..I'll make it anywhere

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# New York, New York... #

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Everyone agreed on one thing.

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No-one expected him to go down like he did.

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It is, to a certain extent, a very classic tale, perhaps,

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of an individual who, from the exterior,

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appears to have been captured by hubris.

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A sense of standing for virtues and, I think,

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working very hard to articulate

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and work towards establishing rules and boundaries

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but then, himself, slipping and failing.

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And this goes back to the days of Greek mythology.

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It's not a new story.

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In New York, everyone's some sort of an animal, you know?

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They're some sort of an animal.

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They're hungry...to make more money.

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Hungry to get more sex.

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To date a prettier girl, or a richer guy.

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Just hungry. Just greedy. Just animals.

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This Chinese philosopher said that human beings

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are a hybrid between

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animals and angels.

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That we're capable of animalistic behaviour.

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Consider sex and war.

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But we're capable of doing beautiful things too,

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like art, music, or making love.

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When I was contemplating that, I was like, "Wow, I kind of dig that."

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We're half-angel, half-animal.

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Good afternoon.

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Over the past nine years,

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eight years as Attorney General, and one as Governor,

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I've tried to uphold a vision of progressive politics

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that would rebuild New York and create opportunity for all.

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We sought to bring real change to New York, and that will continue.

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Today, I want to briefly address a private matter.

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I have acted in a way that violates my obligations to my family,

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and that violates my, or any, sense of right and wrong.

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Spitzer's wrong turn surprised everyone,

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because he had a reputation as Mr Right.

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As Attorney General of New York,

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he was known as the Sheriff of Wall Street,

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someone determined to take on powerful interests on behalf of those who couldn't afford to.

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This was a guy who understood that he had been

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a member of the lucky sperm club.

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He was really smart. He was wealthy.

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So he had gotten a lot of breaks in life.

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And he wanted to use that, you know,

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to better the world.

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Spitzer's father, Bernard, was a self-made real estate tycoon

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who sent his son to an elite prep school, Princeton, and Harvard Law School,

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where he met his wife to be,

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Silda Wall.

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His father had pushed him to succeed.

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We debated issues around the dining room table.

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So I guess it was more of a symposium

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than a touchy-feely environment.

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We were taught not to embrace a notion or principle of fact

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merely because somebody had asserted it.

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Challenge them. Push back.

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That was part of the conversation.

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For a real estate family, Monopoly takes on a special edge.

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Sure, it's a game.

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

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some lessons about money and power.

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Look, I don't want the impression to be that he was devoid of compassion,

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but it is true he foreclosed on me in a Monopoly game.

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Bernard Spitzer tricked his son into selling Boardwalk and Park Place

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for cheap and wiped him out when he landed on a built-up Boardwalk.

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The lesson - don't trust anyone.

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But I think, really, what he was trying to do was

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teach me how the market worked.

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Monopoly's a fun game, but I had overbuilt and overextended.

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And he said, "I'm sorry, that's it. There are consequences, and you've learned a lesson."

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-What was your response at the time?

-Oh, I cried.

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I think I was about ten. I mean, I was a kid.

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It was no fun. I wanted to be bailed out.

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Bernie is a guy who judges people. That's a tough thing for a kid.

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I do remember him watching Eliot and me play tennis.

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

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he gave me the victory sign.

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He said, "Yeah, that's exactly what to do to him."

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Eliot's strategy is to stick with his core game.

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Hard shots, serve and volley.

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My reflexes are good.

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Love to get into net.

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

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Eliot Spitzer's notion of public service was like his tennis game.

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Attack, attack, attack.

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Good morning and thank you for coming.

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As Attorney General, Spitzer saw an opportunity

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to do more than enforce the law.

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

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He sued coal-fired plants in Ohio for causing pollution in New York.

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He sued General Electric for dumping poisonous waste into the Hudson River.

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He uncovered fraud in the pharmaceutical industry,

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where pill-makers hid the damage done by their drugs.

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He fought for the minimum wage for delivery men, and forced upscale restaurants to hire more women.

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He would take them all on because no-one else would.

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There's a reason why Eliot Spitzer became famous as New York's Attorney General.

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The job had been a second-tier position.

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It had been focused on regulating crooked car dealers.

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And Eliot Spitzer focused on Wall Street, on the biggest guys around.

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And Spitzer's premise, which was right,

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was that Wall Street can't be left to regulate itself,

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or terrible things will happen.

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When I assumed office, which was January of 1999,

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we were in a period where Wall Street and investment bankers were,

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to use Tom Wolfe's great phrase, "masters of the universe".

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To protect the average citizen,

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Spitzer was willing to prosecute bankers and CEOs,

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like any other lawbreakers.

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In the course of this investigation,

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my office developed evidence

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indicating that analysts gave misleading advice that helped

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the brokerage's investment banking clients,

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but harmed individual investors.

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When we first got into this, everybody said,

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"Well, what's the State Attorney General's office in New York doing,

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"going after this problem? Shouldn't this be the SEC?"

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

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And if they haven't,

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

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Wall Street analysts advise buyers on what stocks look good or bad.

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With the rise of the internet, analysts became superstars because

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only they seemed to understand how to value internet companies.

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As stocks soared, so did the value of analysts who knew how to pick them.

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The more money they made, the more potential there was for abuse.

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Henry Blodget was a failed writer who stumbled into being

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a top research analyst when, as a young stock picker,

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he predicted the rise of Amazon.com.

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By 2001, he was working for Merrill Lynch, making 12 million a year.

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When one of Merrill's customers sued Blodget for phoney research,

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Spitzer's team investigated him,

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using an arcane law called the Martin Act

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to subpoena thousands of documents and emails in search of fraud.

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As Spitzer's team pored through Blodget's emails,

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they kept coming across the term POS.

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They thought POS was short for positive,

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for stocks Blodget wanted customers to buy.

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But then they stumbled upon Blodget's keyword chart.

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Blodget's emails were honest and brutally downbeat.

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Meanwhile, his official stock ratings were mostly upbeat,

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urging customers to buy, buy, buy.

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Mr and Mrs Smith, whose IRA - or 401k - is being invested,

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they are the sacrificial lambs, and being used to prop up the stock

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so that the Merrill Lynches of the world can go to companies and say,

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"See what we're doing for you? Bring us your investment banking business."

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It was fundamentally corrupt.

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It was insiders' Monopoly, guided by a basic fundamental principle.

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You don't go south of 14th Street

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except for one reason, to make money.

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The guys on the floor, all they cared about was making money.

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That's the American way.

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Jack Grubman was a highly respected telecommunications analyst for Salomon Smith Barney.

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He became famous for pumping up AT&T stock to please his boss, Sandy Weill.

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Then Weill helped Grubman get his twins into an exclusive preschool.

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Grubman's payday for research?

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20 million a year.

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Enough to buy a palace on the Upper East Side.

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Grubman's career ended when he relentlessly pumped up the stock

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of a company called WorldCom just before it went bankrupt.

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Do you regret, in hindsight, staying so bullish on the company for so long?

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Nothing... Look, why are you harassing me like this?

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I'm not harassing you.

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I'm just asking you questions about the company that you cover.

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This caught you completely by surprise, you say?

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Yes.

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Yes.

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-Thank you.

-Yeah.

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There was always this, internally, we call it the come-to-Jesus moment,

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where we went to whoever it was we were prepared to sue

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and/or go after for doing something wrong,

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and we'd say to 'em, in no uncertain terms,

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"Tell us why, given this fact pattern,

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"we would be wrong to sue your ass."

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Early on in the investigation, the Merrill Lynch lawyers came into my office.

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They looked at me and they said, "You're right.

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"But we're not as bad as our competitors."

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I was a prosecutor for a lot of years.

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I never heard a defendant stand up in court and say,

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"Yeah, I robbed three people, but somebody over their robbed five so, therefore, I'm not bad."

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Merrill Lynch wanted to settle the case and pay some money and said,

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"We will pay a big sum of money if you promise to keep the information secret."

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And I said, "No.

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"Because my job as Attorney General is to change the system

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"so that it's fair and will be honest.

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"And if we seal the evidence and you pay a cheque,

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"and we don't change the system, I'm basically being bought off."

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My office has reached an agreement that will help ensure

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the integrity of investment advice on which investors often depend.

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Blodget and Grubman paid million-dollar fines

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and were banned from the securities industry for life.

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But their firms bought their permanent silence

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with handsome severance packages.

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In exchange for Grubman's silence on the details of his firm's behaviour,

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Solomon Smith Barney paid Grubman 30 million.

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The nation's best and brightest were lured to Wall Street

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in search of fast fortunes.

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The money they made flowed everywhere.

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Penthouses, yachts, golf clubs.

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And to the oldest sector of the global economy,

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ready for a new cash infusion.

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I have rich lovers.

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# Love for sale... #

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I don't go out with poor men.

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I've got no reason to do so.

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# ..Appetising young love for sale... #

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I don't call prostitution and escorting selling your body.

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# ..Love for sale... #

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You don't sell, you rent.

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I love my bank account full.

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It's better than empty.

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There's a street in Soho where a lot of artists set up.

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I was selling my paintings one day

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and this charismatic fellow comes along,

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and he's got a beautiful girl with him.

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This girlfriend, Natalia, said,

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"This is the number-one escort, New York city.

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"I run New York's number-one escort agency."

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I've never seen you naked. You think your body's good enough?

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"I want to buy the biggest, most expensive painting you've done."

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He gives me his business card.

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I still have an old souvenir.

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"New York Confidential. Rocket fuel for winners."

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That's all it says.

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In 2004, New York Confidential was at its height,

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making millions by offering clients the Girlfriend Experience.

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A few hours with naughty playmates who look like college cheerleaders.

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-I've had 1,500 in 100 bills in my purse.

-Oh, God.

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-I pulled it out.

-Only 15? THEY LAUGH

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We started hanging out, even after I did the painting.

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One day, we're in the back of a town car and he says,

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"Hey, grab the phone.

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"Just talk to the guy and try to help him out.

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"He's probably looking for a girl to spend the night with."

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I'm on the cell phone and, you know, my adrenaline is going

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and I'm, like, "OK, we have a brunette, a blonde.

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"Do you like ethnic girls?"

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I do a deal for, I don't know, three or four thousand.

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He says, "Great. You just made 400 bucks from a five-minute phone call. I'll give you 10%.

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"Why don't you just come to work for me for a little while, you know?"

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That Craigslist ad pulled well, huh?

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That's where it all began. When I started working for Jason.

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How do you know she's a no?

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We don't get that many calls for Asians. One hot Asian is plenty.

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We need more blondes, hot blondes.

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They might look good in person, but they've got a shitty photographer.

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Hot blondes. She's a definite yes.

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When a businessman spends, say, 2,000 an hour,

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he wants to read the reviews just like if he were to buy a car.

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You want to read the reviews. How much mileage does it get?

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Does it have air conditioning? Four-wheel drive?

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What's the difference between paying 1,000 an hour for this young lady

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when I can open up the Village Voice or go on Craigslist

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and I can pay 200 for another young lady?

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And I'd say, "Well, sir, sure.

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"You can have a cheeseburger, or you can have lobster.

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"You're going to have such a good time

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"with one of New York Confidential's girls that

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"you're going to go to work Monday morning with a smile on your face,

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"you're going to make more money for you and your family,

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"and then you're going to call me up next week and you're going to say,

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"'Who can you send me out today?'"

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You can make the assumption that they're not being sexually satisfied in their marriage,

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or there's baggage, or whatever.

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And then what's their option? Do they get divorced?

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Do they split up their family?

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Or do they seek, you know, do they go see an escort?

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One young lady was a schoolteacher.

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Another girl was an athlete, trying to make it to the Olympics.

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Actresses, singers, models.

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Jason would give his business card to every girl that he met.

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Half of them would call and then a quarter of them would start working.

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Some girls would offer me cash, tips.

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Some girls offered me sex.

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I don't think I ever got a tip or sex with Ashley.

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Ashley was Ashley Youmans, later Ashley Dupre,

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who would become famous for having sex with Eliot Spitzer.

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As an escort, she got her start at New York Confidential,

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where her working name was Victoria.

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It was through one of those straight pitches that Jason found Ashley.

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Jason recruited her from the Gansevoort Hotel.

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At the Gansevoort, Ashley was a bottle girl,

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trying to break in to the music business.

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She was just light. She was just happiness.

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She was a great, bubbly 19-year-old girl.

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She was a good American, New Jersey, Italian girl.

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Guys loved her.

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She had great pheromones or something, you know.

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Within three or four weeks,

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her rate was going up to 2,000 an hour, with a two-hour minimum.

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Her reviews were awesome as well.

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I think she got something like 12 consecutive 10/10 reviews.

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After we did our first appointment together, I told Jason,

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"You got to book this girl."

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First of all, she's great. But she also has a perfect coochie.

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Ashley's reign ended when New York Confidential

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was raided by local police.

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No customers were arrested, but Hulbert was convicted of

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promoting prostitution and was sent to jail for eight months.

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Ashley would move on to work

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for another escort service.

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For every New Yorker who's been ignored, left out,

0:19:430:19:47

who's been told, "You can't fight City Hall,"

0:19:470:19:50

so many times, they've come to believe it.

0:19:500:19:52

For every New Yorker without a voice, listen.

0:19:520:19:55

There's one strong enough for all of us.

0:19:550:19:57

For most of our history, we have turned a blind eye to

0:20:050:20:10

the violations of duty on the part of white-collar criminals.

0:20:100:20:14

We can understand it.

0:20:140:20:16

There's something viscerally terrifying about street crime.

0:20:160:20:19

And, until you're safe in your home,

0:20:190:20:22

you worry a bit less about what is often a bit more amorphous,

0:20:220:20:26

which is the nature of white-collar crime, which is more subtle theft.

0:20:260:20:30

Spitzer broke the mould of how you prosecute a white-collar case.

0:20:300:20:33

He went after it fast and hard and he got things done

0:20:330:20:36

in a period of weeks or months that would take federal regulators years.

0:20:360:20:40

He wanted to change the system, so he'd get the goods on a company,

0:20:400:20:43

or on people, and use it as leverage to institute reform.

0:20:430:20:45

To force the industry to change the way it did business.

0:20:450:20:48

A lot of people thought that was outrageous.

0:20:480:20:49

While Spitzer stirred popular rage at Wall Street, there were a few people

0:20:490:20:54

who were delighted to see the bankers take home big paydays.

0:20:540:20:57

As revealed in the actual cell phone of one of the bookers

0:20:570:21:01

of the escort service called the Emperors Club.

0:21:010:21:04

The lawyer/banker thing is true. There are quite a lot of them.

0:21:140:21:18

But there are lots of stereotypes, you know?

0:21:180:21:20

That it's this crazy, drug-fuelled sort of party scene.

0:21:200:21:24

But, generally, people are respectful.

0:21:240:21:27

They just want to have a nice time with someone.

0:21:270:21:30

Many of my clients are nicer to me than many of the dates I've been on.

0:21:300:21:34

In fact, I've stopped dating in the real world.

0:21:340:21:40

Partly because it would be complicated,

0:21:400:21:42

and partly because my standard has lifted.

0:21:420:21:46

Honestly. You know?

0:21:460:21:48

The pictures of Ashley didn't surface right way.

0:21:480:21:51

The Eliot Spitzer story broke

0:21:510:21:52

and then all these media outlets were calling me to do interviews.

0:21:520:21:56

And so I did a few interviews without even knowing that

0:21:560:21:59

Ashley - my Ashley - was Victoria, was Kristen, was who she was.

0:21:590:22:04

Tonight, Eliot Spitzer resigns as Governor of New York.

0:22:040:22:08

Where will he find comfort

0:22:080:22:09

in this difficult time?

0:22:090:22:11

I was shocked when it all happened.

0:22:110:22:13

But then when I saw Ashley's picture flashed on the news,

0:22:130:22:18

I was, like, "Wait a second!"

0:22:180:22:20

I was, like, "Oh, my gosh!" I couldn't believe it.

0:22:200:22:23

She fit the bill.

0:22:230:22:25

The New York Times website identifies Governor Spitzer's

0:22:280:22:31

mystery call girl as Ashley Alexandra Dupre.

0:22:310:22:34

All over papers and television, she was called "Spitzer's girl".

0:22:340:22:37

Known as Kristen at the Emperors Club,

0:22:370:22:39

Ashley Dupre was determined to take advantage of her sudden opportunity.

0:22:390:22:44

Clearly, Ashley was trying to make

0:22:440:22:47

a name for herself.

0:22:470:22:49

After the scandal broke, Ashley's MySpace page,

0:22:490:22:52

with one of her songs available for streaming,

0:22:520:22:55

got over seven million hits.

0:22:550:22:56

To help package her career, she brought on board two lawyers,

0:22:560:23:00

a publicist and a management team.

0:23:000:23:02

Ashley's manager arranged for an interview with Diane Sawyer.

0:23:050:23:08

Everyone played their part.

0:23:080:23:10

Ashley dressed up as the good girl gone wrong

0:23:100:23:12

and Diane Sawyer played the role of the scalding mom.

0:23:120:23:16

You say the work, but you haven't said the words.

0:23:160:23:21

-The work?

-Prostitution.

0:23:210:23:24

Escort.

0:23:240:23:26

Escort. What's the difference?

0:23:260:23:28

-Escort.

-What's the difference?

0:23:280:23:32

She catered to the stereotypes of hookers which are, you know,

0:23:320:23:36

"Poor me, I had a troubled childhood. I made a mistake."

0:23:360:23:39

Which is such a load of crap.

0:23:390:23:40

It's... I can't change the past.

0:23:400:23:43

I can only try to take what I've learned and apply that to my future.

0:23:430:23:48

We're being paid ridiculous amounts of money.

0:23:500:23:52

None of these women are forced to do this. And they're not stupid.

0:23:520:23:56

Many of the professional prostitutes that I know are very smart women,

0:23:560:24:00

who weren't abused, you know.

0:24:000:24:02

Don't have a mental disorder.

0:24:020:24:03

They just happen to believe in this kind of work.

0:24:030:24:07

So did their customers.

0:24:070:24:09

The cell phone of the booker from the Emperors Club

0:24:090:24:13

offered a glimpse of the club's well-heeled client list.

0:24:130:24:16

An Oscar winner, CEOs and high-powered investment bankers.

0:24:160:24:21

The club treated them like emperors, and why not?

0:24:210:24:25

They made more money than kings.

0:24:250:24:27

They enjoyed having their way with women and the world.

0:24:270:24:30

So it came as no surprise that they resented it

0:24:300:24:33

when the New York Attorney General started to cramp their style.

0:24:330:24:36

The Economist magazine calls him Wall Street's scourger-in-chief.

0:24:360:24:41

He's gone from complete anonymity to what Fortune Magazine calls,

0:24:410:24:45

"the most feared man on Wall Street."

0:24:450:24:47

Spitzer has deputised himself as the Sheriff of Wall Street

0:24:470:24:51

and is leading the posse for retribution, restitution and reform.

0:24:510:24:55

Spitzer appealed to Democrats and Republicans.

0:24:550:24:59

He was a law and order liberal who wasn't afraid to punch back.

0:24:590:25:02

When you walk into a building on Wall Street,

0:25:020:25:05

is it like turning the light on in the kitchen and the roaches just scatter everywhere?

0:25:050:25:11

Like a beam of light to the corrupt.

0:25:110:25:12

There was a day when I had to walk into a hedge fund...

0:25:120:25:14

What I was intrigued by was the number of people who were terrified of him.

0:25:140:25:18

They literally were terrified at this guy coming after them.

0:25:180:25:22

The issue of CEO comp was something

0:25:270:25:30

I had been trying to get people to take a look at.

0:25:300:25:32

It was off the rails.

0:25:320:25:35

# I take what I want

0:25:350:25:39

# I'm a bad go-getter, yeah

0:25:390:25:42

# Huh! Yes, I am

0:25:420:25:45

# I'll never lose

0:25:450:25:49

# And I'll never quit, oh, yeah... #

0:25:490:25:52

The ratio of CEO comp to the average worker's comp had gone from about

0:25:520:25:56

40 to one to about 550 to one.

0:25:560:25:57

CEOs began to just take everything they could and, ultimately,

0:25:570:26:01

that was going to destroy our economy.

0:26:010:26:04

Because, instead of running the companies to create

0:26:040:26:06

long-term wealth and long-term investment,

0:26:060:26:08

all the games we've seen, everything from backdating of stock options

0:26:080:26:12

to maximising short-term profits without sufficient investment for the long term,

0:26:120:26:15

these are things that are cancers inside the economy.

0:26:150:26:20

One of the flashiest executives was head of the New York Stock Exchange,

0:26:230:26:27

Dick Grasso, who boasted owning ten cars and three homes.

0:26:270:26:31

He travelled on private jets, often flanked by armed bodyguards.

0:26:310:26:35

His job was to regulate and market the New York Stock Exchange.

0:26:350:26:39

Nicknamed Punky, Grasso was a scrappy college dropout who started on the floor and worked his way up.

0:26:390:26:45

There's a job opening at the New York Stock Exchange.

0:26:450:26:48

Chairman Dick Grasso resigned yesterday over the fury raised by his massive pay package.

0:26:480:26:52

Not only was Grasso paid an average annual salary of 20 million,

0:26:520:26:57

his retirement package totalled nearly 140 million.

0:26:570:27:01

After Grasso stepped down,

0:27:010:27:03

the new head of the exchange brought the matter to the Attorney General.

0:27:030:27:08

There's a statute in New York that says the value of the pay cheque

0:27:080:27:12

that the head of a not-for-profit receives

0:27:120:27:14

must be commensurate with the value of the services provided.

0:27:140:27:18

I like Dick. He's a decent guy.

0:27:180:27:21

He didn't provide services worth 139 million.

0:27:210:27:24

Perhaps more perversely, the compensation had been determined by

0:27:240:27:28

the very people he was supposed to be regulating.

0:27:280:27:32

I had the most respected group of directors from the corporate and financial world.

0:27:320:27:38

They exercised their business judgement.

0:27:380:27:41

They paid me what they believed to be fair and reasonable, which I agree with.

0:27:410:27:46

Spitzer decided not to go after the blue-chip international board.

0:27:460:27:50

Instead, he sued Grasso and the head of the board's compensation committee, Ken Langone.

0:27:500:27:55

Langone would prove to be a formidable foe.

0:27:550:28:00

I've been rich and I've been poor.

0:28:000:28:01

Rich is better, I can tell you right now.

0:28:010:28:05

The son of a Long Island plumber, Ken Langone had co-founded Home Depot

0:28:050:28:10

and amassed a fortune of well over a billion dollars.

0:28:100:28:13

A dedicated philanthropist, Langone was not shy about paying people well.

0:28:130:28:18

At the time we awarded Dick these pay packages,

0:28:180:28:22

I truly believed that Dick earned every single penny, and more.

0:28:220:28:27

Spitzer demanded that Grasso return 100 million.

0:28:270:28:31

At the time, Langone told Fortune Magazine,

0:28:310:28:34

"If Grasso gives back a fucking nickel, I'll never talk to him again."

0:28:340:28:38

He, as anybody in that position would, took umbrage at him.

0:28:380:28:41

And he developed a rather strong animus towards me.

0:28:410:28:44

The day that I sat in this room and he went on television with

0:28:480:28:53

that false press conference he had, announcing that he was going after

0:28:530:28:59

Dick Grasso and me, and all kinds of bad things about me...

0:28:590:29:04

Eliot's theatrics.

0:29:040:29:07

You can't pay the head of a not-for-profit that much money,

0:29:070:29:10

close to 200 million.

0:29:100:29:13

It's simply too much.

0:29:130:29:14

It's not reasonable. It's not right.

0:29:140:29:16

It violates the law.

0:29:160:29:18

It was headlines.

0:29:180:29:19

It was glorious headlines.

0:29:190:29:21

All these captains of industry. Hey, this is big game.

0:29:210:29:25

This is going after elephants.

0:29:250:29:26

He became a very vociferous critic of mine, and that's all fair game.

0:29:260:29:31

In my view, we were right and he was wrong.

0:29:310:29:34

But, again, it was something he felt deeply about.

0:29:340:29:37

In 2004, at the Democratic National Convention, Spitzer took up the issue

0:29:380:29:42

with Jack Welch, the former CEO of General Electric.

0:29:420:29:46

Jack and I are very good friends.

0:29:460:29:49

Spitzer came up to him with froth

0:29:490:29:52

coming out of the sides of his mouth, spitting at me, and pointing at Jack,

0:29:520:29:58

"You tell your buddy

0:29:580:29:59

"I'm going to put a spike through his heart!"

0:29:590:30:03

This is not something the Attorney General of New York State says.

0:30:030:30:07

So when Jack told me, I said, "Jack, do me a favour."

0:30:070:30:09

I said, "If you see him,

0:30:090:30:10

"tell him one thing - make sure it's steel, because wood'll break."

0:30:100:30:14

The case dragged on for years.

0:30:160:30:19

In 2008, the New York State Court of Appeals dismissed the case for a bizarre reason.

0:30:190:30:23

Since the suit had been brought, the New York Stock Exchange had abandoned its not-for-profit status.

0:30:230:30:29

Dick Grasso kept all his money, but Eliot Spitzer had engaged an enemy with virtually unlimited resources.

0:30:290:30:35

One who was watching and waiting for any missed step.

0:30:350:30:40

I'd like to think I'm not a vindictive person.

0:30:400:30:44

And a basic tenet of my faith is forgiveness.

0:30:470:30:51

The most harm that Eliot Spitzer's done to me is...

0:30:510:30:55

I am defying my faith.

0:30:550:30:57

I can't forgive him.

0:30:570:30:59

And I should. But I can't.

0:30:590:31:01

In Ken Langone, Spitzer had created a mighty enemy.

0:31:130:31:16

And then he added another one, when he took on Hank Greenberg,

0:31:160:31:20

the head of the world's largest insurance company, AIG.

0:31:200:31:23

At the age of 79, Maurice Hank Greenberg was the most powerful businessman on the planet.

0:31:280:31:33

Under his command, AIG had grown to be worth 157 billion,

0:31:330:31:38

with 92,000 employees.

0:31:380:31:41

Admired for his spectacular results,

0:31:410:31:44

Greenberg ruled his empire with an iron fist.

0:31:440:31:47

I think he was Louis XIV to everybody else's, you know,

0:31:470:31:50

being a mere baron.

0:31:500:31:52

I think Hank Greenberg epitomised the power of corporate CEOs and,

0:31:520:31:58

in my view, he was the most powerful person in corporate America.

0:31:580:32:02

Greenberg's measure of his own worth was the stock price at AIG.

0:32:020:32:07

The normal cycle of business is that sometimes your profits go up,

0:32:070:32:10

and sometimes your profits go down.

0:32:100:32:12

But Wall Street didn't like companies to perform that way.

0:32:120:32:15

They wanted to see steadily rising profits.

0:32:150:32:17

If you delivered steadily rising profits,

0:32:170:32:19

they'd give you a higher stock price.

0:32:190:32:21

So Hank Greenberg came up with a new type of insurance that would

0:32:210:32:24

create the illusion of steadily rising earnings.

0:32:240:32:27

Greenberg's AIG was fined over 100 million by federal authorities

0:32:270:32:31

for helping other companies cook their books.

0:32:310:32:35

In 2005, it appeared that AIG might be using similar tricks to pump up its own stock.

0:32:350:32:41

The more we dug into AIG,

0:32:410:32:44

the more problematic the company itself appeared to me to be.

0:32:440:32:50

And the disconcerting aspect of it was that it did appear to come from the very top.

0:32:500:32:57

When did you first hear about Spitzer's investigation of AIG?

0:32:590:33:05

When I got a subpoena.

0:33:050:33:06

One deal generated by Greenberg caught the eye of Spitzer

0:33:060:33:10

and federal investigators.

0:33:100:33:11

It was a suspicious contract between AIG and Gen Re,

0:33:110:33:15

a company owned by billionaire Warren Buffett.

0:33:150:33:19

One of the most startling moments in this case was when

0:33:190:33:22

tapes emerged that were dispositive overwhelming proof

0:33:220:33:25

of exactly what these transactions had been.

0:33:250:33:28

As this was unfolding, Dick Beattie called me

0:33:280:33:32

one Saturday morning at home and said, "Let's talk about this."

0:33:320:33:35

The board wanted me to find out what I could

0:33:350:33:39

about the Gen Re investigation.

0:33:390:33:43

Eliot was jogging on a Saturday morning or something.

0:33:430:33:45

I met him in the park.

0:33:450:33:47

The only thing of significance, he told me, as I recall,

0:33:470:33:51

was that they had Hank's name on tapes.

0:33:510:33:57

To boost his stock price, Hank Greenberg wanted to make it look like

0:34:160:34:20

AIG had 500 million more than it did.

0:34:200:34:23

We got a call to see if we could get a loss portfolio from Ron Ferguson.

0:34:230:34:28

What happened afterwards, I don't know.

0:34:280:34:30

I didn't... I wasn't involved in the details of the transaction.

0:34:300:34:34

A handwritten deal memo laid out the terms.

0:35:050:35:09

Gen Re would pretend to pay AIG 500 million

0:35:090:35:14

in two instalments for a phoney insurance policy.

0:35:140:35:17

There was no risk of paying a claim.

0:35:170:35:19

For doing the phoney deal, AIG would pay Gen Re a 5 million fee.

0:35:220:35:26

HOULDSWORTH LAUGHS

0:35:260:35:28

-HOULDSWORTH:

-'No risk. No risk for five million bucks.'

0:35:280:35:32

Hank Greenberg's initials, MRG, were all over the document.

0:35:320:35:35

-MONRAD:

-'The two people at AIG who are involved

0:35:350:35:38

'are Hank Greenberg and Chris Milton.'

0:35:380:35:40

AIG was a big company.

0:35:400:35:42

I didn't just stay focused on the Gen Re transaction.

0:35:420:35:46

HOULDSWORTH CHUCKLES

0:36:000:36:01

'Yeah, well, that tells you something, doesn't it?'

0:36:010:36:04

What was an unfair advantage to Greenberg was seen as cooking the books to

0:36:040:36:09

AIG's accountants, PricewaterhouseCoopers.

0:36:090:36:13

The firm refused to accept AIG's financial statements

0:36:130:36:16

as long as Greenberg was the CEO.

0:36:160:36:18

Hank wasn't pushed out by Eliot.

0:36:180:36:23

What happened was, the investigation that followed,

0:36:230:36:26

and the accountants, at the end of the day, said,

0:36:260:36:29

"We're not taking that certification any more.

0:36:290:36:32

"So you're saying you're the board of directors and, my God, what does that mean?"

0:36:320:36:35

That's what drove the board

0:36:350:36:37

deciding that Hank had to go,

0:36:370:36:39

and one other issue.

0:36:390:36:41

Spitzer demanded that Hank Greenberg testify under oath.

0:36:410:36:44

However, Greenberg's lawyers advised him to plead the Fifth, despite

0:36:440:36:48

AIG's policy to fire employees who didn't cooperate with regulators.

0:36:480:36:54

That troubled a lot of people on the board.

0:36:540:36:56

They wanted him to say, "No, absolutely not.

0:36:560:36:59

"I'm not going to take the Fifth. I'm going to testify."

0:36:590:37:02

I think Frank Zarb and I called Hank and told him that

0:37:020:37:08

the board had made the decision that he had to step down.

0:37:080:37:12

These are very serious offences.

0:37:120:37:14

Over 1 billion of accounting frauds

0:37:140:37:16

that AIG has already acknowledged.

0:37:160:37:18

That company was a black box, run with an iron fist,

0:37:180:37:21

by a CEO who did not tell the public the truth. That is the problem.

0:37:210:37:24

Does that mean you're moving toward an indictment?

0:37:240:37:27

No, I didn't say that. It depends what we can prove

0:37:270:37:29

that Mr Greenberg knew at the time.

0:37:290:37:31

We have powerful evidence. We will proceed with it.

0:37:310:37:33

It's too bad that the Attorney General

0:37:330:37:36

doesn't come out from behind his office

0:37:360:37:38

where he's protected against libel.

0:37:380:37:41

I wish he'd come out and say these things as a citizen.

0:37:410:37:45

Spitzer attacked Greenberg, and I saw him on television one night

0:37:450:37:51

saying that Hank Greenberg was a crook.

0:37:510:37:55

John Whitehead had been a war hero, a Deputy Secretary of State

0:37:550:37:59

and the chairman of Goldman Sachs.

0:37:590:38:02

And his office continued to leak information about why he was

0:38:020:38:05

a crook, without ever any charges being brought against Hank.

0:38:050:38:10

So I said, "This is something I have to do something about."

0:38:100:38:13

So that's what caused me to write that first article.

0:38:130:38:16

I had heard of an incident involving former Goldman Sachs chairman John Whitehead.

0:38:160:38:20

Mr Whitehead had come out publicly supporting Mr Greenberg.

0:38:200:38:24

After that op-ed was published,

0:38:240:38:26

he received a threatening phone call from Eliot Spitzer.

0:38:260:38:30

He asked me a couple of questions about my article.

0:38:300:38:34

And then he came right to the point.

0:38:340:38:36

He said, "Mr Whitehead, you and I are now at war."

0:38:360:38:39

Look, he had written an op.

0:38:390:38:42

I don't know if I said those words or not.

0:38:420:38:44

If that's the worst I said, you know... OK, that's... People are at war with me all the time.

0:38:440:38:49

"You have fired the first bullet."

0:38:490:38:51

"You have fired the first bullet.

0:38:510:38:53

"But, believe me, by the end of this war,

0:38:530:38:56

"I will fire the last one and you will be dead."

0:38:560:38:59

Well, I don't think I said that. I mean, I wouldn't say...

0:38:590:39:02

Look, I hope I didn't say that.

0:39:020:39:03

He was screaming into the phone.

0:39:030:39:05

He and I had a heated conversation. I will leave it at that.

0:39:050:39:08

It was a private conversation.

0:39:080:39:10

As I've said, I never denied that I have heated conversations in private.

0:39:100:39:14

It's a, you know...

0:39:140:39:15

It was me. It is me. So be it.

0:39:150:39:17

And I think, sometimes, it's how you get things done.

0:39:170:39:20

He said, "I will destroy you."

0:39:200:39:23

And those are strong words.

0:39:230:39:26

I had never heard words like that before from anybody.

0:39:260:39:30

I couldn't quite believe it.

0:39:300:39:32

Spitzer's outbursts became legendary to his staff.

0:39:320:39:36

When he exploded, his staff would remark that Spitzer's evil twin,

0:39:360:39:40

Erwin, had dropped in for an unexpected visit.

0:39:400:39:43

In fact, a very prominent lawyer of a very fine company

0:39:430:39:48

had a meeting with him.

0:39:480:39:51

And this man said to me,

0:39:510:39:53

"When I came out of his office, I swore I saw the words E.V.I.L across his forehead."

0:39:530:39:59

I have no doubt if Hank Greenberg was still running AIG,

0:39:590:40:02

AIG would not be in the fix it's in today.

0:40:020:40:04

Today, the federal government announced it has once again

0:40:040:40:08

reworked the bailout of insurance giant AIG.

0:40:080:40:11

Now the bailout needs a bailout.

0:40:110:40:13

Two months after AIG was given that first emergency government loan,

0:40:130:40:17

it's getting another lifeline.

0:40:170:40:19

In 2008, AIG was at the centre of a global economic meltdown.

0:40:190:40:23

Before and after Greenberg's fall, AIG had been selling

0:40:230:40:26

billions of dollars of insurance to the world's biggest banks

0:40:260:40:31

to hide their risky gambles on home mortgages.

0:40:310:40:34

When housing prices collapsed, AIG couldn't pay the claims.

0:40:340:40:39

The US taxpayers paid 183 billion in an effort to save

0:40:390:40:43

the global economy from collapse.

0:40:430:40:46

According to Greenberg, the blame for AIG's fall

0:40:460:40:50

and the global meltdown rested with one regulator, Eliot Spitzer.

0:40:500:40:56

Spitzer wanted me out.

0:40:560:40:59

When politicians involve themselves in who is going to run a company

0:40:590:41:03

and who is not, we're on dangerous ground in this country.

0:41:030:41:08

It is the big lie writ large.

0:41:080:41:11

The books were being cooked at his company.

0:41:110:41:13

Hank Greenberg was removed as CEO by his own board

0:41:130:41:18

when they saw the underlying facts of what was then

0:41:180:41:20

one of the largest financial frauds in history.

0:41:200:41:23

I didn't do anything improper.

0:41:230:41:25

Neither did any of the senior team do anything improper.

0:41:250:41:28

And you say to people, if Hank Greenberg had still been there,

0:41:280:41:32

this would never have happened?

0:41:320:41:34

It would not have happened.

0:41:340:41:36

The very trading practices that led to these gargantuan obligations

0:41:360:41:40

the taxpayers are now bailing out all began while he was there.

0:41:400:41:44

Very significant accounting frauds.

0:41:440:41:46

Reinsurance contracts which he participated in structuring,

0:41:460:41:50

that were deemed by a federal jury in Connecticut to be illegal.

0:41:500:41:54

Four people went to jail.

0:41:540:41:56

He was called an unindicted co-conspirator by the prosecutor in that case.

0:41:560:42:00

So his maintaining uninvolvement in the structural issues is simply wrong.

0:42:000:42:04

Spitzer wanted to prosecute Greenberg for financial manipulation,

0:42:040:42:09

but was called off the case by the US Attorney, Michael Garcia.

0:42:090:42:13

Michael Garcia sent me an over-the-top letter

0:42:130:42:17

when we were going to include significant allegations relating to

0:42:170:42:22

Hank Greenberg in our AIG complaint, telling us to back off.

0:42:220:42:27

And it was a moment of...

0:42:270:42:30

I don't say there was anything improper about the letter that

0:42:300:42:34

Garcia sent, but he basically said, "Don't you dare go near this.

0:42:340:42:37

"We're doing this." Relating to Hank Greenberg.

0:42:370:42:41

Michael Garcia never pursued charges against Greenberg.

0:42:460:42:50

Instead, he would lead the prosecution

0:42:500:42:53

that led to Spitzer's downfall.

0:42:530:42:56

Both Greenberg and Langone hired PR firms to go after Spitzer.

0:42:560:43:00

And Langone hired a private investigator to find out what he could.

0:43:000:43:04

I want to move on to the Emperors Club.

0:43:060:43:08

When did that start?

0:43:080:43:11

Approximately.

0:43:110:43:12

-Some time in '06.

-Early '06?

0:43:120:43:15

Thereabouts, yeah.

0:43:150:43:18

You were flying about as high as you could possibly be flying.

0:43:180:43:21

At that point in time, you were pretty certain you were going to be

0:43:210:43:25

-Governor of New York, wouldn't you say?

-Right.

0:43:250:43:28

Well, if your point is, things were as good as they could get,

0:43:280:43:34

from a political perspective, I suppose that's right.

0:43:340:43:37

And the only metaphor I can think of,

0:43:370:43:41

perhaps, is Icarus.

0:43:410:43:44

Those whom the gods would destroy, they make all-powerful.

0:43:440:43:49

A friend of mine recently gave me a T-shirt that he claimed

0:43:570:44:02

he had had printed for investment banker friends of his.

0:44:020:44:06

But he thought I would enjoy it and maybe I could even learn from it.

0:44:060:44:09

The T-shirt said on its front,

0:44:090:44:13

'Hubris is terminal'.

0:44:130:44:15

# If I ruled the world

0:44:150:44:20

# I'd love all the girls

0:44:200:44:21

# I love 'em, love 'em, baby... #

0:44:210:44:24

I'm not a kingmaker, but I'll call it. You're going to win.

0:44:240:44:26

-Thank you.

-I'll tell you why.

0:44:260:44:27

-I'm glad I came tonight!

-Absolutely, it's done.

0:44:270:44:30

In early 2006, Spitzer's approval ratings were over 60%.

0:44:300:44:33

He'd announced his run for Governor

0:44:330:44:35

and was predicted to win in a landslide.

0:44:350:44:37

You could do anything. You could punch a toddler and still win!

0:44:370:44:40

AUDIENCE LAUGHS

0:44:400:44:41

His career was every politician's dream.

0:44:410:44:44

I was the enforcer.

0:44:440:44:45

I was the kid who played left full-back.

0:44:450:44:47

Not because I had real talent, but I took people out.

0:44:470:44:50

You play hard, you play rough, and, hopefully, you don't get caught.

0:44:500:44:53

AUDIENCE LAUGHS

0:44:530:44:55

Right around this time, Cecil Suwal, the 22-year-old CEO of the Emperors Club,

0:44:550:44:59

took a phone call from a new customer.

0:44:590:45:02

Though he used the name George Fox, it was actually Eliot Spitzer.

0:45:020:45:06

The very first time that he called,

0:45:060:45:09

I answered the phone

0:45:090:45:11

and he was whispering.

0:45:110:45:14

So I thought it was a prank.

0:45:140:45:16

And so the other booker called and said,

0:45:160:45:18

"OK, I'm ready to start answering the phones."

0:45:180:45:21

So we transferred the phone to her and I said,

0:45:210:45:22

"Oh, I just spoke with someone.

0:45:220:45:24

"I'm going to let you handle that."

0:45:240:45:26

And, apparently, he saw, I think, three people in a row,

0:45:260:45:29

just back to back that evening.

0:45:290:45:31

So I guess it wasn't a prank.

0:45:310:45:33

Reading New York Magazine, George Fox, aka Eliot Spitzer,

0:45:330:45:37

claims he was drawn to websites in the classified ads

0:45:370:45:42

and, while surfing the web, found the Emperors Club.

0:45:420:45:45

# Secret heart

0:45:450:45:48

# What are you made of?

0:45:480:45:51

# What are you so afraid of?

0:45:510:45:55

# Could it be three simple words? #

0:45:550:45:59

When you're sending a girl on a trip to Chicago for 30,000 overnight,

0:45:590:46:04

it doesn't necessarily feel like

0:46:040:46:06

you're running prostitution.

0:46:060:46:08

It feels different.

0:46:080:46:10

And so that's where I think we got a little bit lost,

0:46:100:46:12

as far as the whole legality of the situation.

0:46:120:46:15

# ..This very secret

0:46:150:46:18

# That you're trying... #

0:46:180:46:20

Cecil Suwal dropped out of the University of Miami when she

0:46:200:46:23

fell in love with 60-year-old Mark Brener, who owned the Emperors Club.

0:46:230:46:26

Soon, they were running it together.

0:46:260:46:28

Ceci, as she was called,

0:46:280:46:30

decided to take the Emperors Club in a more high-end direction.

0:46:300:46:34

My primary focus at the time was to promote the website

0:46:340:46:37

to the right people, to the right kinds of girls.

0:46:370:46:41

The number of diamonds that the model had indicated not only

0:46:410:46:45

her hourly and daily rate, but also the general quality of companionship

0:46:450:46:50

you could expect from her.

0:46:500:46:52

So if she was three diamonds,

0:46:520:46:54

her daily rate would be 10,000 and her hourly rate would be 1,000.

0:46:540:46:58

It went 1,000, 1,200, 1,500, 2,100, 3,100.

0:46:580:47:03

And then the day rates, you would just add a zero.

0:47:030:47:07

I did that.

0:47:070:47:08

With mathematical precision, right?!

0:47:080:47:12

Whatever!

0:47:120:47:13

Just add a zero, that should work.

0:47:130:47:15

We had our core girls that we immensely valued that

0:47:150:47:19

really could bring home the bacon.

0:47:190:47:21

Then we had this sort of spiral effect.

0:47:210:47:23

Ashley went for 1,000.

0:47:230:47:26

She certainly wasn't the core.

0:47:290:47:31

She was definitely one of the girls, like, on the edges.

0:47:310:47:34

Sort of peripheries.

0:47:340:47:35

The man known as George Fox became a regular client.

0:47:350:47:39

How often did he meet with Ashley?

0:47:410:47:43

Well, he met her one time.

0:47:430:47:46

And that was the big Mayflower experience for him, I guess.

0:47:460:47:52

But it was just that one time?

0:47:520:47:54

One time.

0:47:540:47:55

How often did you see Governor Spitzer?

0:47:570:47:59

Legally, I am not able to answer that question.

0:47:590:48:04

Court documents say they may have had previous encounters.

0:48:040:48:07

But court documents didn't say that.

0:48:100:48:13

Ashley Dupre let the world believe that she was the 'Luv Guv's girl'.

0:48:130:48:18

But she was only a one-night stand,

0:48:180:48:20

caught on a wiretap at the Mayflower Hotel in Washington DC.

0:48:200:48:24

That begged the question, who else was there?

0:48:240:48:29

There was someone who he enjoyed seeing most.

0:48:290:48:31

And she was very pretty and a very intelligent girl.

0:48:310:48:34

Not a fashion model.

0:48:340:48:36

She had her own career.

0:48:360:48:39

And he liked to meet with her frequently.

0:48:390:48:42

She was actually the first person who said, "Oh, this is Eliot Spitzer."

0:48:420:48:45

The escort chose the name Angelina.

0:48:470:48:50

I discovered who she was and she agreed to speak to me,

0:48:500:48:52

so long as I did not disclose her real name, her face,

0:48:520:48:55

or reveal her voice.

0:48:550:48:57

So I transcribed her interview

0:48:570:48:59

and hired this actress to perform her words.

0:48:590:49:02

He used the name George Fox.

0:49:100:49:13

And he booked an hour at a New York hotel.

0:49:130:49:16

Upper East Side.

0:49:160:49:18

That first time, it was very businesslike.

0:49:200:49:24

You said he wasn't that interested in the companionship.

0:49:240:49:28

Right.

0:49:300:49:32

-You're laughing. I mean, it's like...

-It's funny.

0:49:350:49:38

Because he wasn't at all interested in them as a companion?

0:49:380:49:40

I'm not... From what I heard.

0:49:400:49:42

I remember thinking he was, like,

0:49:420:49:47

I hate to put this crudely,

0:49:470:49:50

a 'trying to get his money's worth type client'.

0:49:500:49:53

I said to the agency, you know,

0:49:530:49:55

"I don't want to see that person again."

0:49:550:49:58

In what seems to be a kind of epidemic

0:49:580:50:04

of political figures in sex scandals,

0:50:040:50:06

one question is, why hookers?

0:50:060:50:11

I mean, why, particularly when that's illegal?

0:50:110:50:14

Again, I don't want to delve into...

0:50:160:50:21

I certainly don't want to speak for others and,

0:50:210:50:24

even in my own case,

0:50:240:50:25

I don't really want to speak to that issue,

0:50:250:50:28

except to say that you cave to temptations in a way that

0:50:280:50:31

perhaps seems easier.

0:50:310:50:32

And perhaps is, in some very twisted way, less damaging.

0:50:350:50:41

Less damaging how?

0:50:410:50:42

Than having affairs or relationships that take on a different tenor.

0:50:420:50:47

I'm sorry, had what?

0:50:470:50:48

Relationships that take on a different tenor.

0:50:480:50:51

-You mean, have some sort of emotional...?

-Perhaps, yeah.

0:50:510:50:54

Eliot Spitzer had taken the first step into his double life.

0:50:540:50:58

He had just entered a world which, formerly,

0:50:580:51:01

he had seen only from the outside as a prosecutor.

0:51:010:51:05

In April 2004, after wiretapping a social club in Staten Island,

0:51:050:51:10

Spitzer helped the FBI and NYPD bring down a sophisticated prostitution ring.

0:51:100:51:15

He knew how it was done.

0:51:150:51:17

He also knew his life was about to become more public than it had ever been.

0:51:170:51:22

CHEERING AND APPLAUSE

0:51:230:51:25

Ladies and gentlemen, I present to you

0:51:250:51:27

the Governor-Elect of the state of New York,

0:51:270:51:30

the Honorable Eliot Spitzer.

0:51:300:51:33

Taking a record 69% of the vote,

0:51:350:51:38

Eliot Spitzer had a popular mandate to make big changes.

0:51:380:51:42

Together, let's build that one New York.

0:51:420:51:46

Let's walk toward that better day.

0:51:460:51:49

Thank you and God bless the great state of New York!

0:51:490:51:53

CHEERING AND APPLAUSE

0:51:530:51:55

Here he was as Governor of New York.

0:51:550:51:57

He's King of the World.

0:51:570:51:58

He's the future President of the United States.

0:51:580:52:01

Eliot Spitzer's going to fix up this state

0:52:010:52:02

and then he's going to go to Washington and

0:52:020:52:04

do the same thing that he just did for New York for the United States.

0:52:040:52:09

That was in everybody's mind.

0:52:090:52:11

People had said to me before I won,

0:52:190:52:20

"Do to Albany what you did to Wall Street."

0:52:200:52:22

And we tried.

0:52:220:52:24

We went at it with a determination

0:52:240:52:26

that was alien to the culture of Albany.

0:52:260:52:28

The Capitol building in Albany was a monument to corruption.

0:52:340:52:38

America's most expensive government building was like the legislature.

0:52:380:52:42

A bog of waste, double-dealing and graft.

0:52:420:52:45

The gargoyles on the walls haunted the place.

0:52:470:52:50

The maze of grand stairways navigated by special interests

0:52:500:52:54

robbed lawmakers of any sense of perspective.

0:52:540:52:57

It's like in Escher,

0:53:000:53:02

you don't know if you're going up or down, left or right.

0:53:020:53:05

The mind gets turned upside down inside that building.

0:53:050:53:08

I think, over the years, that some people have appropriately seen it

0:53:100:53:13

as a metaphor for the labyrinthian nature of New York politics.

0:53:130:53:17

It's time for "Live from the State Capitol!" with Fred Dicker.

0:53:170:53:21

Fred Dicker of the New York Post was a 25-year veteran in Albany.

0:53:210:53:25

This is Fred Dicker, live at the state capitol.

0:53:250:53:27

What a beautiful day it's going to be...

0:53:270:53:29

Deeply conservative, Dicker was proud of calling himself

0:53:290:53:31

"an equal-opportunity prick",

0:53:310:53:33

attacking whomever came into office.

0:53:330:53:36

Eliot Spitzer, who didn't suffer fools lightly,

0:53:360:53:38

was treating a separate branch of government,

0:53:380:53:40

the legislature that could block him at every turn,

0:53:400:53:43

as if he could just push them around

0:53:430:53:44

like they were Wall Street executives.

0:53:440:53:46

Well, they pushed back, and they pushed back hard.

0:53:460:53:48

The man who pushed back hardest was Republican Senate leader Joe Bruno.

0:53:480:53:53

A charming old-school dealmaker,

0:53:530:53:55

he wasn't much interested in Spitzer's reforms.

0:53:550:53:58

He thought that he really was, sort of, the second coming.

0:53:580:54:02

And that he was going to get

0:54:020:54:04

everybody to do what he wanted to do.

0:54:040:54:06

I think he started thinking dictatorially, almost,

0:54:060:54:10

you know, in his own mind.

0:54:100:54:11

I think Eliot's view of it was,

0:54:110:54:13

we would force them to do the right thing.

0:54:130:54:15

But it's not the way the system is set up.

0:54:150:54:18

Again, I don't want to just say you're wrong,

0:54:180:54:20

but you are.

0:54:200:54:21

LAUGHTER

0:54:210:54:23

I'd say to him, "Boss, this system is set up

0:54:230:54:25

"so that only incremental change is possible."

0:54:250:54:27

And he'd be, like, "Goddamn it, no, it's not."

0:54:270:54:29

And the result that it produced is that he began to go around Mr Bruno

0:54:290:54:32

to specific members of the State Senate.

0:54:320:54:35

Mr Bruno took that to be a hostile act.

0:54:350:54:39

He quickly announced publicly he's going to take me out as leader.

0:54:410:54:45

I'm history.

0:54:450:54:47

And the Republican majority was going to cease to exist.

0:54:470:54:50

He was going to take us out.

0:54:500:54:51

I said something like,

0:54:530:54:54

"You know, I've been threatened by hoods and thugs my whole life.

0:54:540:54:58

"You're just an amateur.

0:54:580:55:00

"If you think you're going to bother me, you just don't."

0:55:000:55:03

We knew that folks would come down hard on us if we ever stumbled.

0:55:100:55:15

He said, "You're damn right.

0:55:150:55:17

"If we ever fall, they'll kick us in the nuts."

0:55:170:55:19

Which is why, you know, the downfall was so shocking.

0:55:190:55:23

Did it begin to haunt you as something you thought was possible

0:55:260:55:29

that you were going to get caught?

0:55:290:55:31

Or did that not even occur to you?

0:55:310:55:34

No, of course it does.

0:55:340:55:37

Of course it does.

0:55:370:55:38

And you just deal with it.

0:55:380:55:41

How did you deal with it?

0:55:430:55:45

Those are the mysteries of the human mind, I suppose.

0:55:450:55:47

I don't think I can answer that question

0:55:470:55:50

because I don't think I know.

0:55:500:55:53

I got a call months later and this was kind of a last-minute thing.

0:56:080:56:14

This was at the Waldorf hotel.

0:56:140:56:16

He showed up with this baseball cap on, like, clearly trying

0:56:180:56:22

not to be recognised.

0:56:220:56:24

And I'm, like, you know,

0:56:240:56:27

"Don't tell me it's THAT guy again!"

0:56:270:56:28

In that second meeting, I was rather pushy with him.

0:56:320:56:36

I was, like, "We're going to sit and have a chit-chat

0:56:360:56:40

"and have a nice little date here."

0:56:400:56:42

And it ended up being a fun couple of hours.

0:56:440:56:47

I thought it was Eliot Spitzer,

0:56:470:56:50

but I couldn't be absolutely sure.

0:56:500:56:52

So I made a point to look out for him in the papers.

0:56:520:56:54

And it was at that point that I said to the people who ran the agency,

0:56:540:56:58

"You know who this guy is, don't you?"

0:56:580:57:00

And they said, "No."

0:57:000:57:03

He was hiding. He didn't want anyone to know who we was.

0:57:030:57:06

He was extremely paranoid.

0:57:060:57:08

He knew that his entire political career was on the line.

0:57:080:57:12

And, ultimately, vice just took over virtue.

0:57:120:57:15

He could not control himself.

0:57:150:57:16

I don't know.

0:57:160:57:18

I just remember one time, he was trying to book an appointment.

0:57:180:57:21

I just remember thinking to myself, "This man is so paranoid,

0:57:210:57:25

"he's just going to attract a situation."

0:57:250:57:28

You know, because he was just asking for it.

0:57:280:57:30

It's, like, "Listen, man, if you are so worried about what you're doing, don't do it!"

0:57:300:57:34

I never acknowledged who he was, but he knew that I knew.

0:57:340:57:40

He started to request me.

0:57:400:57:42

I saw him outside of New York in...

0:57:420:57:44

Palm Beach, Puerto Rico,

0:57:440:57:47

Dallas, Washington.

0:57:470:57:50

He was always very guarded about what he would say.

0:57:500:57:53

And I would insist on having a conversation before we started.

0:57:530:57:57

I'm like, "I'm totally taking advantage of this,

0:57:570:58:01

"cos he's so smart and interesting."

0:58:010:58:03

I would, like, have my little rants about what was wrong with

0:58:030:58:07

New York City that needed to be fixed.

0:58:070:58:09

And he listened.

0:58:090:58:11

When I saw him out, with his wife, with his children,

0:58:150:58:17

he had it all together.

0:58:170:58:19

You know, what was strange with Eliot Spitzer was

0:58:190:58:22

he could be pleasant and charming and act very caring.

0:58:220:58:25

When my wife was reported as being seriously ill,

0:58:250:58:28

he called me several times.

0:58:280:58:30

And this is right in the height of some of our worst exchanges.

0:58:300:58:34

Couldn't have been any more pleasant.

0:58:340:58:36

But when he came after me in what was called Troopergate,

0:58:360:58:41

then it was apparent that this man really intended to destroy me.

0:58:410:58:45

In the Spitzer-Bruno war,

0:58:450:58:47

the biggest battle was Troopergate, so-called because of the way

0:58:470:58:51

state troopers may have been misused for political purposes.

0:58:510:58:55

It was an attack on Bruno that would boomerang on Spitzer.

0:58:550:58:59

It was a Sunday and I was reading the local newspaper,

0:58:590:59:01

the Albany Times Union, and there was a story on the front page.

0:59:010:59:04

Its suggestion was that Bruno had misused state helicopters

0:59:040:59:08

and other state travel for personal and political purposes.

0:59:080:59:12

A careful examination of Bruno's travel logs revealed that

0:59:140:59:17

state troopers had ferried Bruno on extended visits to see

0:59:170:59:20

Spitzer's political enemies.

0:59:200:59:22

Including a trip to C.V. Starr,

0:59:220:59:24

the office of Hank Greenberg.

0:59:240:59:28

Do you recall Senator Joe Bruno coming to see you?

0:59:280:59:31

Yeah, Joe Bruno would come from time to time to see me.

0:59:310:59:33

They're always trying to raise money.

0:59:330:59:35

When he came, did you talk Spitzer?

0:59:350:59:38

I don't recall that.

0:59:380:59:40

I don't think... If we did, it wasn't...

0:59:400:59:43

it wasn't a major topic of our conversation.

0:59:430:59:45

Spitzer's enemies were beginning to talk to each other.

0:59:480:59:51

To push the attack on Spitzer,

0:59:510:59:54

Joe Bruno hired a political operative

0:59:540:59:56

who revelled in his reputation as

0:59:560:59:58

the country's most notorious dirty trickster, Roger Stone.

0:59:581:00:02

There you have Mr Clean, the Sheriff of Wall Street,

1:00:021:00:05

someone for whom ethics is his signature issue,

1:00:051:00:08

charging that Bruno is dirty.

1:00:081:00:13

This is a tyrant, a megalomaniac.

1:00:131:00:14

A would-be dictator who really believes that in government,

1:00:141:00:17

you somehow either have the right, by getting a lot of votes or being

1:00:171:00:21

born to privilege, to just issue orders and people do what you say.

1:00:211:00:26

Stone was this, like, legendary figure.

1:00:261:00:30

He had his hair dyed.

1:00:301:00:32

He was a swinger, in literal terms.

1:00:321:00:34

Even in his own Republican ranks, he was regarded as a maverick,

1:00:341:00:39

if not gadfly, if not lunatic.

1:00:391:00:42

But 'crazy like a fox kind of a guy', I guess.

1:00:421:00:45

Sure, I believe in a Gonzo brand of politics

1:00:451:00:48

because you have to get people's attention.

1:00:481:00:50

In a world where there's so much competition for their attention,

1:00:501:00:53

politically, and then there's the rest of life.

1:00:531:00:56

Sports, food, entertainment, whatever it is.

1:00:561:00:59

You're competing for all of that because politics,

1:00:591:01:01

like all those other things, is entertainment.

1:01:011:01:04

In 1996, Stone was fired from the Dole presidential campaign when

1:01:041:01:09

it was revealed that he and his wife had marketed themselves as swingers.

1:01:091:01:12

"We are seeking similar couples,"

1:01:121:01:15

said the ad, "or exceptional, muscular, well-hung single men."

1:01:151:01:18

But that didn't stop Roger.

1:01:201:01:22

An elegant dresser with a taste for Martinis,

1:01:221:01:24

he reinvented himself as a charming secret agent, with a licence to kill.

1:01:241:01:29

He revelled in the body politic and his own bodybuilding.

1:01:291:01:33

Just below his neckline, he bore a tattoo of his hero, Richard Nixon.

1:01:331:01:38

Just a few weeks after Bruno hired Stone, a mysterious voice message

1:01:381:01:42

was left on the phone of Spitzer's 80-year-old father.

1:01:421:01:45

This is a message for Bernard Spitzer.

1:01:451:01:49

You WILL be subpoenaed to testify

1:01:491:01:52

before the Senate Committee on investigations

1:01:521:01:55

on your shady campaign loans.

1:01:551:01:57

If you resist the subpoena, you WILL be arrested and brought to Albany.

1:01:571:02:00

And there's not a Goddamn thing your phoney,

1:02:001:02:03

psycho, piece of shit son can do about it.

1:02:031:02:07

Bernie, your phoney loans are about to catch up with you.

1:02:071:02:11

You WILL be forced to tell the truth.

1:02:111:02:13

And the fact that your son's a pathological liar

1:02:131:02:16

will be known to all.

1:02:161:02:19

We spent some time and effort to see where it came from.

1:02:191:02:22

It came from an apartment that had been rented by either him

1:02:221:02:25

or a company that he owned.

1:02:251:02:27

And the voice, we were able to compare from the voice message

1:02:271:02:31

he'd left on the voicemail to appearances he had made on TV.

1:02:311:02:34

And we got a voice analyst to say it's the same voice.

1:02:341:02:36

And people who knew him said, "Yeah, that's Roger Stone's voice."

1:02:361:02:39

The tape did sound eerily like me.

1:02:391:02:41

Ultimately, private investigators that I retained determined that

1:02:411:02:46

there had been a tap on my phone at 40 Central Park South.

1:02:461:02:49

I now believe that a rogue unit of the New York State Police,

1:02:491:02:52

under the direction of Eliot Spitzer, was monitoring my calls.

1:02:521:02:55

In other words, I think the tape that was released was pasted together.

1:02:551:02:59

It was, er, it was a...

1:02:591:03:01

It was a put-up job.

1:03:011:03:03

The FBI called my dad's office and asked to come by.

1:03:031:03:09

On September 6th, 2007, Agent Katzman from the FBI

1:03:111:03:15

visited Bernard Spitzer at his Manhattan offices.

1:03:151:03:19

The questions didn't focus much on what Roger Stone had done,

1:03:191:03:25

or allegedly done, or the issues relating to the phone call.

1:03:251:03:28

It was more about me.

1:03:281:03:30

Did you think anything about that in retrospect?

1:03:301:03:33

In retrospect, it has crossed my mind.

1:03:331:03:35

And it crossed your mind in what way, since then?

1:03:351:03:37

Well, wondering whether this was part of the investigation

1:03:371:03:41

that led to my downfall.

1:03:411:03:43

The FBI showed up at my apartment.

1:03:491:03:53

They just showed up at 8am and they said, "We want to talk to you.

1:03:531:03:57

"We think you know what this is about."

1:03:571:04:00

Bruno fired Stone because of the phone call.

1:04:001:04:03

But Stone confirms that he was

1:04:031:04:05

then hired by wealthy, motivated Republicans

1:04:051:04:08

to stay on the Spitzer detail.

1:04:081:04:10

A few months later, Rich Baum, Secretary to the Governor,

1:04:101:04:14

received an email from Stone's consulting company.

1:04:141:04:16

The question is, how did the investigation of Spitzer begin?

1:04:201:04:25

The government claims it spotted a suspicious wire transfer of several thousand dollars.

1:04:251:04:30

What was interesting to me

1:04:301:04:31

is that the whole thing comes from a single money transfer

1:04:311:04:35

that sort of sent up a red flag.

1:04:351:04:38

A suspicious activity report.

1:04:381:04:40

Every day, there are thousands of these suckers filed.

1:04:401:04:44

The Federal Clearinghouse receives 3,400 suspicious activity reports,

1:04:441:04:48

or SARs, every day.

1:04:481:04:51

Someone had to have taken a very personal interest in this

1:04:511:04:55

particular transaction and kind of shepherded it through the process

1:04:551:04:59

in order for it to be the subject of a lot of attention and,

1:04:591:05:02

ultimately, be the basis for a case.

1:05:021:05:05

The SAR was filed by North Fork Bank, after Spitzer asked the bank

1:05:051:05:09

to keep his name off a 5,000 wire

1:05:091:05:12

to something called QAT Consulting.

1:05:121:05:15

My understanding is that they didn't even know what QAT Consulting was,

1:05:151:05:20

and that they called Morganthau's office.

1:05:201:05:22

Robert Morgenthau, the Manhattan District Attorney,

1:05:221:05:25

was surprised when the federal government came looking for help on how to prosecute escort services.

1:05:251:05:30

The feds just didn't do prostitution cases.

1:05:301:05:33

They also naively asked if it was common to prosecute customers.

1:05:331:05:37

The answer from Morgenthau's office was, no.

1:05:371:05:39

Once they figured out it was a prostitution ring,

1:05:411:05:44

then it seems to me you're at a juncture on the road here.

1:05:441:05:46

Once you realise that it's just

1:05:461:05:49

a governor with a hard-on,

1:05:491:05:52

the most you're going to get out of this is

1:05:521:05:54

a news story and a resignation.

1:05:541:05:55

I think the government has better things to do.

1:05:551:05:58

The US Attorney for the Southern District of New York was Michael Garcia,

1:05:581:06:02

the man who had tangled with Spitzer over the investigation of Hank Greenberg.

1:06:021:06:06

Normally focused on terrorists, mobsters and Wall Street,

1:06:061:06:09

Garcia's office was suddenly spending enormous

1:06:091:06:12

resources to go after a small escort service.

1:06:121:06:15

Garcia was a Republican.

1:06:151:06:17

Was this a political hit?

1:06:171:06:19

The Spitzer investigation began at the very moment when

1:06:191:06:22

the Justice Department was involved in a huge scandal of its own.

1:06:221:06:25

And the issue was whether the Justice Department was hiring and firing

1:06:251:06:29

US attorneys based on politics.

1:06:291:06:30

And whether it was going after powerful Democrats,

1:06:301:06:33

in order to get rid of them.

1:06:331:06:34

The only banking activity that seemed to interest them

1:06:341:06:37

was Eliot Spitzer's banking activity.

1:06:371:06:39

As we sunk deeper and deeper

1:06:391:06:43

into this horrendous banking scandal that's convulsing the country,

1:06:431:06:47

suspicious banking activity by Eliot Spitzer and the United States Government was on the trail.

1:06:471:06:54

After notifying superiors in Washington,

1:06:541:06:57

the US Attorneys' Office obtained permission

1:06:571:07:00

to wiretap the phones and emails of the Emperors Club.

1:07:001:07:03

The night before, it's, like, 8pm.

1:07:121:07:14

We're both sitting at our computers and all of this information,

1:07:141:07:17

our client information, is being sucked out of the computers.

1:07:171:07:20

And we're, like, "Oh, my goodness! We have hackers."

1:07:201:07:23

We download some kind of encryption software and try to,

1:07:231:07:27

like, save our information, whatever's left.

1:07:271:07:30

And then we go to bed as usual.

1:07:301:07:32

And, 6:30am, bang, bang, bang.

1:07:321:07:36

It's the FBI.

1:07:361:07:38

OK? Shock.

1:07:381:07:39

KNOCKS ON DOOR

1:07:391:07:41

Miss Suwal, are you home?

1:07:411:07:43

I was certainly unprepared... to just be woken up

1:07:431:07:47

out of my sleep at 6:30am and have the FBI come in their

1:07:471:07:51

bullet-proof vests, asking me if there are firearms in the house.

1:07:511:07:56

And all I'm thinking, like, "That cash is going to get us in trouble."

1:07:561:08:01

Ceci and Mark Brener had nearly 1 million in cash

1:08:011:08:06

in a safe in their closet.

1:08:061:08:07

One of the FBI men came in and he was, like,

1:08:101:08:12

"We are closing Emperors Club VIP."

1:08:121:08:15

And I was, like, "Oh! Oh."

1:08:151:08:18

My God, my stomach, my everything.

1:08:181:08:22

My baby. It was just surreal.

1:08:221:08:25

I mean, that was, like, my child.

1:08:251:08:28

The essence of what went on here was, in federal law terms,

1:08:281:08:34

a violation of the Mann Act.

1:08:341:08:35

Known as the White-Slave Act, the Mann Act made it a crime to

1:08:371:08:40

transport women across state lines for immoral purposes.

1:08:401:08:44

That is why federal prosecutors were particularly

1:08:441:08:47

interested in out-of-town dates with Angelina and Ashley.

1:08:471:08:51

In recent years, it's used to go after child prostitution rings.

1:08:511:08:55

It is never used to prosecute Johns or customers.

1:08:551:08:57

We have to look at these statutes in terms of standards of enforcement.

1:08:591:09:03

Is this statute, in fact,

1:09:031:09:05

being enforced that way uniformly across the country?

1:09:051:09:08

And the answer is, it is not.

1:09:081:09:10

Why, then, did the Department of Justice want the case?

1:09:101:09:13

After months of investigating Spitzer,

1:09:131:09:16

Michael Garcia's deputy suddenly sent emails to

1:09:161:09:18

Washington, seeking support for using the Mann Act.

1:09:181:09:21

Wiretaps revealed many customers who paid for escorts, all over the world.

1:09:211:09:26

But Garcia's office was only interested in prosecuting

1:09:261:09:29

one of the customers.

1:09:291:09:31

They pressured me, like they do on TV.

1:09:311:09:34

And they said, "We know you worked for this agency.

1:09:341:09:38

"And we want you to look at some pictures,

1:09:381:09:40

"And tell us if you recognise anyone," and I did that.

1:09:401:09:44

And Eliot Spitzer was in there and I said I recognised him

1:09:441:09:48

and I had seen him.

1:09:481:09:50

And I said, "Should I maybe have a lawyer?"

1:09:501:09:54

And they said, "Well, we want to keep this confidential."

1:09:541:09:58

The main thing about that meeting was that they were very insistent

1:09:581:10:02

and pressuring me in an uncomfortable way, you know,

1:10:021:10:05

for me to admit that I had sex with Eliot Spitzer.

1:10:051:10:08

You know, why him and why not anyone else?

1:10:101:10:13

The question remained,

1:10:151:10:16

how did the US Government first find out about Spitzer?

1:10:161:10:20

Was the FBI tipped off by one of Spitzer's enemies?

1:10:201:10:23

I was in a private club, an adult-themed club in Miami, called Miami Velvet.

1:10:251:10:31

There was a woman sitting at the bar.

1:10:311:10:34

I was sitting at the bar and we began a conversation.

1:10:341:10:36

I asked her what she did and she said she was professionally a call girl,

1:10:361:10:41

but she wasn't working this particular night.

1:10:411:10:43

I said, "What kind of clients do you have?"

1:10:431:10:45

She had athletes.

1:10:451:10:47

She had captains of industry.

1:10:471:10:49

She had prominent businessmen.

1:10:491:10:52

She had politicians and so on.

1:10:521:10:53

I said, "Well, like who?"

1:10:531:10:55

She said, "Recently,

1:10:551:10:56

"I almost had a date with the Governor of New Jersey."

1:10:561:11:01

I said, "Jon Corzine? You had a date with Jon Corzine?"

1:11:011:11:04

She said, "Who's he? I had a date with Eliot Spitzer."

1:11:041:11:07

I said, "No, Eliot Spitzer's the Governor of New York, not New Jersey."

1:11:071:11:11

She said, "Yeah, well, I'm not into politics."

1:11:111:11:13

I said, "Was there anything else notable?"

1:11:131:11:15

She said, "Well, he was kind of weird."

1:11:151:11:17

I said, "What do you mean?"

1:11:171:11:19

She said, "Well, he had these black knee socks and he kept them on the whole time."

1:11:191:11:23

So I ask you, what kind of guy fucks with his socks on?

1:11:231:11:25

The black socks thing isn't true.

1:11:281:11:30

He wore low-cut socks.

1:11:301:11:32

And he took them off.

1:11:321:11:34

The next day, I discussed it with my attorneys and I asked them to

1:11:341:11:38

contact the FBI and tell them what we knew in a formal letter.

1:11:381:11:41

Now, I don't claim that this was a revelation to the federal investigators.

1:11:411:11:45

It may have been a piece of the puzzle that they were putting together.

1:11:451:11:49

I may have started an investigation in an area they weren't looking at.

1:11:491:11:52

I have no idea. And I haven't made any claim.

1:11:521:11:55

The FBI insists that it never received

1:11:551:11:57

a letter from Stone's attorney.

1:11:571:12:00

It wasn't an addiction. It was a desire.

1:12:071:12:10

A need to find an outlet that was not within

1:12:101:12:12

the very confined world that I had been living.

1:12:121:12:18

Had you found a way to completely compartmentalise it?

1:12:181:12:21

Yep. Yeah.

1:12:211:12:23

And was that the beauty of it, in a way, as you saw it?

1:12:251:12:28

Look, I don't want to go there, but it did not affect governance and,

1:12:281:12:33

in fact, I can say with certainty

1:12:331:12:36

in February/March of '08,

1:12:361:12:40

people were beginning to say,

1:12:401:12:41

"Hey, wait a minute, their strategy is working."

1:12:411:12:44

We were winning the political races,

1:12:441:12:46

getting the economic agenda in place.

1:12:461:12:48

People were beginning to see that the chess game was playing out.

1:12:481:12:51

APPLAUSE

1:12:511:12:53

Join me in good faith. I will meet you with an open hand.

1:12:531:12:58

For we will realise this opportunity best

1:12:581:13:01

if we work together in a spirit of cooperation.

1:13:011:13:05

APPLAUSE

1:13:051:13:07

We'd been through so much.

1:13:071:13:09

And we'd had a very successful State of the State Address.

1:13:091:13:13

We'd had a great budget announcement.

1:13:131:13:16

And we really thought we were turning the corner.

1:13:161:13:20

In fact, we were at a bar and one of the senior advisers to the Governor

1:13:201:13:25

raised his glass, in what, I'm sure,

1:13:251:13:27

was the moment that jinxed us all, and said, "To turning the corner!"

1:13:271:13:32

Well, didn't turn the corner.

1:13:321:13:34

When did you first have an inclination

1:13:341:13:36

that you were going to have a serious political problem?

1:13:361:13:40

The Thursday when it was announced

1:13:431:13:50

that a case had been made against Emperors Club.

1:13:501:13:53

And when that came out, what did you think?

1:13:571:14:01

I said, "This is an issue."

1:14:011:14:04

The FBI wiretaps of the Emperors Club intercepted

1:14:071:14:10

more than 5,000 phone calls and text messages and more than 6,000 emails.

1:14:101:14:16

They knew where I'd been. They had dates and times.

1:14:161:14:20

On one trip, the booker and I were texting back and forth.

1:14:201:14:23

She would say, "He's there now and he's ready to see you."

1:14:231:14:27

And I would say, "OK, I'm heading over there."

1:14:271:14:30

They said, "Look, we already know all about you.

1:14:301:14:34

"We know you were at this hotel at this time and, ten minutes later, you were here. We know this."

1:14:341:14:41

The list of charges against the Emperors Club in the affidavit

1:14:411:14:45

was surprisingly detailed.

1:14:451:14:48

As a piece of writing, it was crafted like a mystery story, full of clues.

1:14:481:14:54

It teased the reader with a few sentences each on Clients 1 to 8.

1:14:541:14:58

And then five riveting pages on Client number 9.

1:14:581:15:02

And his one date with Kristen,

1:15:021:15:03

otherwise known as Ashley Dupre,

1:15:031:15:06

at the Mayflower Hotel in Washington DC.

1:15:061:15:10

The affidavit was filled with all sorts of crucial details

1:15:101:15:15

that allowed reporters to go off and find out who Client 9 was.

1:15:151:15:18

The Times won a Pulitzer because they did things like, they went to

1:15:201:15:25

every major hotel in Washington and figured out who was in that suite in which hotel,

1:15:251:15:29

cos they didn't know which hotel he was in.

1:15:291:15:33

The affidavit was full of steamy sexual banter,

1:15:331:15:37

and concerns about whether the client was difficult or even safe.

1:15:371:15:42

Was the writing meant to convict the accused, or embarrass the client?

1:15:421:15:46

An FBI guy with sandy-coloured hair

1:15:481:15:51

and a moustache brought up something from the wiretap.

1:15:511:15:55

He said, "We heard that sometimes, you were asked to bring sex toys."

1:15:551:15:58

And the guy kept pressing me.

1:15:581:16:01

It was like he wanted to get some kind of information about

1:16:011:16:04

some kinky sex stuff, or something juicy that happened.

1:16:041:16:07

You know, like, the Governor's into whatever.

1:16:071:16:09

And I flat-out said, "I don't see how any of that is relevant

1:16:091:16:14

"to your investigation to prosecute what you're trying to prosecute."

1:16:141:16:17

There was nothing. Maybe some sexy lingerie or something.

1:16:171:16:21

But that was all I ever took.

1:16:211:16:23

There were a number of leaks in this case.

1:16:231:16:25

Most obviously to the New York Times.

1:16:251:16:27

But a couple of New York TV stations also were onto the story.

1:16:271:16:31

And the Albany Times Union got sent the criminal affidavit

1:16:311:16:34

in the Emperors Club case.

1:16:341:16:35

And its reporter was told specifically to look at Client 9

1:16:351:16:38

and told that he was a wealthy New York public official.

1:16:381:16:43

Eliot Spitzer was never charged with any crime.

1:16:431:16:46

So you really have to wonder whether or not

1:16:461:16:49

the purpose of the investigation at some point became the leak.

1:16:491:16:53

Some breaking news this afternoon.

1:16:531:16:55

The New York Times is reporting that Governor Eliot Spitzer of New York

1:16:551:16:59

has informed some of his senior administration officials

1:16:591:17:02

that he had been involved in a prostitution ring.

1:17:021:17:05

I recessed the conference.

1:17:051:17:06

We went into my office, the whole conference, and had the TV on.

1:17:061:17:10

Cheers erupted on trading floors around the city

1:17:101:17:12

as word spread of Governor Spitzer's stunning downfall.

1:17:121:17:16

Some traders reportedly broke out bottles of champagne to celebrate.

1:17:161:17:20

They weren't the only ones.

1:17:201:17:22

Four diners at the 21 Club claim that they spotted Dick Grasso,

1:17:221:17:26

Hank Greenberg and Ken Langone celebrating Spitzer's fall with a magnum of champagne.

1:17:261:17:31

-You say that you were surprised by this news?

-Not at all.

1:17:331:17:36

I had no doubt about his lack of character and integrity.

1:17:361:17:39

It would only be a matter of time. I didn't think he'd do it this soon.

1:17:391:17:42

Or the way he did it.

1:17:421:17:44

We do know that Ken Langone told CNBC,

1:17:441:17:47

shortly after all of this broke,

1:17:471:17:50

that he had a friend who was in the post office.

1:17:501:17:53

I know for sure he went, himself, to a post office

1:17:531:17:57

and bought 2,800-worth of mail orders to send to the hooker.

1:17:571:18:02

-How do you know that?

-I know it.

1:18:021:18:04

Why is CNBC sticking a mic underneath his mouth?

1:18:041:18:07

Because he was...

1:18:071:18:10

enemy number one.

1:18:101:18:12

Spitzer's now. It's his turn.

1:18:121:18:14

And the guy's in the back of him, waiting to go and buy a money order.

1:18:141:18:18

And Spitzer goes up and buys 1,800-worth of money orders.

1:18:181:18:22

So you're saying that he said he had a friend

1:18:221:18:24

who stood behind Eliot Spitzer in the post office line,

1:18:241:18:27

overheard him sending a money order for a prostitute?

1:18:271:18:29

I mean, this is too amazing to be true!

1:18:291:18:31

It was totally coincidental that somebody tells me this

1:18:311:18:35

an hour before that.

1:18:351:18:37

It's God at work, I'm telling you.

1:18:371:18:38

Here's God saying, "Here's a little bit more for you."

1:18:381:18:41

Unless you think Ken Langone

1:18:411:18:43

has friends who call him from post offices,

1:18:431:18:45

my hunch would be that it was someone closer to him than a friend.

1:18:451:18:49

What do you mean, someone closer to him than a friend?

1:18:511:18:53

An employee.

1:18:531:18:54

A consultant.

1:18:541:18:56

Somebody that he hired to be there.

1:18:561:18:59

That would be my hunch. But do I know that?

1:18:591:19:02

Is he going to tell us that? He said it was a friend.

1:19:021:19:05

Why he volunteered this information,

1:19:051:19:06

he just couldn't stop himself from crowing.

1:19:061:19:08

I didn't have any private eyes on him.

1:19:081:19:11

I didn't have any dirty tricks guys on him.

1:19:111:19:14

None of that.

1:19:141:19:15

"I knew before the rest of you guys." Well, how did he know?

1:19:151:19:19

I don't know, but I did discuss it with the Governor

1:19:191:19:23

and the Governor felt like he was under surveillance.

1:19:231:19:25

He thought he was under surveillance.

1:19:251:19:28

The day I gave my proffer, I walked out of the courthouse

1:19:411:19:44

and there were journalists suddenly, everywhere.

1:19:441:19:48

I went straight to the bar. I had a couple of drinks.

1:19:481:19:51

And I was sitting in the bar and a news reporter sat down

1:19:511:19:54

next to me and said, "What do you think of the Eliot Spitzer news?"

1:19:541:19:57

And I was, like, "Oh, my God! They've got me already."

1:19:571:20:00

I was, like, freaking out.

1:20:001:20:03

The very day the news broke, there were messages

1:20:031:20:06

on Angelina's phone from reporters he wanted to talk.

1:20:061:20:10

Mysteriously, they knew her real name and her phone number,

1:20:101:20:13

information only available to the government investigation.

1:20:131:20:17

Angelina left town and never returned the calls.

1:20:201:20:23

I do not believe that politics in the long run is about individuals.

1:20:291:20:34

It is about ideas, the public good,

1:20:341:20:36

and doing what is best for the state of New York.

1:20:361:20:40

But I have disappointed and failed to live up to the standard

1:20:401:20:44

I expected of myself.

1:20:441:20:45

I must now dedicate some time to regain the trust of my family.

1:20:451:20:49

I will not be taking questions. Thank you very much.

1:20:491:20:52

I will report back to you in short order. Thank you very much.

1:20:521:20:57

Everybody was just in shock.

1:21:071:21:09

I was angry, and that was the last thing

1:21:091:21:11

I ever would have expected of him

1:21:111:21:13

to have done. My heart broke for Silda.

1:21:131:21:16

I knew Silda very well,

1:21:161:21:18

and his family.

1:21:181:21:20

They'd always seemed to have such a strong relationship and a bond.

1:21:201:21:25

Did you learn something about your wife that you didn't expect,

1:21:281:21:31

as a result of this experience?

1:21:311:21:33

I wish I hadn't needed to learn it.

1:21:361:21:38

But I learned that the depths of her forgiveness are deeper

1:21:381:21:43

than are ever to be called for.

1:21:431:21:47

After the initial announcement, Spitzer considered his options.

1:21:511:21:54

Despite her pain, his wife encouraged him to stay on as Governor.

1:21:541:21:58

Calls went out to the leaders of the State House and Senate.

1:21:581:22:02

No-one would support him.

1:22:021:22:04

The reservoir of goodwill was empty.

1:22:041:22:07

The combative style left him without friends and defenders in the end.

1:22:071:22:11

The only relevant question, really,

1:22:111:22:14

was, what could I do to minimise the continued pain to my family?

1:22:141:22:18

And it seemed to me that to fight to retain the office

1:22:181:22:23

at that point would make it even longer,

1:22:231:22:26

uglier and more painful than to take the alternate path.

1:22:261:22:31

So I resigned.

1:22:311:22:32

From those to whom much is given, much is expected.

1:22:321:22:37

I have been given much.

1:22:371:22:39

The love of my family,

1:22:391:22:41

the faith and trust of the people of New York,

1:22:411:22:43

and the chance to lead the state.

1:22:431:22:45

# You never know how much I love you

1:22:451:22:49

# Never know how much I care... #

1:22:491:22:53

I'm not the most politically correct person in the world,

1:22:531:22:56

and I saw Eliot later after this whole thing.

1:22:561:22:59

And I said, "You know, you could have run in France on this and won."

1:22:591:23:02

HE LAUGHS

1:23:021:23:03

# ..Fever when you hold me tight

1:23:031:23:06

# Fever In the morning... #

1:23:061:23:10

Eliot Spitzer's a joke. A national joke.

1:23:101:23:13

He is like the poster boy of a man out of control.

1:23:131:23:17

But these other guys aren't.

1:23:171:23:20

These other politicians aren't.

1:23:201:23:22

Bill Clinton is one of the most popular figures in American politics

1:23:221:23:26

and he got a blow job in the Oval Office.

1:23:261:23:28

I hope, when history looks back at that, they say, "Gee.

1:23:281:23:32

"Changed the way Wall Street operates.

1:23:321:23:34

"Went after environmental abuses.

1:23:341:23:37

"Went after the insurance company fraud. Went after this."

1:23:371:23:40

And then, on this side, "Had sex in a Washington hotel room."

1:23:401:23:44

He resigned 13 months ago and has remained largely silent until now.

1:23:551:23:59

With the US economy in turmoil,

1:23:591:24:00

the man once known as the Sheriff of Wall Street is back.

1:24:001:24:03

-Governor Spitzer, good morning. It's good to see you.

-Good morning.

1:24:031:24:06

I've heard rumours that he's trying to figure a way

1:24:061:24:08

to get back into public life.

1:24:081:24:10

I mean, the guy's got skin like that, OK?

1:24:101:24:13

I mean, that thick.

1:24:131:24:14

After his resignation,

1:24:141:24:15

Spitzer watched as his Wall Street reforms were attacked

1:24:151:24:19

and rolled back by investment banks and the federal government.

1:24:191:24:22

He had been on to the very issues that almost did us in,

1:24:221:24:25

the collapse of the financial system.

1:24:251:24:27

These were the guys that got us to the brink of disaster.

1:24:271:24:30

And Eliot Spitzer was after them years before the collapse occurred.

1:24:301:24:33

Goldman Sachs will have a profit

1:24:331:24:35

that we estimate of about 12 billion last year.

1:24:351:24:38

That is precisely what taxpayers gave them to help them

1:24:381:24:42

get bailed out from their AIG exposure.

1:24:421:24:44

Banks should be lending to people who have a repayment schedule, who produce something.

1:24:441:24:48

It should be an old-fashioned, boring business.

1:24:481:24:50

And then you grow an economy.

1:24:501:24:51

The outrage is because it is Our money that is subsidising

1:24:511:24:54

these crazy bonuses.

1:24:541:24:55

As Spitzer began reappearing in public, so did Ashley Dupre.

1:24:551:25:00

With uncanny timing,

1:25:001:25:01

it seemed that Ashley appeared on Fox TV or the cover of the conservative

1:25:011:25:05

New York Post whenever Spitzer made public appearances.

1:25:051:25:09

Hi, I'm Ashley Dupre.

1:25:091:25:11

I used to be on the front page of the New York Post.

1:25:111:25:13

Now, I'm writing for it.

1:25:131:25:14

That's right, I'm the New York Post's new advice columnist.

1:25:141:25:18

Ask me anything about love, sex and relationships.

1:25:181:25:21

A lot of people around the country are discussing Eliot Spitzer's

1:25:231:25:26

efforts to rehabilitate himself.

1:25:261:25:29

Senator Joe Bruno, of the great Capital District.

1:25:291:25:32

Good morning, Senator. Thank you for being with us.

1:25:321:25:34

-I think he needs therapy.

-I agree.

1:25:341:25:36

They ought to help him to get himself rehabbed...

1:25:361:25:39

-Assuming he can.

-..because people like this are very dangerous.

1:25:391:25:41

What do you think about an Eliot Spitzer comeback?

1:25:411:25:45

Look, I can't forecast it. I hope not.

1:25:451:25:48

I hope what he did...

1:25:481:25:51

-You think it was simply...

-Yeah, he thought he was above the law.

1:25:511:25:54

The law didn't apply to him.

1:25:541:25:56

What do you think is next for Governor Spitzer?

1:25:591:26:02

You know, we all have our own private hells.

1:26:021:26:06

I hope his private hell is hotter than anybody else's.

1:26:061:26:09

Ken Langone and Hank Greenberg are powerful enemies.

1:26:111:26:15

Did it ever concern you that they might have played a role in your downfall?

1:26:151:26:19

I guess it didn't concern me enough. Look, not to...

1:26:211:26:27

sort of mince words,

1:26:271:26:30

there are all sorts of rumours about

1:26:301:26:33

their helping, or taking credit, occasionally, for bringing me down.

1:26:331:26:38

My view is, I brought myself down,

1:26:401:26:44

and I will not try to blame others

1:26:441:26:48

or excuse my behaviour.

1:26:481:26:50

I did what I did, and shame on me.

1:26:501:26:53

If they were involved in unearthing it, OK, so be it.

1:26:531:26:58

That isn't my concern right now.

1:26:581:27:01

What I did in our investigations of the companies,

1:27:011:27:06

obviously, I believe was right.

1:27:061:27:09

My personal behaviour that led to where I am right now

1:27:091:27:12

was obviously wrong.

1:27:121:27:13

Violative of everything I hope I believe in.

1:27:131:27:16

And I make no excuses.

1:27:161:27:18

# Yeah! New York, stand up!

1:27:181:27:22

# Start spreading the news I'm leaving today

1:27:221:27:27

# I wanna be a part of it New York, New York... #

1:27:271:27:30

I opened up the 1040 today.

1:27:301:27:32

There was a huge panic about inflation and Arabs wanting to be

1:27:321:27:35

paid for their oil in a currency other than US.

1:27:351:27:38

But I think that's just a temporary rumour.

1:27:381:27:40

But it did have serious impact.

1:27:401:27:43

# ..Yo, it's so deep, I woke up in the city that don't sleep

1:27:431:27:46

# Got me up all night like a sink with a slow leak... #

1:27:461:27:51

There are couple of people that I'd like to do that to.

1:27:511:27:54

THEY LAUGH

1:27:541:27:56

OK, the Governor of New York is using our service.

1:27:561:27:59

How bad can what we're doing be?

1:27:591:28:01

Right?

1:28:011:28:02

# ..Known as where you go to become the person you want to be

1:28:021:28:05

# Look, you got some small-town blues you're trying to lose?

1:28:051:28:07

# We got a big city here to abuse your virtue

1:28:071:28:09

# It might help you or hurt you Sink or desert you

1:28:091:28:12

# Get close to bright lights might burn you

1:28:121:28:15

# Start spreading the news... #

1:28:151:28:16

Virtually worthless.

1:28:161:28:19

About, about a hundred...

1:28:191:28:21

About 100 million.

1:28:211:28:22

# ..to be a part of it New York, New York

1:28:221:28:24

# New York, New York

1:28:241:28:25

# These vagabond shoes These vagabond shoes

1:28:251:28:28

# They say if you can make it here You can make it anywhere

1:28:281:28:31

# Right to the very heart of it New York, New York

1:28:311:28:33

# I'm trying to be the new King of the Hill, fear me

1:28:331:28:36

# New York, big city of dreams

1:28:361:28:38

# And big schemes

1:28:381:28:39

# Petty hustlers on the corner

1:28:391:28:41

# Claim they doing big things

1:28:411:28:42

# Winning battles, never wars

1:28:421:28:44

# Doing dirt like chores

1:28:441:28:45

# Never know who's telling lies

1:28:451:28:46

# But the city keeps score... #

1:28:461:28:48

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