Spitzer, Eliot

views updated

Eliot Spitzer

Governor of New York

Born Eliot Laurence Spitzer, June 10, 1959, in New York, NY; son of Bernard (a real estate developer) and Anne (a literature professor) Spitzer; married Silda Wall (an attorney and philanthropic foundation executive), 1987; children: Elyssa, Sarabeth, Jenna. Education: Earned degree from Princeton University, 1981; Harvard Law School, J.D., 1984.

Addresses: Home—New York, NY. Office—Governor's Office, State Capitol, Albany, NY 12224.

Career

Law clerk for Judge Robert Sweet of Federal District Court, 1984–85; associate, Paul, Weiss, Rifkind, Wharton & Garrison, 1985–86; prosecutor in the Manhattan district attorney's office, 1986–92; attorney, Skadden, Arps, Slate, Meagher & Flom, 1992–94; ran unsuccessfully for New York state attorney general, 1994; attorney, Constantine & Partners, 1994–98; elected New York attorney general, 1998, re-elected, 2002; elected governor of New York state, 2006.

Sidelights

Eliot Spitzer won his bid to become governor of New York state in a 2006 election that marked a turning point for his fellow Democrats in both Albany and in Washington. The governor-elect's victory at the polls came thanks to his two terms as New York State attorney general, during which his office utilized an archaic state law to prosecute misdeeds by powerful Wall Street financial-services firms. In doing so, he became the rare state-elected official to enjoy national name recognition as well as "the single most powerful public official outside Washington," noted Fortune's Peter Elkind in a 2005 profile.

Spitzer hails from a well-to-do New York City family with extensive real-estate holdings. He was the third child born to Anne, a literature professor, and Bernard, a real-estate developer of residential high-rise properties in Manhattan. The Spitzer parents epitomized the quintessential New York City success story: both were the children of Jewish immigrants and raised in modest circumstances, and were living in a posh section of the Bronx called Riverdale by the time Eliot joined siblings Daniel and Emily in 1959. All three children attended Horace Mann, a private school in Riverdale, where the future governor captained the high-school tennis team and, like his siblings before him, earned excellent grades.

Spitzer's parents instilled a zeal to achieve as well as a strong sense of social responsibility in their children. The trio were expected to take turns leading the nightly dinner-table debate, and were raised with the idea that because they were more fortunate than others in the world, they should seek ways to give back. During one of his summer college breaks, Spitzer traveled through several southern states and took whatever day-laborer jobs he could find, most of which were tough, dirty, and low-paying. "I'd had a comfortable upbringing," he explained to Time reporter Adi Ignatius, "so I wanted to experience harder work, to see the world from a different perspective."

Though he had a near-perfect Scholastic Aptitude Test (SAT) score, Spitzer was turned down by his first college choice, Harvard, and enrolled at Princeton instead. During his sophomore year he was elected student government president, and after earning his degree in 1981 went on to Harvard Law School. There he served as an editor on the prestigious Harvard Law Review and worked for one of his professors, celebrity defense-attorney Alan Dershowitz, on the infamous Claus von Bulow case. Von Bulow was accused of murdering his socialite wife, and Dershowitz's success in having the original conviction overturned on appeal was the basis of a 1990 Hollywood film, Reversal of Fortune, which depicted the work that Dershowitz's team of Harvard law students put in on the case. Spitzer, said Dershowitz, "was just off-the-charts brilliant," reported New York Times journalist Danny Hakim. "The last thing anyone in my office thought was that he was going to become a politician."

During his time at Harvard, Spitzer met fellow law school student Silda Wall, and the two continued to date after both moved to New York City after graduation. Wall, a North Carolina native who shared her future husband's habit of putting in long hours at the office, joined a top corporate law firm in the city, while Spitzer clerked for a U.S. district court judge before joining Paul, Weiss, Rifkind, Wharton & Garrison, another prestigious private firm. But Spitzer was unhappy working as an associate in a large firm, and left to join the staff of Manhattan District Attorney Robert M. Morgenthau. Within a few short years he rose to head its labor-racketeering unit, which investigated ties between organized crime and labor unions.

Spitzer's first brush with the media came in early 1992, when his team's successful targeting of the Gambino crime family resulted in an end to the decades-old hold the mobsters had had on trucking contracts in the garment industry. Spitzer had devised a fake sweatshop to ensnare the Gambino associates, put an undercover state trooper in charge of it, and several months later managed to produce wiretapped conversations "with them saying, 'Look, if you try to switch trucking companies, we'll break your legs,'" Spitzer recounted in an interview with Holly Brubach for Vanity Fair.

Spitzer returned briefly to private practice when he joined Skadden, Arps, Slate, Meagher & Flom, but re-entered the spotlight when he entered the race for New York state attorney general in 1994. A virtual unknown, he spent heavily in the months leading up the Democratic primary, but finished in fourth place. His opponents wondered publicly about the true source of the funds that paid for the expensive political ads, and claimed he was skirting campaign finance laws. Those charges would return four years later when Spitzer ran once again for the job and made it past the primary race this time. He admitted that in 1994 he had borrowed some of the money, and that his father had then helped him repay the loan. Because of this, Spitzer's Republican opponent, incumbent Dennis Vacco, fought hard to portray him as a privileged scion but political novice who was attempting to buy his way into office. Spitzer fought back and returned the negative press, and squeaked past Vacco at the polls with a margin of just 25,000 votes out of four million; Vacco demanded a recount and did not concede the race until several weeks later.

Spitzer was sworn in as New York state's attorney general in January of 1999. During his first term, Spitzer prosecuted power plants in Ohio and other Midwestern states whose emissions, environmental studies had shown, were actually being carried so far east that they were polluting the skies above New York. His office sued the utility companies who owned the plants under the terms of the Federal Clean Air Act, though enforcement of this law was customarily the job of federal bodies such as the Environmental Protection Agency.

Emboldened by the success, Spitzer soon realized that a little-known state law called the Martin Act, which dated back to 1921, might also be of use. The Martin Act gave the attorney general the power to subpoena witnesses as well as documents from a company doing business in the state if his or her office believed there was evidence of fraud. The Martin Act was rarely invoked except in real-estate cases, but Spitzer deployed it against several big Wall Street brokerage firms whose media-savvy analysts had been publicly recommending stocks during the late 1990s dotcom boom; in reality, associates at the firms privately reviled the stocks as ridiculously bad investment opportunities. Spitzer traced a trail that seemed to hint that these bigname brokerage firms promoted certain stocks in return for winning the company's investment-banking business.

Spitzer subpoenaed e-mails from several companies, and Merrill Lynch was the first to comply, sending over some 94,000 pages. Spitzer's office found one exchange between Merrill Lynch associates hinting that one Internet company had chosen to use another investment bank for its business, and in a retaliatory move, Merrill Lynch analysts had downgraded its stock. The quid-pro-quo arrangement was said to have been a well-known secret on Wall Street, but Spitzer fumed that ordinary investors had been so baldly deceived by some of Merrill Lynch's star analysts, who appeared frequently on television and in the print media to counsel the general public about investment opportunities. Merrill Lynch quickly settled once Spitzer made the incriminating e-mails public, as did several other investment firms over the course of 2002.

Spitzer's crusade became known as the Global Settlement case of 2002, and turned him into the most hated man on Wall Street. He was even derided in some conservative media outlets as an enemy of capitalism and free-market competition. "There will always be apologists for the powerful and politically connected who commit a crime," Spitzer retorted to the criticism at a press conference, according to Elkind's Fortune profile. The attorney general then reminded his audience that his office's zeal had been aimed at ending actions that were "costing real investors billions of dollars. Folks who were saving 50 bucks a week, putting it into the market into savings."

Not surprisingly, the Global Settlement issue made Spitzer a hero in the eyes of the public, and also served to catapult him onto a national stage. The case virtually secured his re-election bid for attorney general in 2002, which he won by a comfortable margin of votes. Several weeks later, Time magazine named him "Crusader of the Year" in its annual recap of the biggest newsmakers of the past 12 months, repeating a new title given by others to him as the new "sheriff of Wall Street." His second term in office resulted in several more notable battles against some of the world's most powerful financial institutions, including a late trading scandal in which Spitzer's office went after brokerage firms that handled mutual funds and allowed some of their more elite clients, such as hedge funds, the privilege of trading after the close of the market. In 2004, Spitzer went after former New York Stock Exchange (NYSE) chair Dick Grasso, whose impressive salary deal of $187.5 million had raised some eyebrows, since its generous terms were agreed to by the members of NYSE board, who represented companies that relied on the remaining in the good graces of both Grasso, as chair, and the NYSE. That 2004 case served to deepen resentment against Spitzer behind closed doors on Wall Street and in the boardrooms of corporate America; editorial writers for the Wall Street Journal even began dubbing him the "Lord High New York executioner."

Rumors that Spitzer's high-profile cases were merely preparation for a larger public role had swirled around his name since 2002. Midway through his second term, he surprised few with his announcement that he would be seeking the Democratic nomination slot in New York's 2006 gubernatorial race. In the party primary in September of 2006, Spitzer bested a Long Island office-holder, Tom Suozzi, and went on to win the November race by one of the biggest margins in New York state electoral history. He took nearly 70 percent of the vote, easily defeating Republican challenger John Faso, and became the first democrat to win the office since Mario M. Cuomo left office in 1995. Spitzer's running mate was David Paterson, a state senator from Harlem, who became the first African American ever elected to the lieutenant governor's office in New York state.

Spitzer, who lives with his wife in one of his father's high-rise buildings near Central Park, runs every morning in the park, and maintains an exhausting schedule that often stretches past the 12-hour mark. Silda Wall Spitzer left private practice to head a nonprofit Spitzer family foundation that encourages schoolchildren to volunteer their time and talents. With such an unusually high public profile for a state officeholder, Spitzer is often mentioned as a possible contender for a national leadership position, perhaps even the White House. For the next four years, however, Spitzer was planning on fulfilling his campaign slogan—"Day One, Everything Changes"—in Albany come January of 2007. In his victory speech, he promised "a new brand of politics—a break from the days when progress was measured by the partisan points you scored or the opponents you beat," New York Sun reporter Jacob Gershman quoted him as saying. "From here on out we need a politics that binds us together, a politics that's forward-looking, a politics that asks not what it's in it for me, but always what's in it for us."