"What I'm most proud of as attorney general is that we were willing to walk into the buzz saw of some very powerful interests and never back down." "Look, I had a simple rule:" "I never asked if a case was popular or unpopular, never asked if it was big or small, hard or easy;" "I simply asked if it was right or wrong." "Man:" "I will never forget that moment." "Woman:" "I was dumbfounded." "Man:" "I can't say I was sorry." "♪ Start spreading the news... ♪" "Man:" "It was like, "You've gotta be kidding."" "♪ I want to be a part of it... ♪" "( siren blares )" "♪ New York, New York... ♪" "Man:" "He was going to be our first Jewish president." "♪ These vagabond shoes... ♪" "Woman:" "There was corporate corruption;" "greed had seemed to hit its peak;" "and he was fighting all of that." "♪ Right through the very heart of it ♪" "♪ New York, New York ♪" "♪ I want to wake up in a city ♪" "♪ That doesn't sleep ♪" "♪ To find I'm cream of the crop ♪" "♪ On top of the heap ♪" "♪ These little town blues ♪" "♪ Are melting away ♪" "♪ I'II make a brand-new ♪" "♪ Start of it... ♪" "Narrator:" "On the face of it, the fall of Governor Spitzer was just another sex scandal." "Was it a private matter?" "Or a public reckoning?" "♪ Oh New York... ♪" "Narrator:" "And what of the timing?" "A few months after his resignation, the reckless banks Spitzer had policed brought the economic system close to failure." "♪ I'II make it anywhere ♪" "♪ New York... ♪" "Everyone agreed on one thing:" "no one expected him to go down like he did." "♪ New York. ♪" "It is to a certain extent a very classic tale, perhaps, of an individual who from the exterior appears to have been captured by hubris;" "a sense of standing for virtues and, I think, working very hard to articulate and work towards establishing rules and boundaries, but then, himself, slipping and falling." "And this goes back to the days of Greek mythology." "This is not-- it's not a new story." "HuIbert WaIdroup:" "In New York, everyone-- everyone's like some sort of an animal, you know?" "They're some sort of an animal." "They're hungry to make more money, hungry to get more sex, to date a prettier girl or a richer guy." "Just-- just hungry, just greedy, just animals." "This Chinese philosopher said that human beings are a hybrid between animals and angels, that we're capable of animalistic behavior." "Consider sex and war." "But we're capable of doing beautiful things too, Iike art, music or making love, you know?" "What" " I was just contemplating that." "I was like, "Wow, I kinda dig that." "We're half angel, half animal."" "Good afternoon." "Over the past nine years-- eight years as attorney general and one as governor-- I have tried to uphold a vision of progressive politics that would rebuild New York and create opportunity for all." "We sought to bring real change to New York, and that will continue." "Today, I want to briefly address a private matter." "I have acted in a way that violates my obligations to my family, and that violates my, or any, sense of right and wrong." "Narrator:" "Spitzer's wrong turn surprised everyone, because he had a reputation as Mr. Right." "As Attorney general of New York he was known as the Sheriff of wall Street, someone determined to take on powerful interests on behalf of those who couldn't afford to." "lloyd Constantine:" "This was a guy who understood that he had been a member of the lucky-sperm club." "He was really smart." "He was wealthy." "So he had gotten a Iot of breaks in life, and he wanted to-to-- to use that, you know, to better the world." "Narrator:" "Spitzer's father Bernard was a seIf-made reaI-estate tycoon who sent his son to an elite prep school," "Princeton and Harvard Law school, where he met his wife-to-be SiIda wall." "His father had pushed him to succeed." "We debated issues around the dining-room table." "And so I guess it was more of a symposium than a touchy-feeIy environment." "We were taught not to embrace a notion, a principle, a fact merely because somebody had asserted it." "challenge them, push back-- that was part of the conversation." "Narrator:" "For a reaI-estate family," "monopoly takes on a special edge." "Sure, it's a game." "But it's also a way for a father to teach his son some lessons about money and power." "Look, I don't want the impression to be that he wasn't-- he was devoid of compassion, but it is true he foreclosed on me in a monopoly game." "Narrator:" "Bernard Spitzer tricked his son into selling" "boardwalk and Park place for cheap, then wiped him out when he landed on a built-up Boardwalk." "The lesson:" "don't trust anyone." "But I think really what he was trying to do was teach me how the market worked." "And monopoly's a fun game, but I had overbuiIt and overextended and he said, "I'm sorry, that's it." "There are consequences and you've learned a lesson."" "Interviewer:" "What was your response at the time?" "Oh, I cried." "I think I was about 10." "I mean, I was a kid." "It was-- it was-- it was no fun." "I wanted to" " I wanted to be bailed out." "Constantine:" "Bernie is a guy who judges people." "That's a tough thing for a kid." "I do remember him watching Eliot and me play tennis." "And after one particular serve and volley of mine, which I won, he gave me that victory sign, and he said," ""Yeah, that's exactly what to do to him."" "EIiot's strategy is to stick with his core game:" "hard shots, serve and volley." "Spitzer:" "But my reflexes are good." "Yeah!" "I Iove to get in to net." "Good shot." "As I say, the game I used to have keeps getting better." "Narrator:" "EIiot Spitzer's notion of public service was like his tennis game:" "attack attack attack." "Good morning, and thank you for coming." "Narrator:" "As attorney general, Spitzer saw an opportunity to do more than enforce the Iaw." "He wanted to use the Iaw to change the way society worked." "He sued coaI-fire plants in Ohio for causing pollution in New York." "He sued general electric for dumping poisonous waste into the Hudson River." "He uncovered fraud in the pharmaceutical industry, where pill makers hid the damage done by their drugs, fought for minimum wage for deIiverymen and forced upscale restaurants to hire more women." "He would take them all on, because no one else would." "Peter EIkind:" "There's a reason why EIiot Spitzer became famous as New York's attorney general." "The job had been a second-tier position." "It had been focused on regulating crooked car dealers." "And EIiot Spitzer focused on wall Street, on the biggest guys around." "And Spitzer's premise, which was right, was that Wall Street can't be left to regulate itself or terrible things will happen." "When I assumed office, which was January of 1999, we were in a period where Wall Street and investment bankers were, to use Tom Wolfe's great phrase, masters of the universe." "Narrator:" "To protect the average citizen," "Spitzer was willing to prosecute bankers and CEOs" "like any other lawbreakers." "Spitzer:" "In the course of this investigation, my office developed evidence indicating that analysts gave misleading advice that helped the brokerage's investment banking clients, but harmed individual investors." "When we first got into this, everybody said," ""Well, what's the state attorney general's office in New York doing going after this problem?" "ShouIdn't this be the SEC?"" "And my response was, "Yes, but they haven't." "And if they haven't, and there are investors being ripped off, we will do it."" "Narrator:" "wall Street analysts advise buyers on what stocks look good or bad." "With the rise of the Internet, analysts became superstars, because only they seemed to understand how to value Internet companies." "As stocks soared, so did the value of analysts who knew how to pick them." "The more money they made, the more potential there was for abuse." "Henry Blodget was a failed writer who stumbled into being a top research analyst when, as a young stock picker," "By 2001 he was working for merrill Lynch, making $12 million a year." "When one of merrill's customers sued BIodget for phony research," "Spitzer's team investigated him, using an arcane law called the Martin Act to subpoena thousands of documents and emails in search of fraud." "As Spitzer's team pored through BIodget's emails, they kept coming across the term POS." "They thought POS was short for "positive,"" "for stocks BIodget wanted customers to buy." "But then they stumbled upon BIodget's keyword chart." "BIodget's emails were honest and brutally downbeat." "meanwhile his official stock ratings were mostly upbeat, urging customers to buy buy buy." "Spitzer:" "Mr. and Mrs. Smith, whose IRA or 401 (k) is being invested, they are the sacrificial lambs and being used to prop up the stock so that the MerriII Lynches of the world can then go to the companies and say, "See what we're doing for you?" "Bring us your investment banking business."" "It was fundamentally corrupt." "Narrator:" "It was insider's monopoly, guided by a basic fundamental principle." "You don't go south of 14th Street except for one reason:" "to make money." "( RB music playing )" "The guys on the floor, all they cared about was makin' money." "That's what-- that's-- that's the American way." "Narrator:" "Jack Grubman was a highly respected telecommunications analyst for Salomon Smith Barney." "♪ Close shooting don't kill no birds... ♪" "He became famous for pumping up ATT's stock to please his boss Sandy WeiII." "Then WeiII helped Grubman get his twins into an exclusive preschool." "Grubman's payday for research?" "$20 million a year, enough to buy a palace on the Upper East Side." "♪ Take food from my family's mouth ♪" "♪ Before the money came... ♪" "Narrator:" "Grubman's career ended when he relentlessly pumped up the stock of a company called WorIdCom, just before it went bankrupt." "Do you regret, in hindsight, staying so bullish on the company for so long?" "Nothing-- look, why are you harassing me" " Iike this?" " I'm not harassing you." "I'm just asking you questions about the company that you cover." "This caught you completely by surprise, you say." "Yes." " Thank you." " Yeah." "♪ Before the money ♪" "♪ Started rollin' in. ♪" "There was always this-- internally we called it the come-to-Jesus moment, where we went to whoever it was we were prepared to sue and/or, you know, go after, you know, for doing something wrong" "and we'd say to 'em in no uncertain terms," ""Tell us why, given this fact pattern, we would be wrong to sue your ass."" "Spitzer:" "early on in the investigation, the MerriII Lynch lawyers, they came into my office." "They looked at me and they said, "You're right, but we're not as bad as our competitors."" "I was a prosecutor for a lot of years." "I never, you know, heard a defendant stand up in court and say, "Yeah, I robbed three people, but somebody over there robbed five, so therefore I'm not bad."" "I said to MerriII Lynch-- they wanted to settle the case and pay some money and said, "We will pay a big sum of money if you promise to keep the information secret."" "And I said no." "Because my job as attorney general is to change the system so that it's fair and will be honest." "And if we seal the evidence and you pay a check and we don't change the system, I'm basically being bought off." "My office has reached an agreement that will help ensure the integrity of investment advice on which investors often depend." "Narrator:" "BIodget and Grubman paid million-dollar fines and were banned from the securities industry for life." "But their firms bought their permanent silence with handsome severance packages." "In exchange for Grubman's silence on the details of his firm's behavior, salomon Smith Barney paid Grubman $30 million." "The nation's best and brightest were lured to wall Street in search of fast fortunes." "The money they made flowed everywhere-- penthouses, yachts, golf cIubs-- and to the oldest sector of the global economy ready for a new cash infusion." "I have rich lovers." "♪ Love for sale... ♪" "I don't go out with poor men." "I've got no reason to do so." "♪ Appetizing young love ♪" "♪ For sale... ♪" "I don't call prostitution and escorting selling your body." "♪ Love for sale. ♪" "You don't sell, you rent." "I Iove my bank account full." "It's better than empty." "♪ Sex for sugar, sugar for sex ♪" "♪ What you got, girl, it's so unfair ♪" "♪ I Iike the way you move so keep it right there ♪" "♪ Or you can do what you wanna do ♪" "♪ I'm just glad I am in front with you ♪" "♪ But I don't mind being butt high ♪" "♪ 'Cause I'm-a touch you where the sun don't shine... ♪" "WaIdroup:" "There's a street in SoHo where a lot of artists set up." "I was selling my paintings one day." "And this charismatic fellow comes along and he's got a beautiful girl with him-- this girlfriend at the time, natalia." "Said, "This is the number-one escort in New York City." "I run New York's number-one escort agency."" "I've never seen you naked." "You think your body's good enough?" "Waldroup:" ""I want to buy the biggest, most expensive painting you've ever done."" "He gives me his business card." "I still have an old souvenir." "♪ Electricity was definitely there ♪" "♪ I got shocked when I touched your hair... ♪" ""New York confidential, rocket fuel for winners."" "That's all it says." "Narrator:" "In 2004, New York confidential was at its height, making millions by offering clients "the girlfriend experience,"" "a few hours with naughty playmates who looked like college cheerleaders." "I had $1500 in $100 bills in my purse." " Oh God." " I pulled it out." " only 15?" " ( laughing )" "We started hanging out even after I did the painting." "And one day we're in the back of a Town Car, and he says, "Hey, grab the phone," you know." ""Just talk to the guy, and try to help him out." "You know, he's probably looking for a girl to spend the night with."" "I'm on the cell phone and... you know, my adrenaline is going." "And I'm like, okay, you know," ""We have a brunette, a blonde or do you Iike ethnic girls?"" "You know, I do a deal for, I don't know, 3,000, 4,000." "He says, "Great, you just made 400 bucks from a five-minute phone call." "I'II give you 10%¤." "Why don't you just come to work for me for a little while, you know?"" "Man:" "That craigslist ad pulled well, huh?" "WaIdroup:" "That's where it all began, where I started working for Jason." "How do you know she's a no?" "We don't get that many calls for Asians." "One hot Asian is-- is plenty." "We need more blondes, hot blondes." "They might look good in person, but they got a shitty photographer, you know?" "Hot blondes." "She's a definite yes." "WaIdroup:" "When a businessman spends, say, $2,000 an hour, he wants to read the reviews, just like if you were to buy a car." "You want to read the reviews." "How much mileage does it get?" "Does it have air conditioning, four-wheel drive?" "What-- what's the difference between paying $1 ,000 an hour for this young lady, when I can open up the "Village Voice"" "or go on craigslist and I can pay $200 for another young lady?" "You know." "And I'd say, "well, sir, sure, you can-- you can have a cheeseburger or you can have lobster."" "You're gonna have such a good time with one of New York Confidential's girls that you're gonna go to work Monday morning with a smile on your face." "You're gonna make more money for you and your family, and then you're gonna call me up next week and you're gonna say, 'Herb, who can you send me out today?"'" "Natalia:" "You can make the assumption that they're not being sexually satisfied in their marriage or there's baggage or whatever's going on there." "And then... you know, what's their option?" "Do they get divorced?" "Do they split up their family?" "Or do they seek, you know-- do they go see an escort?" "WaIdroup:" "One young lady was a schoolteacher;" "another girl was a-- she was an athlete trying to make it to the olympics." "Actresses, singers, models." "natalia:" "Jason would give his business card to every girl that he met." "And half of them would call and then a quarter of them would start working." "Some girls would offer me cash-- tips." "Some girls offered me sex." "I don't think I ever got a tip or sex with ashley, yeah." "Narrator:" "ashley was ashley Youmans, later Ashley Dupré, who would become famous for having sex with EIiot Spitzer." "As an escort, she got her start at New York confidential, where her working name was Victoria." "It was through one of those straight pitches that Jason found ashley." "WaIdroup:" "Jason recruited her from the Gansevoort hotel." "Narrator:" "At the Gansevoort, ashley was a bottle girl trying to break into the music business." "She was just light." "She was just happiness." "She was like a great bubbly 19-year-oId girl." "♪ Oh it's something to see ♪" "♪ That's so pretty... ♪" "Waldroup:" "She was a good American," "New Jersey italian girl." "natalia:" "Guys loved her." "She had great pheromones or something, you know?" "Waldroup:" "Within three or four weeks, you know, her rate was going up there to 2,000 an hour-- with a two-hour minimum." "Natalia:" "Her reviews were awesome as well." "I think she got a-- she got something like 12 consecutive 10/10 reviews." "After we did our first appointment together," "I told Jason, I'm like, "You gotta book this girl."" "First of all, she's great, but she also has a perfect coochie." "Narrator:" "ashley's reign ended when New York Confidential was raided by local police." "No customers were arrested, but HuIbert was convicted of promoting prostitution and sent to jail for eight months." "ashley would move on to work for another escort service." "For every New Yorker who's been ignored, left out, who's been told "You can't fight City hall"" "so many times they've come to believe it, for every New Yorker without a voice, listen:" "there's one strong enough for all of us." "( applause )" "Spitzer:" "For most of our history we have turned a blind eye to the violations of duty on the part of white-coIIar criminals." "We can understand it." "There is something viscerally terrifying about street crime." "And until you are safe in your home, you worry a bit less about what is often a bit more amorphous, which is the nature of white-coIIar crime, which is more subtle theft." "EIkind:" "Spitzer broke the mold of how you prosecute a white-collar case." "He went after it fast and hard, and he got things done in a period of weeks or months that would take the federal regulators years." "He wanted to change the system." "So he'd get the goods on a company or on people and use it as leverage to institute reform, to force the industry to change the way it did business." "A Iot of people thought that was outrageous." "Narrator:" "Spitzer hired a team of dedicated lawyers who were drawn to his mission." "EIiot just wasn't afraid to stand up to corporate bad guys." "And, you know, I think there was some appreciation for the fact that, you know, he'd punch 'em in the nose if that's what was appropriate." "The first day I came in, eliot said, "What's next?"" "And I said, "Well, mutual funds, I think."" "Boy:" "How much will I grow?" "How strong will I be in five years?" "In 10 years?" "Where does my future start?" "Shh." "Narrator:" "Mutual funds were supposed to be a safe place for working people to put their money." "But there were rumors that sophisticated investors were playing games with those funds." "Brown:" "I went off and I started studying them, trying to figure out how to get at this issue." "while I was immersed in this, we got a tip." "( phone ringing )" "Noreen Harrington:" "I Ieft very pathetic voicemail messages." "( phone beeps )" "You know, reporting a crime is hard." "You have to earn your credibility." "You have-- it feels like you're being interrogated." "Narrator:" "Noreen Harrington had a strong financial background." "After 1 1 years at GoIdman Sachs, she ran the global fixed income department at Barclays." "Then she went to work for Eddie Stern, the son of a weII-known pet-food billionaire." "Eddie Stern's hedge fund, Canary Capital, was producing spectacular results at a time when the stock market was tanking." "The big profits, said Harrington, came from manipulating mutual funds." "They were doing something really egregious, which is late trading." "( bell ringing )" "Narrator:" "At the track, customers bet on horse races before the race starts." "But what if there were a special club that allowed you to bet on races after they were over?" "There was a club like that on Wall Street for trading mutual funds." "Brown:" "Mutual funds are only priced once a day," " right at 4:00." " ( bell ringing )" "So during the day, you call in and you buy a mutual fund, they'II say, "Fine, "we're gonna fill your order at today's 4:00 price."" "If you call in at 4:05, they're supposed to say," ""Fine, we'll fill your order at tomorrow's 4:00 price."" "Narrator:" "But what if something happened at, say, 4:05 to make the fund more valuable?" "Brown:" "If you could go in as an investor and call at 4:1 0, having heard that news, go back and buy it at the 4:00 price, you could just buy it, wait for it to go up the next day and sell it" "and take some money out of it." "In one case, they went to a bank and the bank put a computer back-office terminal into Canary capital, Eddie Stern's fund." "Eddie might enter 40 trades prior to 4:00." "Now let's say it's 10:00 at night;" "they cancel the 30 that lost money and keep the 1 0 that made money." "And so this was a bank, completely, you know, working with one client to destroy the profits owed to all the people in those funds." "Narrator:" "The name of the bank was Bank of America." "We spent a Iot of time saying this-- this can't be happening." "I mean, no one would be so, you know, so sleazy." "Harrington:" "I remember it was like 9:00 at night." "And somebody said," ""Wow, we just picked these people off for 10 million."" "I'm thinking, "How do you trade mutual funds at 9:00?"" "I mean, you know, you're a 20-year veteran, but all of a sudden you feel like a rookie." "Narrator:" "When Stern was confronted with the evidence against him, he cut a deal to cooperate with Spitzer's investigation, which laid open the predatory nature of wall Street." "Brown:" "You have some expectation as an investor in the stock market, that there are big big boys out there who probably have better information than you, and it's precisely to get out of that that you would go to mutual funds." "And the idea that there were some sharks in the tank with you, with all these thousands of minnows, was really sort of-- just really surprising." "I sent out the first subpoena at the end of June of '03." "And on September 4th, we announced a settlement." "And what I'd Iike you to do now..." "Harrington:" "Three months after I finished speaking to them, for EIiot Spitzer and his staff to have indictments, settlements, was astounding to me." "Today's announcement is merely step one." "One of the questions I get asked a Iot was," ""Did you believe you would never work again?"" "And I think about that question a Iot, because what you're saying by asking that question is:" "by doing public service and helping 95 million people and stopping a crime, this industry wouldn't want you?" "( siren blaring )" "Narrator:" "while Spitzer stirred popular rage at wall Street, there were a few people who were delighted to see the bankers take home big paydays, as revealed in the actual cell phone of one of the bookers of the escort service called The Emperors club." "Woman: "I keep hearing about all the raises on Wall Street." "And usually that would be good for us." "Hmm, maybe things will pick up." "Take care, hon!"" "The Iawyer-banker thing is true." "There are quite a Iot of them." "But there are lots of stereotypes, you know, that it's this crazy drug-fueIed sort of party scene." "But generally, you know, people are respectful." "They just want to have a nice time with someone." "Many of my clients are nicer to me than many many of the dates I've been on." "In fact," "I've stopped dating in the real world, you know?" "Partly because it wouId be complicated and partly because my standards lifted." "honestly, you know." "( laughs )" "natalia:" "The pictures of ashley didn't surface right away." "The EIiot Spitzer story broke, and then all these media outlets were calling me to do interviews." "And so I did a few interviews without even knowing that ashley was-- my ashley was our Victoria was Kristen was all these-- you know, who she was." "Tonight EIiot Spitzer resigns as Governor of New York." "Where will he find comfort in this difficult time?" "I was shocked when it all happened." "But then when I saw ashley's picture flashed on the news," "I was like, wait a second, you know?" "I was like, "Oh my gosh!"" "I couldn't believe it." "She fit the bill." "♪ My fist to the sky... ♪" "Man: "The New York Times" website identifies" "Governor Spitzer's mystery call girl as Ashley Alexandra Dupré." "Narrator:" "AII over papers and television she was called "Spitzer's girl."" "Known as "Kristen" at The Emperors club," "ashley Dupré was determined to take advantage of her sudden opportunity." "natalia:" "clearly ashley was trying to make a name for herself." "Narrator:" "After the scandal broke, Ashley's MySpace page, with one of her songs available for streaming, got over seven million hits." "To help package her career, she brought onboard two lawyers, a publicist, and a management team." " ♪ So you better hurry up... ♪" " Narrator:" "ashley's manager arranged for an interview with Diane Sawyer." "Everyone played their part." "ashley dressed up as the good girl gone wrong, and Diane Sawyer played the role of the scolding mom." "You say "the work,"" "but you haven't said the words." " The work?" " Prostitution." "Escort." "Escort." "What's the difference?" " Escort." " What's the difference?" "She catered to the stereotypes of hookers, which are, you know, "Poor me." "I had a troubled childhood." "I made a mistake," which is such a load of crap." "It's" " I can't change the past." "I can only try to take what I've learned and-- and apply that to my future." "We are being paid ridiculous amounts of money." "None of these women are forced to do this and they're not stupid." "Many of the professional prostitutes that I know are very smart women who weren't abused." "You know, don't have a mental disorder." "They just happen to believe in this kind of work." "Narrator:" "So do their customers." "The cell phone of the booker from The Emperors club offered a glimpse of the club's weII-heeIed client list:" "an Oscar winner, CEOs and high-powered investment bankers." "The club treated them like emperors." "And why not?" "They made more money than kings." "They enjoyed having their way with women and the world." "So it came as no surprise that they resented it when the New York Attorney general started to cramp their style." "Reporter: "The Economist" magazine calls him" ""wall Street's scourger-in-chief."" "Reporter #2:" "He's gone from complete anonymity to what "Fortune" magazine calls "the most feared man on wall Street."" "Spitzer has deputized himself as the Sheriff of Wall Street and is leading the posse for retribution, restitution and reform." "Narrator:" "Spitzer appealed to Democrats and republicans." "He was a Iaw-and-order liberal who wasn't afraid to punch back." "When you go down to wall Street, like when you walk into a building on wall Street, is it like turning the light on in the kitchen and the roaches just scatter everywhere you go?" " well, y'know" " Are you a beam of Iight" "It is-- there was a day that I had to walk into a hedge fund..." "Ken Langone:" "What I was intrigued by-- the number of people that were terrified by him." "I mean, they literally were terrified at this guy coming after them." "Spitzer:" "The issue of CEO comp was something I had been trying to get people to take a look at." "It was off the rails." "♪ I'II take what I want ♪" "♪ I'm a bad go-getter, yeah ♪" "♪ Ha!" "Yes I am ♪" "♪ I'm never a loser ♪" "♪ And I'm never a quitter, yeah... ♪" "Spitzer:" "The ratio of CEO comp to the average worker's comp had gone from about 40 to 1 to about 550 to 1 ." "CEOs began to just take everything they could and ultimately that was going to destroy our economy." "Because instead of running the companies to create" "Iong-term wealth and Iong-term investment, all the games we've seen-- everything from backdating of stock options to maximizing short-term profits without sufficient investment for the Iong term-- these are things that are cancers inside the economy." "♪ 'Cause I'll take what I want, yeah, baby. ♪" "Narrator:" "One of the flashiest executives was head of the New York Stock Exchange:" "Dick Grasso, who boasted owning 10 cars and three homes." "He traveled on private jets, often flanked by armed bodyguards." "His job was to regulate and market the New York Stock Exchange." "Nicknamed "Punky,"" "Grasso was a scrappy college dropout who started on the floor and worked his way up." "There's a job opening at the New York Stock Exchange." "Chairman Dick Grasso resigned yesterday over the fury raised by his massive pay package." "Narrator:" "Not only was Grasso paid an average annual salary of $20 million, his retirement package totaled nearly $140 million." "After Grasso stepped down, the new head of the Exchange brought the matter to the attorney general." "Spitzer:" "There's a statute in New York that says the value of the paycheck that the head of a not-for-profit receives must be commensurate with the value of the services provided." "I like Dick." "He's a decent guy." "He didn't provide services worth $1 39 million." "Perhaps more perversely, the compensation had been determined by the very people he was supposed to be regulating." "I had the most respected group of directors from the corporate and financial world." "They exercised their business judgment." "They paid me what they believed to be fair and reasonable, which I" " I agree with." "Narrator:" "Spitzer decided not to go after the bIue-chip international board." "Instead, he sued Grasso and the head of the board's compensation committee," "Ken Langone." "Langone would prove to be a formidable foe." "I've been rich and I've been poor." "Rich is better, I can tell ya right now." "Narrator:" "The son of a Long island plumber," "Ken Langone had cofounded Home Depot and amassed a fortune of well over a billion dollars." "A dedicated philanthropist, Langone was not shy about paying people well." "Langone:" "At the time we awarded Dick these pay packages, I truly believed that Dick earned every single penny, and more!" "Narrator:" "Spitzer demanded that Grasso return $100 million." "At the time, Langone told "Fortune" magazine:" ""If Grasso gives back a fucking nickel," "I'II never talk to him again."" "Spitzer:" "He, as anybody in that position would, took umbrage at it." "And he developed a rather strong animus towards me." "The day that I sat in this room and he went on television with that farce press conference he had, announcing that he was going after Dick Grasso and me and all kinds of bad things about me and..." "EIiot's theatrics." "You can't pay the head of a not-for-profit that much money-- close to $200 million." "It's simply too much." "It's not reasonable." "It's not right." "It violates the Iaw." "Langone:" "It was headlines, it was glorious headlines!" "AII these captains of industry!" "Hey, this is big game." "This is going after elephants." "Spitzer:" "He became a very vociferous critic of mine." "And that's all fair game." "In my view we were right and he was wrong." "But again it was something he felt deeply about." "Narrator:" "In 2004 at the Democratic national Convention" "Spitzer took up the issue with Jack Welch, the former CEO of general electric." "Langone:" "Jack and I are very good friends." "Spitzer came up to him with froth coming out of the sides of his mouth, spitting," "I mean, so exercised, and pointing at Jack:" ""You tell your buddy" "I'm gonna put a spike through his heart!"" "This is not something the Attorney general of New York State says." "So when Jack told me, I said, "Jack, do me a favor."" "I said, "If you see him, tell him one thing:" "make sure it's steel, because wood'II break."" "Narrator:" "The case dragged on for years." "In 2008, the New York State Court of Appeals dismissed the case for a bizarre reason:" "since the suit had been brought, the New York Stock Exchange had abandoned its not-for-profit status." "Dick Grasso kept all his money." "But EIiot Spitzer had engaged an enemy with virtually unlimited resources, one who was watching and waiting for any misstep." "I'd Iike to think" "I'm not a vindictive person." "And a basic tenet of my faith is forgiveness." "The most harm that EIiot Spitzer has done to me is I am defying my faith." "I can't forgive him and I should, but I can't." "Narrator:" "In Ken Langone, Spitzer had created a mighty enemy." "And then he added another one when he took on Hank Greenberg, the head of the world's largest insurance company, alg." "At the age of 79, Maurice "Hank" Greenberg was the most powerful businessman on the planet." "Under his command alg had grown to be worth $157 billion with 92,000 employees." "Admired for his spectacular results," "Greenberg ruled his empire with an iron fist." "I think he was Louis XIV to everybody else's, you know, being a mere baron." "I think Hank Greenberg epitomized the power of corporate CEOs, and in my view, he was the most powerful person in corporate America." "Narrator:" "Greenberg's measure of his own worth was the stock price at AIG." "The normal cycle of business is that sometimes your profits go up and sometimes your profits go down." "But wall Street didn't like companies to perform that way." "They wanted to see steadily rising profits." "If you delivered steadily rising profits, they'd give you a higher stock price." "So Hank Greenberg came up with a new type of insurance that would create the illusion of steadily rising earnings." "Narrator:" "Greenberg's alg was fined over $100 million by federal authorities for helping other companies cook their books." "In 2005 it appeared that AIG might be using similar tricks to pump up its own stock." "Spitzer:" "The more we dug into AIG, the more problematic the company itself appeared to me to be." "And the disconcerting aspect of it was that it did appear to come from the very top." "Interviewer:" "When did you first hear about" "Spitzer's investigation of AIG?" "When I got a subpoena." "Narrator:" "One deal generated by Greenberg caught the eye of Spitzer and federal investigators." "It was a suspicious contract between alg and Gen Re, a company owned by billionaire Warren Buffett." "One of the most startling moments in this case was when tapes emerged that were dispositive, overwhelming proof of exactly what these transactions had been." "As this was unfolding, Dick Beattie called me one Saturday morning at home and said let's talk about this." "The board wanted me to find out what I couId about the Gen Re investigation." "EIiot was jogging on a Saturday morning or something." "I met him in the park." "The only thing of significance he told me, as I recall, was that they had Hank" "Hank's name on tapes." "Narrator:" "To boost his stock price, Hank Greenberg wanted to make it look like alg had $500 million more than it did." "The original phone call was to see if we could get a lost portfolio from Ron Ferguson." "What happened afterwards, I don't know." "I" " I didn't" " I wasn't involved in the details of the transaction." "Narrator:" "A handwritten deal memo laid out the terms:" "Gen Re would pretend to pay AIG $500 million in two installments for a phony insurance policy." "There was no risk of paying a claim." "For doing the phony deal, alg would pay Gen Re a $5-miIIion fee." "HouIdsworth:" "No risk." "No risk for 5 miIIion bucks." "Narrator:" "Hank Greenberg's initials, MRG, were all over the document." "Monrad:" "The two people at AIG who are involved are Hank Greenberg and Chris milton." "AIG was a big company." "I didn't-- I didn't stay focused on-on-- on the Gen Re transaction." "Man:" "Yes. ( laughs )" "Graham:" "That sorta gives you somethin'" "Man:" "Yeah, that tells you somethin', doesn't it?" "Yeah." "Narrator:" "What was an unfair advantage to Greenberg was seen as cooking the books to alg's accountants," "PricewaterhouseCoopers." "The firm refused to accept alg's financial statements as long as Greenberg was the CEO." "Hank wasn't pushed out by... by eliot." "What happened was the investigation that followed and the accountants, at the end of the day, said, "We're not taking that certification anymore."" "So you're sitting here as a board of directors, saying, "My God, what does that mean?"" "That's what drove the board deciding that Hank had to go." "And one other issue." "Narrator:" "Spitzer demanded that Hank Greenberg testify under oath." "However Greenberg's lawyers advised him to plead the Fifth, despite AIG's policy to fire employees who didn't cooperate with regulators." "That troubled a Iot of people on the board." "They wanted him to say, you know, "absolutely not." "I'm not gonna take the Fifth." "I'm gonna testify."" "I think Frank Zarb and I called Hank and told him that the board had made the decision that he had to step down." "These are very serious offenses, over a billion dollars of accounting frauds that alg has already acknowledged." "That company was a black box run with an iron fist by a CEO who did not tell the public the truth." "That is the problem." "So does that mean you're moving toward an indictment?" "No, I didn't say that." "It depends what we will prove, or can prove that Mr. Greenberg knew at the time." "We have powerful evidence." "We will proceed with it." "It's too bad that the attorney general doesn't come out from behind his office, where he's protected against libel." "I wish he'd come out and say these things as a citizen." "Spitzer attacked Greenberg, and I saw him on television one night saying that Hank Greenberg was a crook." "Narrator:" "John Whitehead had been a war hero, a Deputy Secretary of State and the chairman of GoIdman Sachs." "And his office continued to leak information about why he was a crook without ever any charges being brought against Hank." "So I said this is something I have to do something about." "So that's what caused me to write that first article." ""Something has gone seriously awry when a state attorney general can go on television and charge one of America's best CEOs and most generous philanthropists with fraud before any charges have been brought, before the possible defendant has even had a chance" "to know what he personally is alleged to have done and while the investigation is still underway."" "That was the thing that set me off." "I had heard of an incident involving former GoIdman Sachs chairman John Whitehead." "Mr. Whitehead had come out publicly supporting Mr. Greenberg." "After that op-ed was published, he received a threatening phone call from EIiot Spitzer." "He asked me a couple of questions about my article." "And then he came right to the point." "He said, "Mr. Whitehead," he said," ""You and I are now at war."" "You know, look, he had-- he had written an op." "I don't know if I said those words or not." "If that's the worst I said, you know, okay, that's-- people are at war with me all the time." "Interviewer: "You have fired the first bullet."" ""You have fired the first bullet." "But believe me, by the end of this war, I will fire the last one and you will be dead."" "well, I don't think I said that." "I mean, John White-- l wouldn't say-- l-- l-- look, I hope I didn't say that." "He was screaming into the phone." "He and I had a heated conversation." "I will leave it at that." "It was a private conversation." "As I've said, I've never denied that I have heated conversations in private." "It's... it was me, it is me, so be it." "And I think sometimes it's how you get things done." "He said, "I will destroy you."" "And those are-- those are strong words." "I had never heard words like that before from anybody." "I couldn't quite believe it." "Narrator:" "Spitzer's outbursts became legendary to his staff." "When he exploded, his staff would remark that Spitzer's evil twin "Irwin"" "had dropped in for an unexpected visit." "In fact, a very prominent lawyer of a very fine company had a meeting with him." "And this man said to me," ""When I came out of his office, I swore I saw the words E-V-I-L across his forehead."" "I have no doubt if Hank Greenberg were still running AIG," "alg would not be in the fix it's in today." "Today the federal government announced it has once again reworked the bailout of insurance giant AIG." "Reporter:" "Now the bailout needs a bailout." "Two months after AIG was given that first emergency government Ioan, it's getting another lifeline." "Narrator:" "In 2008 AIG was at the center of a global economic meltdown." "Before and after Greenberg's fall," "alg had been selling billions of dollars of insurance to the world's biggest banks to hide their risky gambles on home mortgages." "When housing prices collapsed, alg couldn't pay the claims, and US taxpayers paid $183 billion in an effort to save the global economy from collapse." "According to Greenberg, the blame for AIG's fall and the global meltdown rested with one reguIator" "EIiot Spitzer." "Spitzer wanted me out." "When politicians involve themselves in who is going to run a company and who is not, we're on dangerous ground in this country." "Spitzer:" "It is the big lie writ large." "The books were being cooked at his company." "Hank Greenberg was removed as CEO by his own board when they saw the underlying facts of what was then one of the largest financial frauds in history." "I didn't do anything improper." "Neither did any of the senior team do anything improper." "Interviewer:" "You say to people, if Hank Greenberg had still been there, this would never have happened?" "It would not have happened." "Spitzer:" "The very trading practices that led to these gargantuan obligations that taxpayers are now baiIing out all began while he was there:" "Very significant accounting frauds, reinsurance contracts which he participated in structuring that were deemed by a federal jury in Connecticut to be illegal." "Four people went to jail." "He was called an unindicted co-conspirator by the prosecutor in that case." "So his maintaining uninvolvement in the structural issues is simply wrong." "Narrator:" "Spitzer wanted to prosecute Greenberg for financial manipulation, but was called off the case by the US Attorney Michael Garcia." "Spitzer:" "michael Garcia sent me an over-the-top letter when we were going to include significant allegations relating to Hank Greenberg in our alg complaint, telling us to back off." "And it was a moment of" "I don't want to say there was anything improper about the letter that Garcia sent, but he basically said, "Don't you dare go near this." "We're doing this," relating to Hank Greenberg." "Narrator:" "michael Garcia never pursued charges against Greenberg." "Instead he would lead the prosecution that led to Spitzer's downfall." "Both Greenberg and Langone hired PR firms to go after Spitzer." "And Langone hired a private investigator to find out what he could." "Interviewer:" "I want to move on to the-- to The Emperors club." "When did that start, approximately?" " Sometime in '06." " early '06?" "Thereabouts, yeah." "You were flying about as high as you could possibly be flying." " Mm-hmm." " And this is prior to-- at that point in time, you were pretty certain you were gonna be Governor of New York," " wouIdn't you say?" " Right." "well, really, look." "If your point is things were as good as they could get, from a political perspective, I suppose that's right." "And the only metaphor" "I can think of perhaps is Icarus." "Those whom the gods would destroy, they make aII-powerfuI." "A friend of mine recently gave me a T-shirt that he claimed he had had printed for investment banker friends of his." "But he thought I would enjoy it, and maybe I couId maybe even learn from it." "The T-shirt said on its front, "Hubris is terminal."" "♪ If I ruled the world ♪" "( laughing )" "♪ I'd love all the girls ♪" "♪ I Iove 'em, love 'em, baby. ♪" "I'm not a kingmaker." "But I'm gonna call it-- you're gonna win." " well, thank you." " I'II tell you why." " l'm glad I came tonight." " well, absolutely, it's done." "Narrator:" "In early 2006" "Spitzer's approval ratings were over 60%." "He had announced his run for governor and was predicted to win in a landslide." "You could do anything." "You could punch a toddler and still win." "Narrator:" "His career was every politician's dream." "No, I was the enforcer." "I mean, I was the kid who played left fullback, not because I had real talent, but I took people out." "You play hard, you play rough and hopefully you don't get caught." "( laughs )" "Narrator:" "Right around this time, CeciI SuwaI, the 22-year-old CEO of The Emperors club, took a phone call from a new customer." "Though he used the name "George Fox,"" "it was actually EIiot Spitzer." "The very first time that he called," "I answered the phone." "And he called and he was whispering." "So I thought it was a prank." "And so the other booker called and said," ""Okay, I'm ready to start answering the phones."" "So we transferred the phone to her, and I said," ""Oh, I just spoke with someone." "You know, I'm gonna let you handle that."" "And apparently, he saw, I think, three people in a row, just back to back that evening." "So I guess it wasn't a prank."