Day 437: Everything Changes

Gov. Eliot Spitzer quits after his alleged involvement in a high-class prositution ring is revealed by a federal investigation

On Monday, business as usual in the state Capitol came to a screeching halt. It started with a breaking news headline, “New York Governor Eliot Spitzer implicated in prostitution ring,” and was followed by waves of disbelief.

“The Sheriff of Wall Street,” the “steamroller,” “Eliot Ness,” the man who promised “On Day One everything changes,” a man once thought to be presidential material, was implicated in the kind of prostitution ring he fervently prosecuted during his two terms as New York state attorney general.

According to The New York Times, federal investigators were tipped off to odd financial transfers from a personal bank account of Spitzer’s. The investigators soon traced the money trail to the Emperor’s Club, a high-price prostitution service. Using wiretaps, investigators discovered Spitzer having a rendezvous with a prostitute named “Kristen” the day before Valentine’s Day this year, at the Mayflower Hotel in Washington, D.C.

Spitzer allegedly spent tens of thousands of dollars on prostitutes over a period of more than six years. With his wife, Silda, by his side, Spitzer addressed the state Monday and apologized to his family and to the public for an unidentified offense.

For two days speculation raged while Spitzer was holed up in his Manhattan apartment, reportedly negotiating with federal investigators to trade his position as governor for reduced charges.

Rumors flew that his resignation was impending. Assembly Minority Leader James Tedisco (R-Schenectady) insisted that if the governor did not resign in 48 hours he would introduce impeachment legislation against him. Meanwhile, Spitzer’s nemesis, Senate Majority Leader Joseph Bruno (R-Brunswick), remained poised, giving his condolences to the Spitzer family.

Finally, Wednesday morning, during a two-minute press conference, Spitzer announced that he would tender his resignation as governor effective Monday, March 17, the short lag coming at the request of Lt. Gov. David Paterson, who will serve out Spitzer’s term as governor.

“I look at my time as governor with a sense of what might have been,” said Spitzer. “I am deeply sorry that I did not live up to what is expected of me.”

With Paterson as governor, Bruno, who will become acting lieutenant governor, will have executive power when Paterson is out of state.

Senate Minority Leader Malcolm Smith (D-Queens) said, “The governor’s resignation is appropriate. Eliot Spitzer has to take care of his family now and we must move forward and continue to govern and serve the 19 million people of this state.”

U.S. Congresswoman Kirsten Gillibrand (D-Greenport), who earlier had called for Spitzer’s resignation if the allegations were true, said in a statement, “The governor made the right decision for New York. I have every confidence in Governor Patterson [sic] and look forward to working with him on the important challenges we face. I will work to assist him in his transition in any way I can.”

While Spitzer’s fate has become a little clearer, the fate of the party he leaves behind is not. Although Spitzer’s first year in office was almost universally seen as a failure, his effort to win Democratic control of the state Senate looked to be paying off. The effect of Spitzer’s scandal on state Democrats has yet to be seen.

Politicians on both sides of the aisle say that they have great hope for Paterson’s governorship. During his time as a state legislator, Paterson developed a friendly relationship with Bruno. It is expected that Paterson will work quickly to come to a budget agreement and then begin replacing Spitzer administration officials with his own staff. Insiders say hope remains for state Democrats because Paterson is known to excel in politics where Spitzer failed.

The Troy Record quoted Bruno as saying: “We are going to partner with the lieutenant governor when he becomes governor. David has always been very open with me, very forthright. . . . I look forward to a positive, productive relationship.”

—David King

The Albany County Legislature holds off on tax legislation that would help fund convention center

This week Albany County legislators tabled a bill that would renew a 3-percent hotel tax, part of which would be used to secure bonds for the proposed Albany Convention Center. Some legislators said they feel as though they did not have enough information about the wording of the bill or the future of funding of the convention center to approve the tax. The bill has been sent to the Audit and Finance Committee. The room tax will be discontinued by the end of the year if the county Legislature does not reauthorize it. The state Legislature also has to approve the bill.

Confusion arose over the fact that the phrase “hotel project fund” was added to the bill, which had some legislators concerned the county could be allocating taxes on other hotel rooms in the county to fund the Sheraton Hotel in the convention center.

Albany Convention Center Authority executive director Duncan Stewart told the Times Union that the funds would go to repay construction costs and not go to the operators of the hotel.

Legislators also were concerned with the fact that a sunset provision has been eliminated, meaning that they will never again be able to vote on the renewal of the tax. Albany County Legislator Chris Higgins (D-District 6) said it concerns him that the tax could be allocated to the ACCA even if the convention center does not come to fruition.

Furthermore, Higgins said he is concerned that there is no representative from the county Legislature on the ACCA board.

Legislators reportedly are working on arranging a meeting with the larger players in the authority so that they can have a better understanding of the bill they are voting on.

Higgins said he and a number of his colleagues are concerned about where the rest of the funding for the convention center will come from, as it is fairly clear that there is no room in the state budget to provide funding.

“Given the increase in costs and uncertainty of this project, it is absolutely necessary to take a step back and evaluate whether continued county funding of this project is in the best interests of the taxpayers of Albany County,” said Higgins.

Albany Common Councilman Dominick Calsolaro (D-Ward 1) said he has talked to legislators about adding wording to the legislation that would state that the county is liable only for the 1-percent bed tax. “I thought maybe we need to put in to the legislation that the county would only be liable up to whatever amount the bed tax brings in and nothing more,” said Calsolaro.

Meanwhile, Calsolaro said he thinks it is important that the ACCA takes into account rising interest rates on the bond market when considering how much debt service is going to be attached to the building of the center. Calsolaro said he would like to see more information about the kinds of bonds the ACCA is considering.

“I think we need an estimate from Duncan Stewart about what it would cost if they do those bonds,” said Calsolaro. “We really need to have the info. Right now there is no sunset for the bed tax. I suggest maybe we want to have a sunset clause put in for when the bonds are finished. So if we have 20-year bonds it will sunset in 20 years. There is no reason to keep the tax indefinitely.”

—David King

Two TV celebrities—and apparent students of NXIVM—visit the Capital Region with hopes of starting a business

Last week, Troy Mayor Harry Tutunjian got a break from his regular humdrum duties to entertain, at least for a little while, celebrity. Allison Mack of TV’s Smallville and Nicki Clyne of Battlestar Galactica were in Troy, scoping out the quaint downtown scene, visiting the shops and going out for dinner, and they popped in for a quick visit with the befuddled mayor.

Mack and Clyne have said that they were interested in starting a business, and curious about the community’s youth scene, said Jeff Buell, Troy’s director of public information.

Why Troy? Why the Capital Region?

Because, according to multiple sources, Clyne and Mack are students of Executive Success Programs, or ESP, which is the educational wing of NXIVM, and have been for at least a year. Mack’s co-star, Kristin Kreuk, has been connected to the organization for years.

NXIVM, a Capital Region-based organization, purports to offer courses in “ethics, critical thinking and entrepreneurship.” It has been criticized by many of its former members as destructive and cultlike.

The head of NXIVM, Keith Raniere, started his “human potential training” business in 1998, after his first business, Consumers Buyline Inc., a multimillion-dollar discount buyers club, was shut down after 25 state and federal investigations. It was alleged at the time that CBI was a pyramid scheme, and Raniere was forced to pay New York state roughly $50,000.

According to former insiders, Raniere is referred to by followers as “Vanguard.”

Clyne and Mack’s apparent goal is to start a business, the details of which are somewhat unclear, but according to sources, it would be geared toward helping young entrepreneurs and college students start their own businesses. “We really want to be known for our parties,” Mack told a source, who asked to remain anonymous.

Sources also said the business could entail a membership fee. As a member, students would have access to discounted items, such as travel or computers. According to sources, the business would have direct ties to NXIVM, something that NXIVM president Nancy Salzman flatly denied.

In an e-mail to Metroland, Salzman wrote, “To say their business is affiliated with NXIUM [sic] is quite a stretch, but if you must it would also mean, Enron, Worldcom, Krispy Kreme and BNI, Black Entertainment TV and a number of different countries are NXIVM affiliated. . . . The business to which you refer is just another business started by one of our past or present 8,000 participants who took one of our courses in ethics, critical thinking and entrepreneurship. It is our intent to help people start businesses if they want to and be more joyful and prosperous in their lives, I guess we’re doing a good job.”

“What Raniere is obviously doing is gearing up for the college crowd,” said Rick Ross, a leading cult deprogrammer and controversial critic of NXIVM. “The demographic that has been the most lucrative, the most fruitful for cults is 18 to 26.”

Young people with substantial discretionary funds who are alone for the first time in their lives, are an ideal target, he said. He pointed to the survey that Clyne and Mack have linked to from their official Web sites as an example of Raniere’s attempts to gather data on this demographic. Nearly each page of the online survey features a picture of Clyne, Mack, or Kreuk. The survey is hosted at etho lutions.com, a domain registered to Karen Unterreiner, a longtime associate of Raniere’s from his days with CBI.

Raniere, according to Ross, is not allowed, by law, to be involved in a discount buyer’s club, due to the collapse of CBI.

The survey is specifically geared toward college students. It asks more than a dozen questions regarding their purchasing, studying, and recreational habits. After a round of these questions, the survey moves on to more unusual questions, such as, “Would you swallow a glass of your own vomit for $100?” The questions continue along in this vein, increasing the hypothetical monetary payout, and also the grossness factor: “What if it was dog vomit?”

“My experience with Hollywood people and cults, they are really easy to grab,” said Ross. “A lot easier than you would imagine. They are so vulnerable and emotionally needy. What kind of person wants to be an actor in the first place? They need to be loved, adored, and the center of attention. It’s like shooting fish in a barrel.”

Clyne and Mack declined to comment for this article.

—Chet Hardin

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