Could Spitzer have been inadvertently caught up in an American counter-intel operation against a Mossad honeytrap? Unlikely, as we have seen countless examples of Israeli intelligence operations caught in the U. S., with the perps allowed to scurry back home. The American government is far more likely to ask to share the results of an Israeli intelligence operation than to try to stop it. I'm not saying that this was not an operation with intelligence connections (the operator had two Israeli passports - was one of them a special passport that indicated to officials that this person should be given special treatment? - and had special IRS credentials, when the IRS was involved in the investigation!), just that the American government was probably not interested in shutting it down.
A Wall Street conspiracy is the best bet. Wall Street was furious with Spitzer, both for demonstrating that you could build a successful political career attacking high finance crooks, but also in doing so with a moralizing zeal. There was a lot of interest in deterring politicians from any future efforts to attempt to clean up corporate corruption.
Palast's theory, that Spitzer was removed specifically to prevent him from interfering in the sub-prime crisis corruption, doesn't really make sense (note that lite-Zionist Palast can't help throwing in a completely irrelevant reference to 'Gulf sheiks') . Had Spitzer still been N. Y. Attorney-General he might have still been a danger to them, but as Governor he had his own problems to look after, and was no longer a direct threat to Wall Street. Palast refers to Spitzer's recent bang-on attack connecting Bush Administration regulatory skullduggery directly to the sub-prime crisis, but this was published well after Spitzer was in the sights of law enforcement officials.
The Sunday Times probably is closest to the truth (although it wasn't just "the presence of a federal prosecutor from the political corruption squad that first alerted New York Times reporters to the possibility that a politician might be involved"; there was an actual, and illegal, leak; my emphasis in red and green):
"Yet not even a hoard of saucy Dupré photographs unearthed by the New York Post on Friday could distract Wall Street lawyers and bankers from intriguing anomalies in the small print of the prosecution case against Spitzer . . .
While there was little sympathy, there were plenty of questions about how a handful of outwardly innocuous payments from his bank account came to trigger a federal investigation into his sexual activities.
'The movement of the amounts of cash required to pay prostitutes, even high-priced prostitutes over a long period of time, does not commonly generate a full-scale investigation,' noted Alan Dershowitz, the Harvard law professor and former member of OJ Simpson’s legal team. Others on Wall Street were wondering whether Spitzer’s financial dealings had been singled out for scrutiny as revenge for his past prosecutions.
The beginning of Spitzer’s end can be traced to three banking transfers that left his personal account at the North Fork Bank in New York last spring and summer. For reasons that have not been satisfactorily explained, these payments totalling $15,000 attracted the attention of bank employees who monitor accounts for signs of suspicious activity.
After the terrorist attacks of 2001 on New York and Washington, laws relating to money-laundering were significantly tightened, requiring banks to file so-called 'suspicious activity reports' whenever there is evidence that clients might be trying to sidestep routine regulations.
Spitzer’s transfers to a company called QAT International Inc – later revealed to be a front for the Emperors Club – were reportedly considered by the bank to be an attempt to avoid another law that requires all transactions over $10,000 to be reported to the US Treasury. Breaking down payments with intent to avoid reporting is an offence known as 'structuring'.
Yet Spitzer is the son of a multi-millionaire property tycoon and has substantial assets of his own. The notion that as few as three payments from his account of less than $10,000 might be considered suspicious 'raises as many questions as answers', said Dershowitz.
'We are talking about a man who is a multi-millionaire with numerous investments and purchases,' he said. 'It’s simply none of the federal government’s business that a man may have been moving his own money around in order to keep his wife in the dark about his private sexual peccadilloes.'
Prosecution sources said last week they had no idea at first that the money was related to prostitution. Even after a second bank, HSBC, reported suspicious activity at QAT’s account – and a link was found to Spitzer – it was at first assumed that the money might be related to corruption or improper use of political campaign funds.
The case was initially turned over to the section of the Manhattan prosecutor’s office that deals with political corruption. The ensuing investigation duly established QAT was banking payments to a prostitution network and that Spitzer was a client.
When the case against the one man and three women accused of running the international network reached court earlier this month, it was the presence of a federal prosecutor from the political corruption squad that first alerted New York Times reporters to the possibility that a politician might be involved.
It has since been established that both North Fork and HSBC were on the receiving end of Spitzer investigations in his days as attorney-general. In 2003 North Fork was obliged to refund $20,000 to dozens of home-owners after Spitzer claimed that the bank had been charging illegal fees.
No evidence has been produced that the bank reporting of Spitzer’s transactions was maliciously intended, yet Dershowitz and other commentators have noted that the system was designed to ferret out drug dealers, the mafia, terrorists and major financial fraud.
'Once federal authorities concluded that the ‘suspicious financial transactions’ attributed to Mr Spitzer did not fit any of [these categories], they should have closed the investigation,' said Dershowitz.
Instead, they went after Spitzer with the raw, relentless enthusiasm that the governor had so often displayed towards his own targets in the past. And although his speedy resignation defused much of the political tension in New York, many questions remain about how a man so familiar with the politics of personal destruction exposed himself to inevitable ruin."
As I have already noted, Spitzer wasn't reckless. In fact, he was almost absurdly careful in avoiding the usual traps of prosecutors and law enforcement. He first alerted suspicion when he asked to have his name removed from a wire transfer. If you read between the lines just a bit, it is apparent that Wall Street actually had private detectives following him (watching him buy money orders: another traceless way of moving money). When the two banks involved in alerting the authorities were special targets of Spitzer, and the alerting otherwise makes no sense, and Wall Street was following him around, it looks like Spitzer's fate was part of a Wall Street campaign specifically directed against him. It's a combination of revenge and a warning that Wall Street's information gathering capacity is vast, and will be used to take down any politician that dares challenge Wall Street corruption in the future.