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Spitzer is still working out the details of a separate case against five CEOs, calling on them to return profits made from stock offerings arranged by Salomon Smith Barney. On the basis of another roundup of e-mail, Spitzer says that Jack Grubman, then Salomon's chief telecommunications analyst, engaged with the executives in "spinning," a practice whereby a bank allocates hot, essentially risk-free shares in companies about to go public to CEOs of prospective clients. In return, the CEOs give the bank business, confident that, in turn, their own stocks will receive favorable ratings. It was from this email that the public learned that rich investment bankers do favors to get their associates' kids into the right preschools.
Spitzer's case against Wall Street is as gutsy as his earlier pursuit of Mob interests in New York City. Everyone knew that organized crime controlled the trucking business in the city's garment center, but no one could figure out how to crack it or how to make the case. At the time Spitzer was the 33-year-old chief of the labor-racketeering unit at the Manhattan district attorney's office. A few attempts to wire undercover agents had failed, in part because the target--the notorious Gambino family--was wary of such tricks. So Spitzer came up with a high-risk plan to set up his own sweatshop. He brought in a state trooper to run it undercover, then hired 30 laborers who had no idea it was a front. The shop set up on Chrystie Street in the city's garment district, turning out shirts, pants and sweaters. But the sting took longer than anyone had anticipated. "Every two weeks Eliot would come in asking for more money," says Michael Cherkasky, who headed the investigation division (and is now president of risk-consulting firm Kroll Inc.). "We were actually stuck running a business--and losing money. I said, 'Eliot, you're becoming a shmatte salesman?'" But the shop manager eventually got close to the Gambinos, and officials were able to plant a bug in their office, in an elaborate ruse that involved picking locks, switching off alarms, disrupting utilities and distracting guards.
The wiretaps and other material produced evidence of a conspiracy in which a few families agreed to carve up the garment-industry trucking business among themselves. The trick was bringing a case. There was evidence of extortion, Spitzer recalls, but it was ambiguous, and cases like this had failed in the past. So he charged the Gambinos with something that could stick, an antitrust violation. Thomas and Joseph Gambino and two other defendants took the deal and avoided jail by pleading guilty, paying $12 million in fines and agreeing to stay out of the business. "It was imaginative and smart," says Cherkasky, who calls Spitzer one of the "best and brightest" lawyers he has worked with.