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New York Governor Eliot Spitzer announced his resignation earlier today, after he and his suppliers were found transferring large amounts of cash among their financial accounts. See Reuters and the New York Times for more details.

Reporting systems

In the US, banks are required to file Currency Transaction Reports when customers make large cash transactions. The regulation is supposed to discourage these transactions, while alerting the Federal government to possible criminal activities. As a lawyer who has prosecuted corporate crime, Spitzer knew about the US$10000 reporting threshold that triggers these notices – and he posted more than 150 transactions that fell just shy of that limit.

Spitzer also knew about the Mann Act, because he led a successful effort to increase New York State’s criminal penalties for international and interstate offenses, as described in this Times article. When the governor made his interstate date, he violated Federal law and a state law that he championed. RootsWeb has a brief discussion of the Mann Act, and there’s always Wikipedia.

People still matter

Important parts of these reporting systems are not fully automated. People have to take notice and action for these systems to work well. Read more about this in Larry Dignan’s article at ZDnet (via BoingBoing), and in the Wall Street Journal. The second figure in Dignan’s article is a handy flowchart of the system.

Updated 2000 HT 13 March 2008: A former student of mine passed along the following information, which I used to update the post. Banks file Suspicious Activities Reports (SARs) when they find a pattern of transactions:

FYI, there may have been some bad data in one of your sources. It’s not a 10K threshold for SARs. It’s a 10K Threshold for CTRs which is for any cash transaction. SARs are based on potential exposure due to suspicious transactions. The more common thresholds are 5K if you can name a suspect and 25K if you can’t.

USA: CNN.com - Valuable art collection found in schools - Jul 7, 2004: “To the delight of school officials, a multimillion-dollar treasure trove of 19th- and 20th-century art has been discovered in basements, boiler rooms, closets and hallways in Philadelphia’s cash-strapped public schools.”

Tech: Wired 12.07: Copy This Article & Win Quick Cash!“In fact, successful hoaxes have always preyed on our tendency to imagine the future through the lens of our own hopes and worries. A celebrated 19th-century prank convinced millions that Thomas Edison had invented a machine capable of converting soil into cereal. A “top secret” report that became a best-seller in 1967 concluded that an end to war “would almost certainly not be in the best interest of stable society.” Publication of the deadpan parody led Lyndon Johnson to cable every US embassy, insisting the report didn’t reflect foreign policy.”

Tech: CNN.com - Microsoft thinks small - Jun 17, 2004: “Microsoft is rejiggering plans to cater to the more specialized needs of small businesses, part of a wider effort to find new revenue streams to augment its traditional cash cows. The hope is to score with accounting and other software that Microsoft is not traditionally known for. The target customer: companies with fewer than 1,000 employees.”

Tech: From the AP: “Small companies, some publicly traded, are burning cash trying to turn Wi-Fi into viable business. Some have already shut down. Faster than you can say “industry bubble,” skeptics are asking whether wireless Internet connections will become similar to the wired Internet of the late 1990s — hot but rarely profitable. “Anyone trying to build a stand-alone business on Wi-Fi access should be worried,” said analyst John Yunker of Byte Level Research. “It’s not a stand-alone business, it’s an add-on to other communications businesses, the cable bill or the DSL bill.”“