Did Ken Langone Set Up Eliot Spitzer?

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There's still a bit of a mystery behind the fall of disgraced former New York governor and one time self-styled "sheriff of Wall Street." The mystery began when the prosecutors who showed up for the arraignment of the managers of the Emperor Club prostitution ring turned out to be from the public corruption office. Why were federal prosecutors specializing in public corruption running the case against hookers?
The reason soon became apparent: the chief executive officer of the State of New York was allegedly a patron of the prostitutes. But there are still doubts about how the federales got involved in this case. Supposedly they were tipped off by some unusual wire-transfers, although many scoff at that story. The suspicion among many--including some reportedly close to Spitzer himself--has been that someone with a grudge against Spitzer handed the case to the feds after having uncovered it independently.
Who could it be? Spitzer had lots of enemies, including some in organized crime and some in the Bush administration. But a lot of the speculation settled on Dick Grasso and Ken Langone, co-defendants in the long-running case Spitzer had brought based on Dick Grasso's pay-package while he was the head of the New York Stock Exchange. Those guys hated Spitzer. And new revelations by Charlie Gasparino are bound to rekindle the speculation.


When the news that Spitzer was the subject of a prostitution investigation broke in the New York Times, Langone told CNBC that he knew about Spitzer's hooker problem. "We all have our own private hells," he said, "I hope his private hell is hotter than anybody else's. I had no doubt about his lack of character and integrity. It would only be a matter of time, I didn't think he would do it this soon or the way he did it. But I know for sure he went himself to a post office and bought $2,800 worth of mail orders to send to the hooker. . . . I know it. I know somebody who was standing in back of him in line. . ."
Nearly everyone who heard Langone's remark wondered the same thing: was Langone having Spitzer followed? As one person put it at a DealBreaker happy hour, "Do the kind of people who stand in line at the post office even get to talk to Ken Langone?"
"It wasn't long that an urban legend made its way around Wall Street and among reporters covering Spitzer that some combination of Grasso, Langone, possibly another Spitzer hater, former AIG CEO Hank Green¬berg, and private detective Bo Dietl had followed Spitzer, and brought the case to the Feds," Charlie Gasparino writes in the introduction to the paperback edition to his book King of the Club.
Langone's friends didn't believe the legend, Dietl said he had nothing to do with it and Langone eventually denied it on CNBC. He was just lucky enough to have a friend in the right place at the right time, he explained. He had only learned the story about the post office after the news about Spitzer had broken, Langone claimed. But Gasparino points out that something that had happened many months before suggesting that Grasso, at least, knew something long before the feds.

"We hear he has something going with a young girl," was Grasso's comment about the former attorney general and then governor of New York, Eliot Spitzer, when I began asking him sometime in early 2007 how he felt about Spitzer's investigation of his pay package, which now included a full inquiry into whether Grasso had an affair with his secretary and even fathered a love child.

So were Langone and Grasso as innocent as they claimed in this matter?
"Maybe so, but when I confronted Grasso with his earlier statement--the one he made to me more than a year earlier that he knew about Spitzer's extramarital ac¬tivities--he just laughed before hanging up the telephone," Gasparino writes.

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