Surrendering to intense pressure to step down after a federal wiretap investigation revealed this week he was a client of a high-priced prostitution ring, Eliot Spitzer announced his resignation as governor in a somber press conference today.

As his wife, Silda Wall Spitzer, stood by his side, often looking at his face as he spoke, Spitzer said: "In the past few days, I have begun to atone for my private failings with my wife Silda, my children and my entire family," he said. "The remorse I feel will always be with me. Words cannot describe how grateful I am for the love and compassion they have shown me."

"I am deeply sorry that I did not live up to what was expected of me," he continued. "To every New Yorker and to all of those who believed in what I tried to stand for, I sincerely apologize. I look back on my time as governor with a sense of what might have been."

"There is much more to be done and I cannot allow my private failings to disrupt the people's work," he said, adding that in his public life he has insisted "people -- regardless of their position or power -- take responsibility for their conduct."

"I can and will ask no less of myself," Spitzer said. "For this reason, I am resigning from the office of governor."

Spitzer's resignation will be effective on Mon., March 17, he said, to allow time for an orderly transition.

After spending more than 36 hours at home, the embroiled Democratic governor appeared to hold his head high as he left his 5th Avenue Manhattan residence surrounded by police just after 11:15 a.m. Spitzer's wife rode with him to his Midtown Manhattan office in a black SUV with helicopters hovering above.

An aide close to Spitzer told The New York Post: it was "an agonizing night."

The state's lieutenant governor, David Paterson, 53, will take over as the state's 55th governor. Paterson, a Harlem Democrat who has been nearly sightless since birth, was first elected to the state senate in 1985. He will be New York's first African-American governor.

Speaking before reporters in Albany, Senate Majority Leader Joe Bruno today said legislators must now work together to get on with the business of New York State and focus on fiscal challenges.

"As for Eliot Spitzer, my heart goes out to his wife and to his family; at this time he must deal with his own problems in his own way," Bruno said, "But it is now time for us and all New Yorkers to move forward."

Bruno, who said he has a good relationship with Paterson and expects to work well with him, will assume the responsibilities and duties of the lieutenant governor, which includes holding a vote on the Senate floor and taking over if the governor becomes incapacitated or is out of the state.

Spitzer's resignation came as Republicans in Albany and across that state ramped up calls for him to leave office after it was revealed Monday that he spent thousands of dollars for a prostitute named Kristen on the night before Valentine's Day at a hotel in Washington, D.C.

Republican minority leader Jim Tedisco had demanded that Spitzer leave office immediately or risk facing impeachment if he did not quit by tonight.

Democratic State Assemblyman Dov Hikind said Paterson's governorship will be good for the state. "He's a guy that will not terrify anyone, will not threaten anyone. He will not be a steamroller, just a good guy bringing people together. Democrats and Republicans."

Spitzer, 48, a father of three teenage daughters, was once considered a rising political star with presidential aspirations. He became known in Albany for his abrasive style and confrontational manner, earning the nickname of "steamroller" after describing himself as such and using profanity in a private call he made last year to Tedisco.

Spitzer's track record was marked by an earlier political scandal and legislative setbacks. In a separate episode last year dubbed "Troopergate," Spitzer's aides were accused of using state police to track the travel of state Sen. Joseph Bruno in an effort to embarrass the powerful Republican.

The governor withdrew a controversial proposal to allow illegal immigrants to get drivers' licenses, a move that embarrassed Democratic presidential candidate Hillary Rodham Clinton, who made contradictory statements about whether she supported the idea.

The dragnet that caught Spitzer paying a call girl occurred in an elaborate financial surveillance system that was expanded after the Sept. 11 attacks to snare terrorists, drug traffickers, international organized crime figures and white-collar criminals.

The federal Bank Secrecy Act requires financial institutions to report suspicious transactions to the Treasury Department. Those transactions are then reviewed and, in some cases, passed on to criminal investigators if they suggest potential illegal activity.

That is what happened in the case of Spitzer, according to federal law enforcement authorities, who said it was the alleged transactions themselves -- and not the governor or the high-priced prostitution ring now linked to him -- that prompted the investigation.

"Nobody went after Spitzer. Nobody went after a prostitution ring," said one federal law enforcement official, speaking on the condition of anonymity because the investigation is sensitive and ongoing. "If something looks suspicious we've got to check it out. That's what they did here, and bizarrely, one thing led to another."

The scandal broke on Monday when it was disclosed that federal authorities had identified Spitzer as one of the clients who had used the Emperors Club VIP call-girl service.

Emperors Club says it caters to wealthy men seeking beautiful young female consorts in New York, Washington, Miami, London, Paris and Los Angeles. A federal wiretap captured a man identified as "Client 9" -- a regular customer of the Emperors Club -- arranging a date last month with a petite brunet, an FBI affidavit said. Spitzer was Client 9, federal law enforcement officials have said.

Spitzer has retained the law firm of Paul, Weiss, Rifkind, Wharton & Garrison. Michele Hirshman, former chief of the public corruption unit in the Manhattan U.S. Attorney's Office and a former colleague of Spitzer's when she served as New York State's first deputy attorney general, is the lead attorney, said Madelaine Miller, a spokeswoman for the firm.

Law enforcement sources were quoted by the Associated Press and Newsday saying that Spitzer spent as much as $80,000 during numerous liaisons with Emperors Club prostitutes. Newsday also reported that Spitzer drew the attention of bank officials when he split one financial transaction of at least $10,000 into three smaller ones to evade reporting requirements. The newspaper reported, citing unnamed law enforcement sources, that Spitzer then tried unsuccessfully to take his name off the three transactions.

After Spitzer was first linked to the prostitution ring by the New York Times on Monday, he apologized for unspecified bad behavior at a hastily called news conference. But he has not admitted publicly that he consorted with prostitutes or that he knowingly engaged in suspicious or illegal financial transactions.

On Tuesday, authorities said it is the transactions themselves that could get Spitzer into legal trouble, especially if authorities determine that he was trying to "structure" them to avoid reporting requirements or disguise the true nature of the payments.

According to the federal law enforcement official, Spitzer's bank reported his suspicions transactions, as required under the Bank Secrecy Act, by electronically filing at least one Suspicious Activity Report, or SAR.

One financial crimes expert, former senior FBI official Dennis Lormel, said SARS have been required for many more financial transactions since the Sept. 11 attacks, and that bank compliance officers "have come down really hard" on financial institutions.

The SARS are forwarded by the Internal Revenue Service to a Treasury Department agency known as FinCENÖ, the Financial Crimes Enforcement Network.

SARS normally contain the name of the sender and receiver of a financial transaction, and information from bank officials about why they believe the transactions were suspicious, said Lormel, who is now senior vice president for anti-money laundering for Virginia-based Corporate Risk International.

It is illegal to disclose publicly that a SAR has been filed, but the information is widely disseminated to federal and even state law enforcement agencies, Lormel said.

In Spitzer's case, agents from the IRS's Criminal Investigation Division, and later the FBI public corruption squad, began to unravel the threads of the financial transactions. They first linked cash payments to accounts tied to suspicious front companies that didn't seem to do anything and then, ultimately, to the Emperor's Club call-girl ring, according to the former federal law enforcement official and a second person familiar with the investigation.

Lormel, who used SARs to investigate dozens of cases for the FBI, from white collar crimes to terrorism to drug trafficking, said he was surprised to see the savvy former New York Attorney General in his current predicament. "I'm just dumbfounded that a guy of his stature and his investigative experience would allow himself to be tripped up like that. He should know that there are [banking] reporting requirements there," Lormel said. "And of course, he should know the difference between right and wrong, too. It just baffles me."

New York Republican State Sen. Martin Golden said Spitzer's political base appeared to have crumbled.

"The people in the state of New York are very hurt," said Golden. "Their trust has been violated and it's going to take a while to heal that."

-LA TIMES

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