The Man Who Brought Down Spitzer

Mike Segar/Reuters Manhattan’s U.S. attorney Michael Garcia may have chased Eliot Spitzer out of office, but he also ignored years of chicanery on Wall Street. So how did he pull down a multi-million dollar job in private practice?

Michael J. Garcia is leaving his post as U.S. attorney in Manhattan to take up a $3 to 4 million per annum partnership at the law firm of Kirkland & Ellis. His transition has been marked with a number of puffy interviews with regional papers. The New York Times extolled his 16 years as a public servant and pointed to a bright career ahead in private practice. But his departure is not as smooth as the press coverage suggests. Congress is planning a hearing questioning his handling of the prosecution that forced Gov. Eliot Spitzer of New York to resign and about the failure of regulatory oversight over Wall Street on his watch. The stench of collusion in his aggressive handling of the Spitzer case and his passivity in dealing with Wall Street hang over his departure.

“Michael was just fine as a prosecutor,” one of his close colleagues confided, “but he never really managed to shine. He made his way up the ladder with good political instincts.”

Garcia’s sudden move to Kirkland & Ellis was engineered by executive committee member Jay Lefkowitz—a high-powered neoconservative who authored President Bush’s stem cell research policy and was once considered to serve as White House chief of staff. It caught many senior partners there by surprise. “Normally it would certainly be a plum to pick up a U.S. attorney, but frankly it’s disappointing when you first hear about it reading the morning New York Times,” one senior partner in the New York office told me. Garcia did not respond to inquiries for this story. The Chicago-based Kirkland has long been renowned for its ties to powerful Republicans. Former Whitewater prosecutor Kenneth Starr also makes his home at Kirkland, and the firm recently hired former U.N. ambassador John Bolton as a “special advisor.” It is said to be looking to recruit a number of other high-profile Bush administration lawyers.

“Michael was just fine as a prosecutor,” one of his close colleagues confided, “but he never really managed to shine. He made his way up the ladder with good political instincts. He had a knack for knowing what would make the politicos happy, and he played that very effectively.” Garcia made his way to Washington with an appointment from President Bush as assistant secretary for Immigration and Customs Enforcement in the Department of Homeland Security. Then he returned to Manhattan and the U.S. Attorney’s office just over three years ago, this time as boss.

The Manhattan U.S. Attorney’s office, dubbed the “Sovereign District of New York,” is arguably the most powerful prosecutorial office in the land. Legendary political careers have been launched there, from Thomas E. Dewey to Rudolph Giuliani, and the post has long been viewed as a stepping stone to higher office. Garcia’s reputation was made in counter-terrorism prosecutions, a point on which he speaks forcefully and sometimes emotionally—he once stormed out of the room at a public forum at the NYU Law School when the wife of a 9/11 victim criticized him. But his record on wrongdoing on Wall Street has been negligible. His most notable case was a prosecution of KPMG officials in a tax-shelter controversy that ended badly, with the prosecutors getting a tongue-lashing from the judge over their mismanagement of the case.

Garcia served as the AWOL “sheriff of Wall Street” during the most serious collapse of financial institutions since the 1929 Depression. A consensus is building that this collapse is largely linked to a failure of regulatory oversight. That oversight should have been provided by Garcia’s office, which historically offers the prosecutorial muscle for the SEC and other regulators. In his 39-month tenure as U.S. Attorney, however, Garcia can claim no high-profile enforcement effort—not one.

Even more curious, however, is his most glittering prize: Eliot Spitzer, a man seen by many as a rising star in Democratic politics who was steadily eroding Republican power in Albany and built a reputation as a Wall Street watchdog. Spitzer got to the New York state house after a precedent-shattering two terms as New York’s attorney general. He used the position to eclipse the traditionally dominant role of the Manhattan U.S. Attorney in regulation of financial institutions, bringing sweeping lawsuits that challenged the barons of Wall Street over abusive practices—notably their habit of selling stocks aggressively to the public, while commenting internally, usually in quite colorful language, that the stocks were a bad bet.