Eliot Spitzer’s Last Pay-to-Play Scandal?

The revelation that New York Governor Eliot Spitzer, the left’s caped crusader for the Social Justice League, has been involved in a prostitution ring will no doubt come as a shock to all those progressives who have faithfully –often fanatically– boosted him over the years. Spitzer has whined about market abuses, both real and imagined, for years, especially during his loud tenure as New York’s attorney general.

But his ethical shortcomings in the world of philanthropy have garnered little attention.

As attorney general Spitzer policed the Empire State’s 60,000 charities and nonprofits, including his family’s philanthropy, the Bernard and Anne Spitzer Charitable Trust. That trust invested almost all of its nearly $26 million in assets in hedge funds and equity funds whose executives made generous donations in the hundreds of thousands of dollars to Spitzer’s gubernatorial campaign. (A related New York Times story)

Marcy Murninghan, a consultant to foundations and a former ethics professor at Harvard Divinity School, said the actions raised red flags. “It raises ethical questions — and suggests a level of self-dealing — when financial investments are placed with investors who happen to be his biggest contributors.”

There are other inglorious philanthropy-related moments in Spitzer’s career.

Spitzer helped Princeton in its posterior-covering launch of a scholarship program to distract from the school’s flagrant violation of donor intent. He was on hand for the press conference when the $10 million Woodrow Wilson School fellowship for the “Charles and Marie Robertson Scholars in the Nation’s Service” was unveiled. The Robertson heirs have been involved in a lawsuit for years, Robertson v. Princeton, in which they’ve been trying to force the school to honor the donor intent of their late parents.

Never one to overlook the well being of his fellow lawyers, Spitzer insisted that Philip Anschutz, former chairman of Qwest, pay donate $200,000 to six law schools favored by Spitzer, as part of a settlement. Now that’s chutzpah. Spitzer had sued Anschutz alleging that Salomon Smith Barney provided him insider information in return for his business. Anschutz admitted no wrongdoing, but paid out a total of $4.4 million to various charities (without taking tax deductions). Magnanimously, Spitzer allowed Anschutz to choose most of the charities receiving the “donations.”

Spitzer did, however, defend donor intent at least once. When American Red Cross president Dr. Bernadine Healy wanted to spend funds donated to the group in the wake of the September 11 terrorist attacks on programs unrelated to 9-11 victims, Spitzer said the proposal was “anathema” for the Red Cross. He vowed litigation to deprive the charity of its state and federal tax deduction if it failed to hand over the “reserve” to victims: “We will not be satisfied until every penny of that $564 million goes to the victims of the September 11 attack. That was clearly the intent of those who gave so generously.” In the end the Red Cross relented and Healy resigned.

(Acknowledgement: CRC staffer James Dellinger came up with the phrase “Social Justice League” a few months ago. -Matthew Vadum)

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