New York governor quits over sex scandal

NEW YORK (CNN) -- New York governor Eliot Spitzer announced his resignation Wednesday amid allegations that he used an exclusive prostitution ring at least eight times in eight months, according to sources familiar with the investigation.

Spitzer, who will step down on Monday, said he wanted to "atone for his private failings" in a brief statement to reporters in New York.

Sources told CNN the probe began when New York's North Fork Bank informed the U.S. Treasury Department about suspicious transfers of money from Spitzer's accounts.

That investigation led agents to the alleged organizers of the prostitution ring, four of whom were charged in a criminal complaint last week, the sources said.

A grand jury in New York is likely to hear evidence in the case soon, said Kathleen Mullin, an attorney who told CNN she represents one of the ring's employees.

Mullin would not identify her client, but said she was not the "Kristen" that court papers linked to Spitzer. She said her client and other women who worked for the Emperors Club have been asked to testify before the grand jury.

Asked if her client had any encounters with Spitzer, Mullin told CNN, "We have no information regarding the governor."

Wiretaps on suspected members of the ring, authorized in January, yielded more than 5,000 telephone calls and text messages and another 6,000-plus e-mails, according to court papers. In those intercepts, the organizers told clients how to arrange and pay for their trysts, a federal agent's affidavit states.

Spitzer built his career on rooting out public corruption and became a national figure with a series of high-profile Wall Street investigations

"Over the course of my public life I have insisted people take responsibility for their conduct. I can and will ask no less of myself. For this reason I am resigning as governor," he said Wednesday.

"I am deeply sorry that I did not live up to what was expected of me," Spitzer said. "I will try once again outside of politics to serve the common good."

He added, "Our greatest glory consists not in never falling but in rising every time we fall." Watch Spitzer announce his resignation »

With Spitzer's resignation, Lt. Gov. David Paterson -- who is legally blind -- is set to become New York's first African-American governor.

In a statement released after Spitzer's resignation, Paterson said his "heart went out" to Spitzer and his family. "It is now time for Albany (New York's state capital) to get back to work as the people of this state expect from us."

Earlier Wednesday, Spitzer's lawyers were negotiating with the U.S. attorney's office in New York in an effort to avoid prosecution, a source with knowledge of the discussions told CNN. Spitzer has not been charged with any crime.

In a statement issued after the governor's resignation, U.S. Attorney Michael Garcia said no agreement had been reached between his office and the governor "relating to his resignation or any other matter."

Federal agents have determined that Spitzer, a key ally of Democratic presidential candidate Hillary Clinton, used a high-priced, call-girl ring at least eight times in the past eight months, sources familiar with the investigation said Wednesday.

The allegations, revealed Monday in The New York Times, were outlined in federal court papers detailing a meeting last month in a Washington hotel room -- identified as the Mayflower Hotel -- between a prostitute and a client called "Client 9," identified to CNN by sources as Spitzer.

According to the source, an affidavit says "Client 9" paid $4,300 for two and a half hours with a prostitute. The source said Spitzer rented two rooms -- one under the name of a political donor.

Spitzer's alleged involvement with the ring was caught on a federal wiretap, sources said.

The prostitute, identified only as "Kristen" worked for the Emperors Club, which charged between $1,000 and $5,500 an hour and operated in New York; Los Angeles, California; Miami, Florida; London, England; and Paris, France, according to court papers. View a gallery of recent political sex scandals »

On Wednesday, the New York Times reported that "Kristen" is Ashley Youmans, an aspiring 22-year-old singer from New Jersey.

Mullin said she believes the investigation is much broader than what has been revealed so far, citing the grand jury probe and the amount of evidence so far released in the court documents last week. She said the FBI started interviewing Emperors Club escorts last week, prompting some of them to seek legal help. She would not discuss any details about any of the other clients of the firm.

Legal experts not involved in the case have said Spitzer could face charges relating to a violation of the Mann Act, which makes it a federal offense to transport someone across state lines for the purpose of prostitution.

Those experts say the governor may also face some type of money laundering charge; specifically "structuring," in which a large transaction is divided into smaller ones to conceal the amounts and the source to avoid federal bank reporting requirements.

Spitzer took office in January 2007 with a landslide victory after serving eight years as the state's attorney general. See a timeline of his life »

He was also known for prosecuting prostitution rings and earned the tabloid nickname "Eliot Ness" after the incorruptible hero of "The Untouchables." E-mail to a friend

CNN's Kevin Bohn contributed to this report

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