CNN - Source: Spitzer 'cannot hold on to his job'

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Source: Spitzer 'cannot hold on to his job'

New York Gov. Eliot Spitzer's hold on office seemed less certain Tuesday as a legislative staffer said gubernatorial aides were in transition talks with the lieutenant governor, and Democratic sources said Spitzer had no choice but to step down.

"It is a 'when' question on the resignation, not an 'if.' He knows that," said a Democratic source with firsthand knowledge of the issue.

"It is hard to come to terms with, and there are legal issues that are related to any big political decisions. But Eliot knows he cannot hold on to his job here. He might want to, but he is absolutely aware of his predicament."

A Democratic campaign veteran with ties to the Spitzer team added, "A resignation was part of the discussions early yesterday but was tabled. The political people were clear about the options. There are none -- not for him."

If Spitzer resigns, Lt. Gov. David Paterson, 53, would become the state's first black governor and the fourth in U.S. history. The former Senate minority leader is legally blind and is the son of Basil Paterson, a longtime Democratic operative in New York City.

No further information was immediately available about the reported meetings between Spitzer and Paterson staffers.

Political opponents quickly called for Spitzer's resignation after federal investigators linked the Democratic governor to a high-rolling prostitution ring.

On Tuesday, a day after Spitzer apologized for a personal matter without elaborating, New York's minority leader in the state Assembly issued a warning: Resign by Thursday or face potential impeachment.

A spokesman for state Assemblyman James Tedisco said that Tedisco plans to introduce articles of impeachment within 48 hours if Spitzer didn't step down.

Tedisco, a Republican, called for Spitzer's immediate resignation after prosecutors unsealed an affidavit detailing a rendezvous in a Washington hotel room last month. The affidavit refers only to "Client 9," but a source with knowledge of the investigation told CNN on Monday that the reference was to Spitzer.

Tedisco said he was providing the two-day window because Spitzer "may be making decisions or negotiations with the law enforcement officials in relationship to the legal aspects of this."

"Our hearts are broken," Tedisco said. "But we have to continue with governance here and this is a total distraction. It's a circus here at the New York state Capitol."

Tedisco said he already is preparing the paperwork for the articles of impeachment, which haven't been introduced in the state Assembly in more than a century. He insisted it wasn't about partisan politics but "about what's right and wrong in moving this government forward."

More than half the Assembly would need to approve impeachment for it to pass. That would require all 42 Republicans and about a third of the 108 Democrats in the Assembly to cast yes votes. The GOP-controlled Senate then would need to pass the measure by a two-thirds vote.

Though he hasn't been been charged with any crime, Spitzer has begun assembling a legal team. He has tapped Michele Hirshman as his lead attorney, said Madelaine Miller, a spokeswoman for Hirshman's law firm, Paul, Weiss, Rifkind, Wharton & Garrison.

Hirshman, who was the first deputy attorney general under Spitzer when he was New York attorney general, also is a former assistant U.S. attorney who "served as chief of the Public Corruption Unit, where she led major investigations and prosecutions of government fraud and political and police corruption," according to the law firm's Web site.

The Republican Governors Association called on Spitzer to resign to "allow the people of New York to pursue honest leadership."

"The American people are tired of corrupt and hypocritical politicians. The governor of New York is just another in the long list of politicians that have failed their constituents," said Nick Ayers, the association's executive director.

Spitzer, 48, took office in January 2007 after eight years as the state's attorney general, rising to national prominence.

Spitzer, who is married with three children, went before reporters Monday to confess to an undisclosed personal indiscretion, saying he had acted "in a way that violates my obligations to my family, that violates my or any sense of right and wrong."

He did not acknowledge the allegations, which were revealed Monday in The New York Times, nor did he take questions. Watch Spitzer's apology

Sources said a federal money-laundering probe led agents to Spitzer. According to two sources who spoke Tuesday with CNN, Spitzer hit the federal radar when a bank reported to the Internal Revenue Service that a significant amount of money had been suspiciously transferred from one account to another.

His alleged involvement with the ring was caught on a federal wiretap, the source said. View a gallery of recent political sex scandals

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.

If Spitzer paid for Kristen to travel from New York to Washington to perform sexual acts for money, as is alleged in the affidavit, the governor could be found violation of federal law. The Mann Act makes it a federal offense to take someone across state lines for the purpose of prostitution.

A source familiar with the investigation identified the Washington hotel where the pair allegedly met as the tony Mayflower. Spitzer registered at the hotel under the name George Fox, two sources close to the investigation said.

Spitzer, who built his career on rooting out public corruption as New York attorney general, became a national figure with a series of high-profile Wall Street investigations. He also prosecuted prostitution rings. See a timeline of his life

Now his lawyers may be questioned about how he paid for the alleged hotel encounter, whether the trail was concealed and whether any banking laws were circumvented as a result, the source said.

The investigation into the Emperor's Club, which began in October 2007, included evidence from a confidential source identified in court papers as a prostitute who worked at the club in 2006 and was given immunity.

It also included statements from an undercover officer who posed as a customer, more than 5,000 intercepted phone calls and text messages, more than 6,000 e-mails recovered with search warrants, bank records, travel and hotel records and physical surveillance.