How IT uncovered a prostitution ring and nailed the New York governor

Through the power of data mining and the cooperation of U.S. banks and multiple U.S. federal agencies (seriously!), IT systems helped federal authorities track down a major prostitution ring, uncover their money-laundering scheme, and identify one of their customers as New York Governor Eliot Spitzer, who was also allegedly engaging in money-laundering to hide his transactions.

Spitzer’s short reign as New York governor is clearly headed toward a brief end, and that’s the big story for the national news, but there’s also a powerful IT story buried in all of this. It was the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury that enabled authorities to discover these crimes.

FinCEN collects data from banks based on rules for flagging suspicious behaviors (in this case, a certain pattern of transactions). That data is then shipped to the IRS and the FBI where it can be crunched by computer systems and analysts. Additional emphasis has been placed on these technology systems since the September 11, 2001, attacks on the United States, and it appears that they are bearing some fruit, although they raise major red flags for privacy advocates.

For more details of how FinCEN works and how it uncovered these crimes, see the full report from my colleague Larry Dignan.