Eliot Spitzer and the world's oldest business

Thanks to Eliot Spitzer and co, we can learn all about the business side of the world's oldest profession...

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Last Updated: 31 Aug 2010

Last week the FBI busted an international prostitution and money-laundering ring that specialised in supplying high-class call girls in North America and Europe. However, it really rocketed to public attention when the New York Times mentioned Eliot Spitzer’s name in connection. Spitzer, the New York governor and self-appointed ‘Sheriff of Wall Street’, emerged on Monday to issue a public apology (though he didn’t say exactly what he was apologising for – strictly speaking the timing could have been completely coincidental...)

Now discreet North American prostitution rings don’t normally fall under the MT remit. However, what really piqued our attention from the media coverage – apart from the widespread schadenfreude at Spitzer’s spectacular fall from grace – was the fascinating glimpse into the business of running expensive prostitutes.

According to the 55-page federal complaint (now all over the internet), the four people behind the Emperor’s Club who include three women) allegedly raked in more than $1m in proceeds between December 2004 and January 2008 via a dodgy front company called QAT Consulting – whose website boasts that its services are ‘comprehensive and hands-on’. You can say that again.

Screen grabs of the Emperor’s Club website also provide an interesting insight into pricing strategy. The 'companions' were selected for their ‘beauty, elegance, erudition and educational standing/ career accomplishment’, but also expected to score highly on ‘character, personality, ability to create desirable atmosphere’ and so on (note there's no mention of male companions - a possible sex discrimination claim perhaps?). Their initial rate was calculated based on these factors, rose with experience, and ranged from $1,000 to about $5,500 per hour at the top end. So just like your accountant, basically. In some respects.

The federal complaint also reveals that the four owners suffered many of the headaches common to business owners everywhere: negative customer feedback (one ‘john’ complained that his ‘date’ was ‘more sex than sexy’); supply chain issues (occasionally prostitutes had to be illegally transported to other destinations in the US); billing problems (some girls weren’t taking proper imprints of clients’ AmEx cards); HR issues (one girl left a client 20 minutes early to pick up her kids from school) and hiring problems (one prostitute turned down an invitation to work because her friend had had to 'service' a client twice in an hour).

Some of their issues may be less familiar, however (unless you also happen to run an illegal prostitution ring, of course). The website explicitly denied that ‘providers’ ever accepted money for ‘services that may be considered indecent’. Presumably some people might otherwise have got the wrong idea from the numerous shots of scantily-clad ladies on the site...

However, this is unlikely to save them from prosecution now. It just goes to show that in business, crime doesn't pay. And that your accounts department shouldn’t be paying out invoices to QAT Consulting...

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