NEXT, PLEASE

New York Governor Eliot Spitzer, who resigned yesterday amid allegations that he patronized prostitutes, is now in a legal fight to avoid criminal charges.

Spitzer, 48, stepped down after the New York Times reported he was ``Client 9'' of an international call-girl ring whose operators were charged with crimes last week. Spitzer's lawyers need to persuade the U.S. government not to file related charges against him because he allegedly summoned prostitutes to Washington and paid them secretly, former prosecutors said.

Prosecutors are more likely to consider going after Spitzer, a Democrat, for money laundering or misusing his office than for prostitution because customers of call girls are rarely pursued by federal authorities, the lawyers and ex-prosecutors said.

U.S. Attorney Michael Garcia in New York declined to say after the resignation if he's investigating Spitzer. He said only that ``no agreement'' has been reached with the governor. A call to Garcia's office today for comment on any talks with Spitzer's lawyers was not immediately returned.

The assistant prosecutor handling the case against the prostitution ring is chief of Garcia's public corruption unit, formerly headed by Spitzer's lead lawyer Michele Hirshman.

Spitzer's defense team also includes Theodore Wells, who unsuccessfully defended former vice presidential aide Lewis ``Scooter'' Libby last year for lying about the leak of the identity of a U.S. intelligence agent, and Mark Pomerantz, who won a reversal of an obstruction conviction in 2006 of former Credit Suisse banker Frank Quattrone.

The resignation of Spitzer, who was elected governor in November 2006, followed a criminal investigation of payments made to what prosecutors said was an international prostitution and money-laundering ring called the ``Emperors Club VIP.''

On March 6, prosecutors said they charged four people for operating the business. Client 9, not identified in the criminal complaint, paid $4,300 for sex with a prostitute named ``Kristen'' at a Washington hotel in February. The club accepted payments through front companies, according to the complaint.

Client 9 summoned Kristen from New York to Washington and made secret payments to her, according to an FBI affidavit supporting the complaint.

The New York Times identified Client 9 as Spitzer and said investigators suspected he may have wanted to conceal the source and recipients of his money. Spitzer didn't admit the conduct in resigning. He apologized for what he called ``a private matter.''

Kristen, identified by the New York Times as Ashley Dupre, 22, of Manhattan, was subpoenaed to testify before a grand jury, and made a brief court appearance March 10 in New York, according to the newspaper, citing an unidentified source. Don Buchwald, who was appointed as her lawyer, according to the newspaper, didn't return a call from Bloomberg News for comment.

Spitzer may be open to charges that he violated the Mann Act, which makes it a crime to transport someone across state lines for prostitution, lawyers said.

He could also be charged with wire fraud, if he made false statements about the source or destination of his funds; structuring, if he made payments to avoid U.S. requirements on reporting cash transactions of more than $10,000; or money laundering, if he knew the ring was using front companies to move money illegally, the lawyers said.

Spitzer's attorneys, who declined to discuss the case, probably will press numerous arguments to persuade prosecutors not to bring charges, the defense lawyers said.

``I'd approach it by saying to the U.S. Attorney's Office that if you prosecute me, you've got to prosecute'' Clients 1-8, said William Mateja, who formerly helped oversee the Justice Department's Corporate Crime Task Force. ``They don't want to be accused of selective prosecution,'' a potential legal defense.

The other eight clients mentioned in the criminal complaint haven't been identified by prosecutors.

Bradley Simon, a former federal prosecutor in Brooklyn, said the facts in the complaint could support of a charge of violating the Mann Act because Client 9 is ``inducing and persuading a woman to cross state lines for sex.'' That law is normally used in conjunction with other violations and usually when it involves a minor, he said.

The law ``is typically reserved for people who operate prostitution rings,'' said Peikin, who's now at the Sullivan & Cromwell firm in New York. ``I would be arguing that the spirit here is not intended to reach this kind of conduct.''

Prosecutors may have a tough time supporting a structuring charge, said Joshua Hochberg, who once headed the Justice Department's fraud section. ``I'm not clear whether the financial transactions were done in any way to evade a reporting requirement,'' Hochberg said.

Bruce Zagaris, a defense attorney at Berliner, Corcoran & Rowe in Washington, said prosecutors might have a shot at a structuring case because of the way Client 9 arranged the payments in cash in amounts less than the $10,000 threshold required for currency reports.

Money laundering isn't a common charge in prostitution cases, said Mark Arnold, a former bank secrecy auditor at Wells Fargo & Co. ``If you go out and do money laundering, usually it's for tax evasion,'' he said.

A fraud charge, based on the notion that Spitzer lied about the source or recipient of his payments, also may be flawed. ``Who's he trying to defraud?'' Mateja said. ``It sounds like it's money that was his money.''

The call girl at the center of the prostitution scandal that prompted Gov. Eliot Spitzer to resign in disgrace has been identified as a 22-year-old aspiring musician who struggled in a broken home as a child.

The New York Times reported that the real name of the woman — identified as "Kristen" in court papers alleging that Spitzer paid thousands of dollars for her services — is Ashley Alexandra Dupre.

Don D. Buchwald, a New York lawyer, confirmed to The Associated Press that he represents Dupre, but he wouldn't comment further.

Law enforcement officials have said Spitzer had a Feb. 13 tryst with Kristen and paid her $4,300, according to court papers. Spitzer said Wednesday that he's resigning.

Dupre briefly spoke to the Times about the Spitzer scandal but didn't offer details on her involvement in it.

"I just don't want to be thought of as a monster," Dupre told the Times. "This has been a very difficult time. It's complicated."

Dupre told the newspaper she had slept very little since the allegations against Spitzer were revealed, and she declined to comment when asked by the Times when she first met him and how many times they had been together.

She told the Times she was worried about paying her rent in a ninth-floor Manhattan apartment since her boyfriend recently left her. She said she was considering moving back in with her family in New Jersey.

A man who answered the phone at her mother's home in New Jersey and identified himself as Dupre's brother told The Associated Press he had no idea why Dupre would agree to be interviewed in the scandal.

"She's just trying to get through this," he said. "We are all trying to be supportive of her."

Dupre's MySpace page provides a window into her life as she went from a broken home in New Jersey to a music career in the city.

"I have been alone," she wrote. "I have abused drugs. I have been broke and homeless. But, I survived, on my own. I am here, in NY because of my music."

In an Aug. 30 blog posting on MySpace, she wrote: "The past few months have been a roller coaster with so called friends, lovers, and family ... but its something you have to deal with and confront in order to move on ..."

"What destroys me strengthens me" is the slogan next to a photograph of her. The photos show her at various places, including in a bikini on a boat in a tropical locale. The number of hits to the page soared by the tens of thousands after the story broke, and many recent postings to her page ridiculed her.

Dupre describes her favorite musical artists as Etta James, Aretha Franklin, Celine Dion, Christina Aguilera and Frank Sinatra, among many others.

Her Web site boasts a recording of a song, "What We Want.""I know what you want, you got what I want," she sings. "I know what you need. Can you handle me?"

Records show she lives in Manhattan a luxury rental skyscraper called The Chelsea Landmark, where a gaggle of reporters and TV trucks quickly gathered Wednesday night. Rents there start at $3500 a month for a small studio, neighbors said. The 35-story building opened less than a year ago.

The apartments feature imported Italian tiles, 9-foot ceilings and floor-to-ceiling corner windows. The building has a gym with a whirlpool and yoga and Pilates studios.

Dupre apparently appeared in federal court Monday as a witness in the case against four people accused of operating the Emperors Club VIP prostitution ring.

When the Emperors Club VIP said it was sending Kristen, a call girl it described as a "petite, very pretty brunette, 5 feet 5 inches, and 105 pounds," Client 9 was pleased.

"Great, OK, wonderful," he told the escort service's booking agent, according to a federal affidavit.

Client 9, later revealed to be New York Gov. Eliot Spitzer, was caught arranging the liaison on a federal wiretap. It was the beginning of the end for him.

For the woman at the heart of the prostitution scandal, it was just another step on what she calls an "odyssey" of degrading abuse and high aspirations.

Court documents reportedly identified Ashley Youmans -- now known as Ashley Alexandra Dupre -- as Kristen, the high-priced prostitute who met with Spitzer at the Mayflower Hotel in Washington on February 13.

Dupre is a 22-year-old would-be singer from New Jersey, the New York Times reported Wednesday. She has not been charged with any crime.

Dupre made a brief appearance Monday in U.S. Magistrate Court as a witness against four people charged with operating Emperor's Club VIP, the prostitution ring, the Times said.

Spitzer announced his resignation Wednesday as governor of New York, two days after reports of his connection to the Emperors Club VIP emerged.

Replacing Eliot L. Spitzer, who rose to the governorship of New York after browbeating Wall Street titans, is David A. Paterson, a man so affable that the colleague he supplanted in an Albany coup now speaks of him in glowing terms.

With Spitzer announcing his resignation amid a prostitution scandal, Paterson, 53, will become the country's third African American governor since Reconstruction, assuming control of the third-largest state in the country and a government that many say has been dysfunctional for years.

Under New York law, Paterson will fill out the remaining three years of Spitzer's term. Several prominent New Yorkers, including Attorney General Andrew M. Cuomo (D) and New York Mayor Michael R. Bloomberg (I), are rumored to be considering running for governor in 2010. But Democrats predicted that Paterson will have enough time before then to establish himself as the incumbent favorite.

Though his ascension is sudden, Paterson, who is married and has two children, has had plenty of preparation. He was born in Brooklyn and raised in the thick of the Harlem political world. His father, Basil Paterson, served as state senator, deputy mayor and secretary of state and is allied with such Harlem heavyweights as Rep. Charles B. Rangel (D).

He graduated from Columbia University and Hofstra Law School and went to work for the Queens district attorney and David N. Dinkins's campaign for Manhattan borough president. In 1985, at age 31, he assumed a vacant Senate seat, representing his father's former district.

Given his abilities as a legislator, some in Albany, the state capital, were surprised in 2006 when he gave up his shot at leading Senate Democrats into the majority for the more ceremonial position of lieutenant governor. But his allies predict that he will handle his first executive role well. "He'll do fine. He's a veteran. He's been in the trenches for many, many years," said Assemblyman Keith L.T. Wright, a Harlem Democrat who has known Paterson since childhood.

As an infant, Paterson was declared legally blind, with minimal sight in only one eye, a disability that has not kept him from running a marathon and playing pickup basketball. "The impressive thing about him . . . is a constant striving to overcome his disability," said Eric Lane, who was one of his professors at Hofstra.

Paterson's family roots set him apart somewhat from other African American politicians on the rise who are viewed as part of a new post-civil-rights-era generation, such as Sen. Barack Obama (D-Ill.), Massachusetts Gov. Deval L. Patrick (D) and Newark Mayor Cory A. Booker (D). Though he shares part of their reform agenda, Paterson represents a more traditional type of community-based urban leadership, say New York Democrats.

Like Spitzer, Paterson is supporting his state's junior senator, Hillary Rodham Clinton, for the Democratic presidential nomination. His politics are liberal, further left in several areas than Spitzer, who as a former attorney general emphasized criminal justice and who drew criticism for cutting back on the money allotted to New York City schools after a long-running court battle.

It remains to be seen whether Paterson's history in Albany will keep him from picking up Spitzer's agenda of reforming the capital, where incumbents are protected from challenges and enormous power is invested in the governor and the heads of the two legislative chambers. Democratic strategist Hank Sheinkopf predicted that Paterson will press reforms, but in a more measured way. "He's going to show he can get things accomplished without leaving a lot of blood in the hallway," he said.

NEXT, PLEASE

YOU ARE A SEXY GIRL

New York Governor Eliot Spitzer was reported Monday to have told senior staff that he had been involved in a prostitution ring.

Spitzer, a father of three who built his career fighting corporate corruption as attorney general, issued only a brief statement after the reports broke, saying he had failed to live up to his own standards.

"I have acted in a way that violates my obligations to my family, that violates my or any sense of right and wrong," Spitzer told reporters, flanked by his wife of more than 20 years.

"I apologize first and most importantly to my family. I apologize to the public, whom I promised better," he said. "I must now dedicate some time to regain the trust of my family."

According to the New York Times, Spitzer was caught on a federal wiretap arranging to meet a high-end prostitute at a Washington hotel last month.




Spitzer was believed to have called an exclusive ring known as the "Emperor's Club VIP," the Times said that Spitzer learned last week that he had been implicated in the prostitution probe and informed his top aides Sunday night.

A New York Times report linked him to a $1,000-an-hour prostitute, saying he was caught on a federal wiretap at least six times on February 12 and 13 arranging to meet with her at a Washington hotel last month.

Prosecutors said last week the ring operated in cities across the United States and in London and Paris, employing more than 50 prostitutes who charged fees ranging from 1,000 dollars to more than 5,500 dollars per hour.

The club even offered clients the option of paying with cash, credit card, wire transfer or money order, selling the prostitutes' services through a website that ranked each of them on a system of one to seven diamonds.

His alleged involvement with the ring drew a swift call from the Republican Governors Association for Spitzer to step down. "The governor of New York should immediately resign from office and allow the people of New York to pursue honest leadership."

Spitzer, 48, became governor in January last year, pledging to bring ethics reform. At his inauguration, he used his address to say "we must transform our government so that it is as ethical and wise as all of New York."

His time in office, however, has been marked notably by a scandal involving the use of state police to keep tabs on Republican state senate majority leader Joseph Bruno.

It was during his time as attorney general that he earned a reputation for toughness and high ethical standards.

When he first took on the post, he locked horns with the Gambino Mafia family in a bid to break their hold on the New York and New Jersey waterfronts.

He later made a name for himself as one of the toughest corporate cops in the United States, with a crusade against Wall Street wrongdoers.

In May 2002, he led a spectacular victory over the Wall Street titan Merrill Lynch, which paid 100 million dollars to settle charges that it advised clients to buy stocks it secretly believed were "junk."

And in December of the same year, he helped wring 1.4 billion dollars out of top Wall Street banks and brokers for stock research abuses. His other targets ranged from the music industry to major insurance carriers.

During that period, he also prosecuted at least two prostitution rings, and according to the New York Times, in 2004 spoke with revulsion after announcing the arrest of 16 people for operating one high-end ring.

Spitzer is the individual identified as Client 9 in court papers that were filed last week when four people were charged with running a multimillion-dollar international prostitution ring, the Times reported, citing unidentified sources.

Client 9 arranged to meet with "Kristen," a prostitute who charged $1,000 an hour, on February 13 in room 871 of a Washington hotel and paid $4,300 for services rendered and as a down payment for future engagements, according to the court documents.

They describe six telephone calls between Client 9 and one of the defendants that were intercepted by wiretaps on February 12 and 13.

New York Gov. Eliot Spitzer betray his family in a private matter and the public, and it is hard to see how he will recover from this mess and go on to lead the reformist agenda on which he was elected.

With his wife at his side, the governor apologized and said his behavior “violates my obligation to my family and violates my or any sense of right or wrong.” He was right about his violations, but he was, sadly, wrong when he asserted that politics is only about “big ideas” and not individuals.

His short, arrogant statement was not enough, not from the Sheriff of Wall Street, not from the self-appointed Mr. Clean who went to Albany promising a new and better day.

It is likely that every aspect of Mr. Spitzer’s other life as Client 9 for the Emperor’s Club V.I.P. every text message and other secretive communication will be made public. Any politician would have a full-time job just dealing with such revelations. There have been elected officials, over the years, who have survived scandals of this sort. But for Mr. Spitzer, who runs a large and complex state, the burden is especially heavy to show that he has not lost the credibility to push for change, a sound budget and good government, as he promised so confidently a year ago.

While few clients of prostitutes face criminal charges, law-enforcement affidavits raise at least the possibility of criminal charges based on transporting a woman across state lines for prostitution. Mr. Spitzer’s own record of prosecuting such cases gives him scant breathing room. As state attorney general, he prosecuted prostitution rings with enthusiasm — pointing out that they are often involved in human trafficking, drug trafficking and money laundering. In 2004 on Staten Island, Mr. Spitzer was vehement in his outrage over 16 people arrested in a high-end prostitution ring.


A further tragedy here, beyond the personal one of the Spitzer family and the damage he has done to the reform cause, is that Mr. Spitzer’s targets are now relishing their tormentor’s torment. Those on Wall Street who fumed at having to make their world fairer for ordinary shareholders can now chortle with satisfaction in their private enclaves. For New York Republicans, who have blocked some of the most important reforms in Albany, it is hard to imagine the private glee — especially at a moment when they are fighting desperately to hold their majority in the State Senate.

Sadly, this was not the first time that Mr. Spitzer has been caught up in his own arrogance. For all his promise as governor, Mr. Spitzer’s first year was unnecessarily rocky and full of the kinds of mistakes that come as much from hubris as from being new on the job. After succeeding with a few reforms, the governor’s ill-fated attempts to smear his Republican opponent lost him months of progress. Only recently had he seemed to be tempering his abrasive style.


Mr. Spitzer did not seem to understand on Monday what he owed the public, the longer he hesitates, it becomes a harder case to make. He has been too vague about his role in a high-class prostitution ring. He must step forward today to flatly disavow implications that he was involved in the illegal activity or resign.

Spitzer shocked New Yorkers and the nation in general when he told a crowded news conference Monday that he'd "acted in a way that violates my obligation to my family and violates my or any sense of right or wrong." He stopped short of admitting that he arranged to meet a prostitute at a Washington, D.C., hotel on Feb. 13.

Now is no time to play word games. As a former two-term state attorney general who used his aggressive crusade for high ethical standards on Wall Street to help catapult him to the governor's mansion, Spitzer owes it to New Yorkers to be honest and straightforward with them.




While he closed the news conference with a promise to "report back in short order," this alarming situation demands a clearer, unequivocal response, something he should have provided Monday.

Surely Spitzer, an Ivy League-trained lawyer, understands that he is embroiled in a scandal that's far more than the "private matter'' he described.

Too, unlike the Troopergate scandal, which involved charges that Spitzer used state troopers last year in an attempt to smear Republican Senate Majority Leader Joe Bruno, the governor is suspected of criminal misconduct.




An affidavit reports that a federal wiretap captured a man believed to be Spitzer who confirmed plans to have a prostitute travel from New York to a Washington hotel room to meet him. The 1910 Mann Act makes it a federal offense to transport someone between states for the purpose of prostitution.

Wiretap evidence also indicated that Spitzer might have also had prior involvement with the prostitution ring, which booked upscale prostitutes by telephone or online at a rate of $1,000 to $5,500 an hour.

Based on what's already known about the scandal, today is likely to be another sad and dark day in New York history. Nevertheless, it can't be avoided. Spitzer must be more forthcoming, either with the facts as he knows them to be or with his resignation.

The ascent and descent of Eliot Spitzer’s career have been dizzying. He was the brainy kid who graduated from Princeton and Harvard Law School and became an avenging state attorney general, hunting down Wall Street malefactors with a moralistic fervor that sounded pitch-perfect. Everywhere he found “betrayals of the public trust” that were “shocking” and “criminal.”

He stands close to ruin’s precipice, this tireless crusader and once-charmed politician reduced to a notation on a federal affidavit: Client 9.

The tawdry nature of his current troubles — to be caught on tape arranging a hotel-room liaison with a high-priced call girl, according to law enforcement officials — shocked even his harshest critics, though not all were surprised that he would risk so much. Mr. Spitzer’s path through public life has at times resembled a blindfolded dash along the political I-beam.

He was not the first politician to burn with a moral fervor; but he sometimes failed to recognize that his own footsteps could fall in ethically dodgy territory. In 1994, he denied — and later acknowledged — secretly borrowing millions of dollars from his father to finance an unsuccessful run in the Democratic primary for state attorney general. Mr. Spitzer the prosecutor might have pursued this sort of behavior as possibly illegal.



The Republicans complained, yet he sidestepped questions and won election to the office four years later.

As attorney general, his ambition, intelligence and energy were palpable. And his timing was impeccable. A gilded, stock-fed decade was winding down, and a torrent of too-easy cash had eroded the financial controls inside many investment banks, brokerages and insurance companies.

Mr. Spitzer cast himself as Wall Street’s new sheriff and took off at full gallop after his quarry. To his young lawyers, he offered his standard advice: “If you’ve got it, do it.” If they could turn old laws to new, even unintended purposes, so much the better.


His mastery of this style of justice was evident. Employing aggressive tactics, threatening to crush his opponents, his office extracted vast civil settlements from defendants eager to avoid criminal indictment.

But his style wed toughness to what looked to some like bullying. He hurled curses at the targets of his investigations, and sometimes at colleagues perceived as too slow or too questioning of his tactics.

During an argument at a conference, he nearly came to blows with the California attorney general, according to a magazine article. And Wall Street rank left him largely unimpressed.




Few on Wall Street expressed much sorrow at Mr. Spitzer’s predicament on Monday. In particular, friends of Richard A. Grasso, the former chairman of the New York Stock Exchange and a favorite Spitzer piñata, recalled that Spitzer aides had circulated allegations, never substantiated, that Mr. Grasso had had an improper relationship with his secretary.

But in his own view, Mr. Spitzer was a warrior in wartime. He had come to symbolize public revulsion with Wall Street’s excesses, and most voters seemed willing to extend him the benefit of the doubt.

He also initiated popular attacks on subprime mortgage brokers and gun manufacturers, and issued a report concluding that the New York City police were twice as likely to stop blacks and Latinos as whites on suspicion of carrying weapons — a finding that enraged Mayor Rudolph W. Giuliani.

And Mr. Spitzer was a careful custodian of his own image, cultivating editorial boards and magazine editors. He might be intense and sometimes profane, but he sold these traits as the necessary downside of his crusading style. So he became the “new Untouchable” or, in Time magazine, the “tireless crusader.”

So great was his public acclaim that his path to the governor’s mansion already seemed clear when he launched his campaign in Buffalo to the sounds of Tom Petty’s “I Won’t Back Down.” The symbolism was clear and his language was characteristically unyielding.

He promised a cleaning of the governmental stables, vowing to sweep out “unqualified cronies,” stamp out “pay-to-play politics” and impose leadership on a leaderless statehouse.

His assurance never faded, even as he walked up the steps of the Capitol to be inaugurated on a frigid January morning in 2007.

He relied — too often, said some — on his tough-talking crew from the attorney general’s office, and tended to speak loudly when he might better have listened.

Time and again, Mr. Spitzer began as the hunter and finished as the hunted. He would curse at legislators, who would in turn leak damaging word to reporters or hold up crucial legislation.

The Republican leader of the State Senate, Joseph L. Bruno, a wily, white-haired 78-year-old former Army boxer, tossed jab after jab at the 48-year-old governor. Mr. Spitzer, opined Mr. Bruno, is a “spoiled brat” prone to tantrums. And when it was revealed that just weeks into Mr. Spitzer’s term, the governor’s staff had used the state police to try to prove that Mr. Bruno misused a state helicopter for political trips, the Senate leader played the near-perfect victim.

“Straight talk,” Mr. Spitzer told a reporter last fall, “is perhaps something that comes too naturally to me.”

New York Gov. Eliot Spitzer's alleged involvement in a prostitution ring has sent some heads spinning. The possible acts of impropriety run counter to the politician's hard-line career commitment to fighting corruption. The obvious question on many minds: What was he thinking?

The short answer, researchers say: Power and corruption go together.

Psychologists suggest several reasons for Spitzer's seeming hypocrisy, including a feeling of invincibility and "no one can touch me" attitude. People in high positions have more opportunities to step out of line. Humans hold leaders to higher standards and elect those individuals whom they think can resist great temptations.

Spitzer, 48, allegedly paid $4,300 for a prostitute to commute from New York to Washington and meet him at a hotel there last month. News reports state Spitzer was tracked with court-ordered wiretaps. Spitzer was a repeat call-girl customer known as "Client 9," according to The New York Times.

In his prior position, as New York State's attorney general from 1998 to 2006, Spitzer garnered respect for his unrelenting pursuit to root out Wall Street corruption. He also prosecuted at least two prostitution rings during that time.

Power has been and will forever be entangled with corruption for various reasons. With more opportunities for lying-cheating-stealing behaviors, political leaders must be on their toes double-time.

Perhaps that's why power figures and sexual improprieties sometimes seem linked in the public mind. For instance, Sen. Larry Craig was arrested last year for lewd conduct in an airport men's room. Also in 2007, Sen. David Vitter was linked with prostitutes when his telephone number showed up on phone records of "D.C. Madam," an alleged prostitution service. This list goes on to include Rep. Barney Frank, who in 1989 admitted a relationship with a male prostitute, according to news reports.

If guilty, someone like Spitzer would likely be blown away that he or she was caught in an allegedly criminal act, because with so much professional success, failure is the furthest thing in his or her head, another expert says.

REAL SOCIALISM

Spain's ruling Socialists won a second term in elections Sunday as voters brushed aside concerns over the slowing economy and soaring immigration and backed the party's liberal social reforms.

The victory was much narrower than socialists had hoped, and leaves Mr Zapatero well short of the absolute majority of 176 seats he craved. The victory amounts to an endorsement of his record reforms, and of conceding more powers to Spain's autonomous regions.

For Mr Rajoy, the second consecutive defeat marks a crushing setback and is likely to increase pressure on him to quit as party chief.

With the marginalisation of fringe parties, the results have produced what a disappointed leader of the United Left party Gaspar Llamazares called "a tsunami of bi-party-ism". Conservative regional nationalist parties including Catalonia's Convergence and Union and the Basque nationalists party held up however, with 10 and six seats respectively. The Galician Nationalist Bloc kept its two seats.

But support for radical nationalist groupings in Catalonia and the Basque Country crumbled. The pro-independence Catalan Republican Left slumped from eight to three seats. The pro-communist United Left (IU) dropped from five to two seats. Conservative regional parties in Aragon and Navarra also lost seats.

Socialists started celebrating at party headquarters in Madrid soon after polls closed, and within an hour the street outside was jammed with euphoric supporters. "Zapatero, you didn't fail us," they chanted.

Hundreds celebrated the victory amid a sea of red and white Socialist Party flags. With 99.95 percent of votes counted, his Socialist Party was predicted to secure 169 seats, short of the 176 need for an overall majority in the 350-member assembly, against 153 for the conservative opposition Popular Party (PP) of Mariano Rajoy.

In the last legislature, the Socialists had 164 seats and the PP 148.

Turnout was estimated to be 75.3 percent, close to the high 75.66 percent in general elections four years ago. In Senate elections the Popular Party lost one seat to 101 of the 208 seats at stake in the 264-seat upper house, with 99.42 percent of the votes counted.

Zapatero's socialists won eight more seats and now have 89 senators.

The record participation in March 2004 had also helped Zapatero, now 47, to score a surprise win over Rajoy, 52, three days after train bombings in Madrid that killed 191 people.

Voters then were infuriated at the conservative government's insistence that ETA was to blame, even though evidence pointed to Islamic extremists angered by Madrid's role in the Iraq war.

Election campaigning was again suspended this time around, after a former municipal legislator, Isaias Carrasco, a Socialist, was shot dead Friday in the northern Basque region.

There have been no claims of responsibility, but police said the attack bore the hallmark of the Basque separatist group ETA, which has killed over 800 people in its nearly 40-year campaign for an independent homeland.

Spaniards on Saturday received an emotional plea to turn out and vote from Carrasco's daughter, as hundreds attended his funeral. Pictures of a grief-stricken Sandra Carrasco made the front pages of almost all Spanish newspapers on Sunday, and the conservative press had warned that it could help the Socialists.

The centre-left El Pais commented: "Some are already beginning to put out the idea that a bigger Socialist win than predicted by the opinion polls will be due to the killing of Isaias Carrasco."

During his four years in power, Zapatero has brought in sweeping social reforms, including same-sex marriage, fast-track divorce, laws to promote gender equality and an amnesty for undocumented workers.

The elections came as a decade-long economic expansion has begun to slow due to the international credit crunch which has hit Spain's key construction sector.

Rajoy, a former education and interior minister, has also accused the government of being soft on terrorism by launching failed peace talks with ETA.

Rajoy sought to put the best face on the defeat.

The PP "is the party that most progressed in Spain, in terms of votes and seats," he told cheering supporters at the party's headquarters in Madrid.

In regional elections in southern Andalusia, also held Sunday, the socialists lost five seats to 56 compared to the 2004 elections but maintained their overall majority in the 109-seat chamber, while the Popular Party won 10 more seats and will now have 47 in the regional assembly.

In addition to immediately removing Spanish troops from Iraq, Mr. Zapatero has legalized gay marriage, passed legislation that cracks down on domestic violence, and made gender parity mandatory within political parties. In 2005, his government offered residency permits to hundreds of thousands of previously undocumented immigrants who could prove they had a job.

The economy, which has faltered in the past few months after four years of unprecedented prosperity, was nevertheless on voters' minds. Although the Popular Party worked hard to promote their own economic policies and raise fears about the impact of immigration on the average Spaniard's financial well-being, its strategies were not as persuasive as Socialist promises to issue tax rebates and to subsidize housing.

Spain's governing Socialists won a second term in office but will again need the support of smaller parties to reboot a slowing economy and deal with Basque separatists after an election that left the country deeply divided politically.

With 99.9 percent of the vote counted in Sunday's election, Prime Minister Jose Luis Rodriguez Zapatero's party won 169 seats against 153 for the conservative opposition Popular Party of Mariano Rajoy.

The victory, although an improvement of five seats for the Socialists from the 2004 election, left the party seven short of a majority in the 350-seat parliament.

"A Second Opportunity," read the editorial headline in leading daily El Pais, which noted that the result increased the tendency toward a two-party nation.

The Socialists "will have to continue counting on external support," the paper said. Offers of help came quickly from the Basque Nationalist Party, which won six seats.

With more than 99 percent of the ballots counted, Mr. Zapatero’s party won 43.7 percent of the vote, and the conservative Popular Party 40.1 percent, according to the Interior Ministry. Turnout was high — an estimated 75.4 percent of the country’s 35 million eligible voters — only a shade below the 75.7 percent turnout in 2004.

The election was a rematch of the bitter contest four years ago between Mr. Zapatero and Mariano Rajoy, the head of the Popular Party.

Throughout the past four years, Mr. Rajoy and his party called into doubt Mr. Zapatero’s legitimacy and relentlessly tried to block his agenda.

So it was not surprising that in his speech conceding defeat Sunday night, Mr. Rajoy stood firm on principle, but said nothing about the need for national unity. “Everyone knows we are predictable,” he said. “Everyone knows what we stand for. Everyone knows what I believe in.”

The voting was overshadowed by the killing on Friday of a Socialist advocate in the Basque region, for which the government and the opposition blamed ETA, the militant outlawed Basque independence group. But it was too soon to say what effect the killing may have had on the vote.

In casting their ballots, many voters expressed both frustration with the petty infighting that has dominated the campaign and worry about the sudden downturn of the strong economy during the last year.

In the upscale Madrid neighborhood of Salamanca, Gloria Perez, a 58-year-old librarian, said the poor economic performance of Mr. Zapatero’s government prompted her to shift her vote this time to the United Left, the main Communist Party, from the Socialists.

“Zapatero has not done enough to bring down the price of rents, control mortgage costs, help young people and get us workers better salaries,” Ms. Perez said. She added that she was not impressed by tax incentives offered by the two main parties, including the Socialists’ promise of a 400-euro tax rebate, about $620, for all taxpayers.

“What good is 400 euros going to do me?” she said. “That’s bread today, hunger tomorrow. We need reforms that will help us in the long term: better work contracts, better salaries, less inflation.”

Other voters said they wanted to support Mr. Zapatero’s ambitious social and political agenda that has ushered in reforms like new rights for women and recognition for the victims of the Fascist Franco dictatorship.

“Zapatero has given us more rights than any leader to the people of Spain: the old, the young, gays, men, women,” said Santiago Cruz, 69, a retired plumber who lives in the working-class Madrid suburb of Vallecas, which has a large immigrant population. “I grew up under Franco with no rights. I grew up having to sing Franco’s anthem so that his Fascist supporters would throw me scraps of cabbage.”

Other voters claimed that Mr. Zapatero’s social reforms were destroying Spain’s value system.

“Zapatero is breaking with the traditional Christian values that we have espoused our whole lives,” said Miguel María Santos de Quevedo, a 76-year old retired notary in Tomares, a town in Andalucía, who said he voted for the Popular Party. “He wants to impose his relativist values on everyone, to claim that there is no such thing as good and bad.”

The election of the prime minister involves a complicated process in which voters do not vote for one candidate but for one party list of candidates for deputies in Parliament.

Voters had more than two dozen party lists from which to choose. A tiny new progressive party headed by a Socialist former lawmaker who broke with Mr. Zapatero because of his negotiations with ETA won one seat in Parliament, for example.

The rightist Falange, which opposes immigration and is devoted to preserving the memory of the late dictator Franco, also ran but failed to win a seat.