First, the definitive post on this matter is from Some Guy with a Website. I won’t quote it here, it’s about 4 paras long, but if you removed the F-bombs and the word “stupid”, it would be one sentence.

According to TPM, it appears that Spitzer was not caught as the result of an investigation of the Emperor’s club escort service, but that the Emperor’s club was caught as a result of an investigation of Spitzer.

It appears that Spitzer had a large number of cash withdrawals from his bank account that were not much less than the $10,000 level which would require notification under the law, and so the bank reported possible “structuring”, of the use of smaller transactions to obscure a larger one.

This is a red flag for things like bribery, so the US Attorney’s public integrity division looked into it, and in following the case, determined that there was no bribery, but that he was paying prostitutes.

I do believe that Spitzer will resign, but not until he has cut a deal, which makes sense. If he were to resign now, he would see a no holds barred felony prosecution by the corrupt politicized Bush DoJ with the goal of putting him in jail for decades.

His resignation would be ceding a major bargaining chip to the prosecution. As a former NY State AG, he knows this.

As to the possible prosecution under the Mann Act, it isn’t going to happen when the principals were both consenting, though it may be used as a lever by the prosecution.