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The reason this is a federal case is the prostitute he allegedly hired came down from New York, thus crossing state lines and invoking the jurisdiction of the federal government.
Gov. Spitzer has been identified as "Client Number 9" in the wiretap recordings. Apparently, this is not the first time Gov. Spitzer has allegedly used the service; "Client Number 9" had a credit with the company.
Gov. Spitzer is the former New York City prosecutor. After leaving that post he served as the New York attorney general, where he was instrumental in prosecuting several prostitution rings. Therefore, he definitely would have been aware of the federal law known as the Mann Act which prohibits taking people across state lines for sexual favors for money.
The fact that Gov. Spitzer has personally put prostitutes behind bars has led to charges of stunning hypocrisy and thus has fueled widespread expectations that he will resign as Governor of New York.