March 14, 2008 -- This week, the big news for many of my company's clients has been the Eliot Spitzer scandal in New York. My company provides editorial coverage to Wall Street magazines, among other publications, and Eliot Spitzer wall well known for prosecuting high-profile Wall Street cases before he became governor of New York State.

In fact, Eliot Spitzer was one of the top prosecutors in the U.S. In addition to going after the big money, he also prosecuted other kinds of criminals -- including prostitution rings. In his prosecutions, he used techniques such as following the money trails, and tapping telephone calls.

This week, we learned that other prosecutors -- also following suspicious financial transactions and listening to tapped telephone conversations -- had caught Eliot Spitzer himself paying for prostitutes. He will now forever be known by his code name, "Client No. Nine."

Over the past decade, Spitzer allegedly spent around $80,000 on prostitutes, typically paying $1,000 per hour. In at least one case, he paid to have a prostitute take a train trip from New York City to Washington D.C. Transporting a prostitute across state lines is a federal crime -- severely increasing the possible punishment he might get.

Spitzer resigned from his office as governor of the state.

Today, the details of his encounters with prostitutes are all over media around the world. "Kristen," the woman who took the train to Washington D.C. has been tracked down and is about to become spectacularly famous. It turns out that she's an aspiring singer, and her songs are being downloaded off the Internet at a rapid pace. If there's a silver lining in this cloud, it's is for Kristen -- also known as Ashley Alexandra Dupre. She's likely to get plenty of offers from magazines, talk shows, and music producers.

Spitzer, on the other hand, is done. His political career is over, and there's no chance he'll be able to go back to his previous job as prosecutor.

The stupidity of his actions is amazing. Did he think he was going to get away with this for ever? Did he think he could outsmart investigators? Did he think he was too powerful to be brought down? Did he say to himself, "everybody is doing this?"

It only takes one bad act to bring down a career, or to bring down a corporation. Enron's accounting firm, Anderson, was a top-five global firm before the actions of a small group of accountants in Texas brought down the whole company.

The lesson from the Spitzer scandal is that bad acts will catch up with you -- and, if Murphy's Law is to be believed, they will happen at the worst possible time.

In recent days, managers at two different consulting companies here in China admitted to me that they were breaking local laws. In one case, instead of setting up a rep office and operating legitimately, all the foreign employees were here on dodgy short-term business visas. Ironically, one of the services this company offers is market entry advice.

In another, one of the partners of a firm explained how they avoided paying taxes on the service income they received -- claiming that they were doing it to save their customers money. Since one of the services this consulting company offers is financial advice, this is a really bad sign. If they're cheating the government, are they going to cheat their customers, as well?

Finally, who wants to be standing next to one of these guys when they finally go down?