Sources familiar with the federal investigation say the Manhattan branch of Spitzer's bank alerted the IRS after noticing a series of suspicious money transfers from a Spitzer account, Newsday reported Wednesday.

Since wire transfers of $10,000 or more are reported to the government, Spitzer wired smaller amounts from his branch to a consulting group that turned out to be the front for a prostitution ring.

The sources say after sending the smaller amounts, Spitzer apparently had second thoughts and asked the bank to remove his name from the transfers.

Instead, the bank filed a Suspicious Activity Report with the Internal Revenue Service because the transfers had added up to more than $10,000, Newsday reports.

Because Spitzer was a public official, the Suspicious Activity Report was forwarded to IRS criminal investigators who joined with federal prosecutors in New York and the FBI to investigate the matter.