Spitzer was the initial target of the investigation and was tracked using court-ordered wiretaps that appear to have recorded him arranging for a prostitute to meet him at a Washington hotel in mid-February, the official said.

The official spoke to The Associated Press condition of anonymity because of the sensitivity of the investigation.

The scandal surrounding the man who built his political reputation on rooting out corruption stunned the state. Calls for Spitzer's resignation began immediately and intensified Tuesday with the New York Daily News, New York Post and Newsday all demanding that he step down.

Spitzer retreated from public view Monday afternoon, when he appeared glassy-eyed with his shellshocked wife, Silda, at his side and apologized to his family and the public, but did not directly acknowledge any involvement with the prostitute.

Scrambling to ease the strain on the credit market, the Federal Reserve announced a $200 billion program on Tuesday that would allow financial institutions, including the nation’s major investment banks, to borrow ultra-safe Treasury money by using some of their riskiest investments as collateral. Wall Street responded with a rally, with the Dow Jones industrials surging 150 points.

This was the central bank’s second effort in a week to unfreeze the nation’s panicky credit markets, where investors have become too frightened to finance even conservative debt offerings, which in turn has caused a cash squeeze at seemingly solid financial institutions.

Stock markets soared after the announcement, with the Dow Jones industrials gaining 260 points before falling back to 11,925.85, a 185-point gain, at 12:30 p.m. as brightened investors snapped a three-day losing streak. The Standard & Poor’s 500-stock index was up 1.4 percent, and the Nasdaq composite index gained 1.5 percent.

The Fed normally lends Treasury securities to banks for just a few hours. Under the new program, money will be lent for 28 days and the central bank will accept nongovernment mortgage-backed securities — the source of the current crisis in the credit markets — as collateral. The Fed will require that the assets, which are linked to soured home loans, have a premium credit rating.

The new program, dubbed the Term Securities Lending Facility, will effectively allow strapped financial institutions to hand over potentially damaged securities to the government in exchange for either cash or easily traded Treasury securities, some of the safest in the market.

Microsoft cut the prices of its Xbox 360 video game console in Europe by up to 28 percent on Monday in a bid to promote sales in a key battleground in the fast-growing industry.

The cut brought the cheapest Arcade version to 200 euros ($307 U.S. dollars) and the high-end Elite to 370 euros ($568 dollars).

"Xbox 360 is now mass market in Europe," Chris Lewis, vice president of Microsoft's interactive entertainment business in Europe, said in a statement.

History has shown that the reduced price point "is where a console's audience begins to expand, and with these new ERP's in place, we're ready to bring more consumers in the Xbox 360 world," Lewis added.

The reductions were made as Sony Corp's PlayStation 3 appears set to capitalize on the company's recent victory in the high-definition DVD battle.

It was the second time in less than a year that Microsoft had attempted to gain market share for the Xbox 360. It shaved 7 percent off the euro price of its low-end model and 13 percent off the main Premium model in last August.

The company claims that the Xbox 360 is now the number one next generation console in Europe as well as the Middle East and Africa, where it holds 42 percent of the market.

The PlayStation brand has long dominated the European console market. Meanwhile, Nintendo is winning customers with its Wii machine that sports unique motion-sensing controls and games that are easier to learn.

The decision by Judge Silvino Pampilo Jr. of the Manila Regional Trial Court came after a 17-year trial in the case, involving some $863 million in Swiss bank accounts.

Pampilo said the prosecution presented witnesses that were not directly relevant to the accounts, and failed to prove wrongdoing by Marcos beyond a reasonable doubt.

Marcos and two associates were accused of unlawfully opening 11 dollar accounts in Switzerland under the names of 10 foundations linked to the Marcos family to hide alleged ill-gotten wealth, Pampilo said in a telephone interview.

"The prosecution presented inadmissible evidence," he added.

The money has been frozen by the government and is being held in escrow at the Philippine National Bank.

Pampilo said the forfeiture proceedings for the funds are separate and being handled by the anti-graft court Sandiganbayan, and that Marcos was acquitted only on the criminal case.

The wealthy socialite, 79, gained fame for the extensive shoe collection and diamond- encrusted tiaras she left behind when she and her husband fled the country after his 1986 fall from power.

Among the 47 people named in the lawsuit filed with the Supreme Court are three members of the current Cabinet, according to Sitthichoke Sricharoen, a lawyer representing the Assets Examination Committee.

"It is now up to the Supreme Court to decide whether or not to accept the case," Sitthichoke said.

The targets of the suit are accused of malfeasance for allegedly mismanaging and illegally spending money gained from the lottery scheme initiated by Thaksin's government.

The complaint alleged that irregularities in the scheme caused the state $1.17 billion in financial losses. It asked the Supreme Court to order the 47 people to pay the damages.

Thaksin's government launched the lottery in 2003, saying it would lure people away from the popular illegal underground lottery and also would generate revenue for education.

In addition to officials of the government lottery office, the suit targets Thaksin — who was toppled in a 2006 military coup and returned from exile last month to face other cases against him — and 29 members of his former Cabinet.

Three of those named in the suit are in the current government of Thaksin ally Samak Sundaravej.

The committee had previously submitted the case to the Attorney General's office, which had declined to prosecute it. This time it decided to submit the complaint directly to the Supreme Court's criminal division for political office holders, said Sitthichoke.

Rakkiat Pattanaphong, the division's secretary, said a panel of nine judges will take 30 days to deliberate whether to accept the case and order a trial.

The AEC was established right after the September 2006 coup that toppled Thaksin. There are several other corruption-related suits under way against Thaksin and his family, but none have yet come to trial.

Brian Z. Liss has joined theWashington, D.C. office of Sheppard Mullin Richter & Hampton LLP as specialcounsel in the firm's Labor and Employment practice group.  Liss most recently practiced with MorganLewis & Bockius in Washington, D.C. 

Liss focuseshis practice on wage and hour counseling and litigation, National LaborRelations Act and Railway Labor Act arbitration and litigation, labor law complianceadvice and defense of unfair labor practice charges, labor and employment lawdue diligence for mergers and acquisitions, and employment discriminationcomplex litigation.  Liss' practice alsoincludes advising clients regarding the labor and employment law ramificationsof business transactions, negotiation and administration of collectivebargaining agreements, and employment law counseling. 

Liss has extensive experiencearbitrating union grievances, litigating Fair Labor Standards Act collectiveactions, and litigating Title VII, ADA, FMLA, and multi-plaintiff"hybrid" breach of contract/duty of fair representation cases.  Liss also has experience conductingcomprehensive internal wage and hour audits, representing clientsin federal and state Department of Labor audits, developing employmentpolicy manuals and training materials, and conducting wageand hour training for human resources staff, supervisors, and managers. 

"We are thrilled that Brian has elected to join us," said EdSchiff, managing partner of the firm's Washington, D.C. office.  "He will be a great addition to our firmand to the Washington, D.C. office, as we continue to expand the Labor andEmployment group on the East Coast.  His depthof experience in labor relations is a perfect fit for the practice group andallows us to provide added resources for our client representation."

Commented Liss, "I am thrilled to rejoin former colleagues SheldonKline and Jonathan Rose, as well as begin practicing with the other top-notchemployment attorneys at Sheppard Mullin. I am greatly impressed by the firm and look forward to expanding theLabor and Employment practice in D.C."

Labor and Employment partnersSheldon Kline and Jonathan Rose joined Sheppard Mullin last year.  Sheppard Mullin has 40 attorneys based in itsWashington, D.C. office.  The firm'sLabor and Employment practice group includes more than 65 attorneys. 

About Sheppard MullinRichter & Hampton LLP

Sheppard Mullin is a fullservice AmLaw 100 firm with more than 520 attorneys in 10 offices locatedthroughout California and in New York, Washington, D.C. and Shanghai.  The firm's California offices are located inLos Angeles, San Francisco, Santa Barbara, Century City, Orange County, Del MarHeights and San Diego.  Founded in 1927 on the principle that the firm would succeedonly if its attorneys delivered prompt, high quality and cost-effective legalservices, Sheppard Mullin provides legal counsel to U.S. andinternational clients.  Companies turn to Sheppard Mullin to handle a full range ofcorporate and technology matters, high stakes litigation and complex financialtransactions.  In the U.S., the firm'sclients include more than half of the Fortune 100 companies.  For more information, please visit www.sheppardmullin.com.

A court ruling that California parents "do not have a constitutional right" to home-school their children has touched off anger and bewilderment throughout America's home-schooling community and prompted a denunciation from Gov. Arnold Schwarzenegger.

For a movement that has gained greater accommodation in recent years, a state appellate court decision last month is a setback that, if not overturned on appeal, could force some 166,000 home-schooled students in California to enroll in conventional schools. It may also prod California and other states with vague or nonexistent laws on home schooling to be more specific about what is allowed and what is required of home-schoolers.

California's education statutes, for instance, do not mention "home schooling," but officials have allowed the practice for decades. The appellate court, however, found that the state's laws have not been changed to allow home schooling since a case back in 1953 erected a major roadblock to the practice.

Governor Schwarzenegger said Friday he would go to the legislature if the ruling is not overturned.

"I could see this ruling being a real strong impetus for home-schoolers in California to get the legislature to change their laws.... Or I could see it being perhaps the beginning of other states wanting to look more closely both at their laws and current enforcement," says Kimberly Yuracko, a professor at Northwestern University's Law School in Chicago.

The number of students nationwide who are home-schooled is not known because 10 states are so hands-off they require no reporting at all, nor do parents always comply with reporting requirements. Estimates range from 1.1 million to 2.5 million home-schooled students, and the numbers are rising.

About half the states require more than simple notification from parents or guardians, such as testing, curriculum approval, or home visits. But such rules are dwindling – either explicitly or by lax enforcement, say experts. Home-school advocates worry the California case could bring more regulation or enforcement, or both.