ALBANY, New York (CNN) -- Aides to New York Gov. Eliot Spitzer and the state's lieutenant governor have begun planning for a possible transition after federal prosecutors linked Spitzer to a high-end prostitution ring, a top legislative staffer said Tuesday.
Gov. Eliot Spitzer, with his wife, Silda, by his side, apologizes to his family and to the public on Monday.
Spitzer, a former state attorney general whose reputation as a scourge of white-collar crime propelled him to the governor's office in 2006, has faced calls for his resignation since apologizing for an undisclosed personal indiscretion Monday afternoon.
The Republican leader of the state Assembly said Tuesday that he would move to impeach Spitzer if he remained in office.
Three Democratic sources involved in state and party politics told CNN that negotiations were aimed at orchestrating the governor's resignation as early as Wednesday morning.
But all three said on condition of anonymity that the situation was volatile, noting that indications that Spitzer would step down Monday turned out to be unfounded.
Two of the three sources said close Spitzer aides were attempting to resolve some remaining political issues, including a formal resignation and transfer of power to Lt. Gov. David Paterson.
On Monday, prosecutors unsealed an affidavit detailing a rendezvous in a Washington hotel room last month as part of a federal prostitution investigation.
The affidavit refers only to "Client 9," but a source told CNN on Monday that the reference was to Spitzer.
Sources say Spitzer spent more than $15,000 for several encounters with prostitutes.
Assemblyman James Tedisco, a Republican, said he would take action against Spitzer if he did not resign soon. "It's not something we rejoice in; it's nothing political," he told CNN's Wolf Blitzer of the impeachment plan. "It's what's right and what's wrong." Watch more of Tedisco's interview »
Tedisco said he was providing a two-day window for Spitzer to leave office because the governor "may be making decisions or negotiations with the law enforcement officials in relationship to the legal aspects of this."
A Democratic source said, "it is a 'when' question on the resignation. Not an 'if'. He knows that. It is hard to come to terms with, and there are legal issues that are related to any big political decisions. But Eliot knows he cannot hold onto his job here. He might want to, but he is absolutely aware of his predicament." Watch how details of the scandal are emerging on the Web »
Paterson, 53, would become the first black governor in the state and the fourth in U.S. history. The former state Senate minority leader, who is legally blind, is the son of Basil Paterson, a longtime Democratic operative in New York City.
"The public is hoping for that replacement to redeem the office and to redeem their faith in elected officials in general. So David Paterson, in a sense, walks into a great opportunity," said Steve Kornacki of the New York Observer.
"David is a wonderful young man," said Assemblyman Herman Farrell, chairman of the Ways and Means Committee. "He would provide good leadership."
Tedisco said impeachment articles are being prepared, though they haven't been introduced in the state Assembly in more than a century.
"Our hearts are broken," Tedisco added. "But we have to continue with governance here, and this is a total distraction. It's a circus here at the New York State Capitol."
More than half the Assembly would need to approve impeachment for it to pass. That would require all 42 Republicans and about a third of the 108 Democrats in the Assembly to cast "yes" votes. The GOP-controlled Senate then would need to pass the measure by a two-thirds vote.
Tedisco spokesman Josh Fitzpatrick said the state's system of impeachment is modeled on the federal system, which cites "high crimes and misdemeanors" as the bar needed to convict by the legislative body.
Though he hasn't been charged with a crime, Spitzer has begun assembling a legal team. He has chosen Michele Hirshman as his lead attorney, said Madelaine Miller, a spokeswoman for Hirshman's law firm, Paul, Weiss, Rifkind, Wharton & Garrison.
Hirshman, who was the first deputy attorney general under Spitzer when he was New York attorney general, also is a former assistant U.S. attorney who "served as chief of the Public Corruption Unit, where she led major investigations and prosecutions of government fraud and political and police corruption," according to the law firm's Web site.
The Republican Governors Association also called on Spitzer to resign to "allow the people of New York to pursue honest leadership."
"The American people are tired of corrupt and hypocritical politicians. The governor of New York is just another in the long list of politicians that have failed their constituents," said Nick Ayers, the association's executive director. View a gallery of recent political sex scandals »
Spitzer, 48, took office in January 2007 after eight years as the state's attorney general, rising to national prominence. See a timeline of his life »
He built his career on rooting out public corruption and became a national figure with a series of high-profile Wall Street investigations. He also prosecuted prostitution rings. Watch how Wall Street views Spitzer scandal »
Spitzer is married with three children. Watch Spitzer's apology »
Sources said a federal money-laundering investigation led agents to Spitzer. According to two sources who spoke Tuesday with CNN, Spitzer appeared on federal radar when a bank reported to the Internal Revenue Service that a significant amount of money had been suspiciously transferred from one account to another.
Federal law requires a banking institution to file a suspicious activity report when the institution suspects a transaction is linked to a federal crime. More specifically, the banks are required to report to the IRS any transactions totaling $5,000 or more if the transactions "involve potential money laundering or a violation of the Bank Secrecy Act."
The act requires businesses to keep documents that are useful for identifying and investigating money laundering. After receiving the IRS report last year, the FBI corruption squad linked the account transfers to a prostitution ring, according to various sources.
The FBI criminal division joined the inquiry to look into the prostitution ring, while the federal corruption team continued its investigation into Spitzer. Investigators are focusing on how Spitzer is thought to have paid for the sexual encounters, what he may have done to conceal the movement and source of the money, and whether he broke any laws doing it, sources said Tuesday.
Spitzer was allegedly moving money between several of his own accounts, the sources told CNN. Those sources say the money ended up in the bank accounts of shell companies linked to the prostitution ring. Prostitution had been the last thing on investigators' minds before that, the sources said.
The sources said they don't believe that Spitzer used taxpayer dollars; some indicated that investigators think Spitzer might have been shuffling money to hide things from his wife.
Spitzer has not been formally questioned, sources said. Financial investigations take a long time, they said, and it is possible his lawyers will meet with federal prosecutors to discuss legal issues.
Now there is a question of whether the scandal could end in prison time.
The 47-page affidavit details arrangements for a nearly 2½-hour rendezvous between Client 9 and a high-dollar prostitute -- identified only as "Kristen" -- at a Washington hotel in February.
A source identified as the hotel as the Mayflower. Sources told CNN that Spitzer rented two rooms, one under the name of a political donor, George Fox, where Spitzer is said to have met with the prostitute from New York. Watch breakdown of key dates in Spitzer scandal »
The Emperors Club, for which officials said the prostitute worked, charged between $1,000 and $5,500 an hour and operated in New York; Los Angeles, California; Miami, Florida; London, England; and Paris, France, according to court papers released by prosecutors last week. Authorities learned more about the inner workings of the prostitution ring by using wiretaps and accessing text messages, according to the affidavit.
The affidavit alleges that Client 9 paid for the prostitute to travel from New York to Washington. The Mann Act makes it a federal offense to take someone across state lines for the purpose of prostitution.
The affidavit recounts communication between members of the alleged prostitution ring in which they said Client 9 would be "paying for everything: train tickets, cab fare from the hotel and back, mini bar or room service, travel time, and hotel." E-mail to a friend
CNN's John King, Kelli Arena, Kevin Bohn and Dana Garrett contributed to this report.
All About Eliot Spitzer