March 11 (Bloomberg) -- The U.S. investigation of New York Governor Eliot Spitzer for links with a call-girl ring started with Internal Revenue Service officials looking into suspicious financial transactions, the New York Times reported, citing people close to the matter.

The Hauppauge, New York-based tax officials were alerted by banks to unusual movements of several thousands of dollars in cash involving the governor of New York, according to the newspaper.

The IRS, FBI agents and federal prosecutors began looking into what they thought might be bribery, corruption or illicit campaign financing, the Times said. They then learned that the payments involved sex and were being hidden to conceal Spitzer's link to payments for rendezvous with call-girls, the Times said.

Several thousand dollars in cash were being transferred to shell companies, the newspaper said.

Spitzer, called Client 9 in records, was captured in secretly recorded conversations arranging a Washington, D.C., meeting with a prostitute, the Times said in an earlier report.

Messages left by Bloomberg News with Spitzer's office went unanswered; calls and e-mails sent to the Manhattan U.S. Attorney General's office didn't get an immediate response.

To contact the reporter on this story: David Altaner in London at daltaner@bloomberg.net

Last Updated: March 11, 2008 04:03 EDT