Developer Helped Congressman By Buying Boat, Arranging Loan

Thomas T. Kontogiannis, a Long Island developer, says he doesn't particularly like politics, so he never does business with the federal government. Still, he hit it off with Rep. Randy "Duke" Cunningham years ago, and recently Kontogiannis bought Cunningham's 65-foot yacht, the Kelly C, and helped the California Republican finance a house.

The developer says the transactions are nothing like Cunningham's dealings on another house and yacht that are the subject of a federal investigation. A federal grand jury is examining Cunningham's relationship with Mitchell J. Wade, a Washington defense contractor who bought a home from Cunningham, possibly at an inflated price, and then let the congressman stay rent-free on Wade's 42-foot boat, the Duke-Stir, while in Washington.

The transactions between the congressman and Kontogiannis are not fully documented in the public record or the congressman's financial disclosure. Cunningham, for example, is still listed as the owner of the Kelly C, with his address listed as the home he bought more than a year after Kontogiannis said he bought the yacht from the congressman.

Kontogiannis, of Glen Head, N.Y., said in interviews this weekend that he bought the Kelly C, a boat on which Cunningham used to live while Congress was in session, for $600,000 in summer 2002. Kontogiannis spent $100,000 more redecorating it the next year at the Glen Cove marina but didn't use it except for dockside parties, he said, because it wasn't stable in rough seas. Kontogiannis said he never got around to changing the title on the boat from Cunningham's name to his.

Then in late 2003, Kontogiannis said, when Cunningham bought a $2.55 million home in Rancho Santa Fe, the congressman asked if a mortgage company owned by Kontogiannis's nephew and daughter could finance $1.1 million in mortgages. The congressman bought that house shortly after Wade paid $1.675 million for Cunningham's previous home in Del Mar. Wade then sold that house for a $700,000 loss.

Kontogiannis said he recently paid off a $500,000 second mortgage on the Rancho Santa Fe home at the congressman's request, mostly with money he owed Cunningham for the yacht.

There is no mention of Kontogiannis's debt to Cunningham on the congressman's financial disclosure statements.

Cunningham's lawyers, K. Lee Blalack II and Mark Holscher, said in a written statement that the congressman's "business dealings with Mr. Kontogiannis have been entirely proper."

Cunningham called and visited the Long Island marina a month ago -- before news stories about Wade appeared -- to arrange for repairs so he could take the Kelly C back to Washington.

Kontogiannis, 56, said he had discussed reselling the Kelly C to Cunningham but decided against it. The source close to Cunningham said the congressman registered the boat this year using his new California address in anticipation of the resale. But that idea was jettisoned when San Diego area newspapers broke stories about the congressman's dealings with Wade.

The developer said his failure to record the change in title on the boat should not be taken as a sign that he was doing Cunningham a favor by paying for refurbishing his boat. "Why would I do that?" he said. "I don't need the man." Kontogiannis said he has never asked Cunningham for a favor.

The developer pleaded guilty to what he said was a misdemeanor state fraud charge in 2002 in connection with alleged bribes to a local school superintendent in return for $6 million in computer contracts. He said he agreed to pay $5 million in reimbursement.