Search Targets Contractor With Ties to Lawmaker

By Charles R. Babcock and R. Jeffrey Smith
Washington Post Staff Writers
Thursday, August 18, 2005

Federal authorities searched the offices and home of a politically well-connected San Diego defense contractor Tuesday, an apparent expansion of the grand jury investigation of Rep. Randy "Duke" Cunningham (R-Calif.).

San Diego area newspapers yesterday reported the search by FBI, Internal Revenue Service and Defense Department agents at the offices of ADCS Inc. and the home of its chief executive, Brent Wilkes, a major contributor to Republican politicians.

Neither law enforcement officials nor the company would comment on the reason for the search. Wilkes is a former business associate of Mitchell J. Wade, the head of MZM Inc., a defense contractor under investigation by a San Diego grand jury. That inquiry was prompted by newspaper reports in June suggesting that Wade had done financial favors for Cunningham.

Cunningham, a longtime member of the House subcommittee that oversees the Pentagon budget, has acknowledged pushing for funding of classified programs on which MZM worked, but he has denied wrongdoing. He announced last month that he will not run for reelection next year.

According to federal databases, ADCS has received $80 million in Defense Department contracts since 1999, mostly for converting documents into digital form using proprietary software. Wade is a former consultant to ADCS who met Cunningham through his work for the San Diego company, according to sources familiar with the relationship.

The Pentagon's inspector general previously investigated several ADCS contracts because of complaints "alleging favoritism and inappropriate actions," and he concluded in 1999 that they were awarded as the result of irregular procedures. Louis A. Kratz, an assistant deputy undersecretary of defense, said in a recent interview that he had requested the IG probe. Both Cunningham and Wilkes had called him seeking the release of funds for ADCS, he said.

Kratz said he had never before experienced anything close to their "meddling" and "arrogance." Wilkes "implied that it was his money," Kratz said, though the funding was earmarked for a program, not a company. The document conversion program was later killed, Kratz said.

"I can't address the specifics of this report," said K. Lee Blalack II, Cunningham's attorney, "but there is nothing inappropriate nor unusual about a member of Congress calling the Pentagon on behalf of a constituent regarding the use of appropriated funds."

Michael Lipman and Barbara Murray, attorneys for ADCS, issued a statement saying: "It is not clear what information the government is seeking and what role ADCS may have in the government investigation. ADCS strongly believes that all of its actions have been proper and appropriate. ADCS is confident that the government will come to the same conclusion."

Wilkes and his wife, Regina, are heavy political contributors. They donated a total of $139,806 to state and federal lawmakers and political action committees between 2001 and 2004, mostly to Republicans, according to data published by the nonpartisan Center for Responsive Politics. Wilkes was also a "Pioneer" in President Bush's 2004 reelection campaign, a designation indicating that he had raised at least $100,000 during that cycle.

The ADCS political action committee gave $125,000 to 29 congressional candidates from 2001 to 2004, including members of the House and Senate Armed Services and intelligence committees, who had the capacity to influence spending on the company's contracts. Since 1997, Cunningham and his PAC have received $79,250 in campaign contributions from Wilkes, the ADCS PAC and the firm's employees.

In 2003 and 2004, House Majority Leader Tom DeLay (R-Tex.) flew three times on corporate jets owned by Group W Transportation, a firm controlled by Wilkes.

In 2000, Wade listed his occupation as "consultant" to ADCS and gave a $5,000 donation to its political action committee. Two years later, he donated $29,500 to Wilkes's personal foundation, according to its tax return. That year, the foundation sponsored a dinner honoring Cunningham.

Research database editor Derek Willis contributed to this report.

© 2005 The Washington Post Company