Prosecutors: Cunningham Violated Bribery Law

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By Charles R. Babcock
Washington Post Staff Writer
Friday, August 26, 2005

Rep. Randy "Duke" Cunningham (R-Calif.) "demanded and received" an inflated price for the sale of his home from a Washington defense contractor in 2003 in violation of the federal bribery statute, prosecutors in San Diego said yesterday.

The assertion that the congressman took the money "in return for being influenced in the performance of his official acts as a public official" was made public in the government's response to a civil court filing by Cunningham's attorneys. They are fighting a Justice Department effort to seize the congressman's new home in Rancho Santa Fe.

No criminal charges have been filed. But the statement was the most extensive the U.S. Attorney's Office in San Diego has made about its ongoing investigation of the relationship between Cunningham and Mitchell J. Wade, founder of MZM Inc. The District-based company has received more than $160 million in Pentagon contracts over the last three years. Wade stepped aside in June, and the company was sold to a New York investment firm last week.

The wording that Cunningham "demanded" the high price for the sale suggests that someone with knowledge of the transaction may be cooperating with the government. Reginald J. Brown, a Washington attorney who represents Wade, declined to comment. Mark J. Hulkower, a lawyer for MZM, said the company "has cooperated with the government investigation since its inception and will continue to cooperate fully through its conclusion."

Wade bought the congressman's house in late 2003 for $1.675 million, which the government filing yesterday called "an amount far greater than its fair market value." That purchase has been a focus of the investigation since the San Diego Union-Tribune reported in June that Wade took a $700,000 loss when he sold it several months later.

The government filing yesterday said that Cunningham and his wife used $1.4 million of the proceeds two weeks later to buy their new home in Rancho Santa Fe for $2.55 million. The congressman, a member of the subcommittee that controls the Pentagon's budget, has denied wrongdoing but announced last month that he will not run for reelection next year.

K. Lee Blalack II and Mark Holscher, Cunningham's attorneys, said in a statement: "A month ago the government outrageously attempted to take the Cunninghams' home based on secret allegations that they would not share with our clients or defend in court. Now that we have called them on this blatant violation of our clients' constitutional rights, the government has confessed error by unsealing the secret complaint.

"But this complaint is not a serious legal filing; it's a public relations exercise. It cites no testimony, no documents -- in short, no evidence. In this country, it is illegal to take someone's property simply on the say-so of the government and we intend to show that this complaint is false. Duke Cunningham strongly denies these allegations and we will contest them in court as soon as the judge permits us to do so."


© 2005 The Washington Post Company

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