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Contractors Linked to Bribery Case Worked Together

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By Charles R. Babcock
Washington Post Staff Writer
Wednesday, November 30, 2005

The two defense contractors who allegedly made many of the illicit payments to convicted Rep. Randy "Duke" Cunningham (R-Calif.) worked together for several years as relatively small players in the Pentagon's multibillion-dollar procurement system.

It was clear from facts in the criminal charges to which Cunningham pleaded guilty on Monday in San Diego that Mitchell J. Wade, president of Washington-based MZM Inc., is "Coconspirator No. 2." Yesterday, a lawyer for Brent Wilkes, head of San Diego area defense contractor ADCS Inc., said Wilkes is "Coconspirator No. 1" in the charging documents.

The lawyer, Michael L. Lipman of San Diego, declined to comment further.

Cunningham resigned from Congress after tearfully admitting in court to having taken $2.4 million in bribes to steer defense contracts to conspirators. He faces as much as five years in prison on each of the two counts. As part of a plea agreement, he must forfeit his house in Rancho Santa Fe, Calif.; $1.8 million in cash; and a long list of furniture and carpets.

During a trip to Texas yesterday, President Bush called the bribes "outrageous" and said that Cunningham "is going to realize that he has broken the law and is going to pay a serious price, which he should."

Wade's relationship with Cunningham became the early focus of the investigation when San Diego area newspapers reported in June that he had bought the congressman's Del Mar, Calif., home at an inflated price and allowed him to live rent-free on his 42-foot yacht, the Duke-Stir, while in Washington.

The first payments to Cunningham listed in the plea agreement were checks totaling $100,000 from Wilkes that were issued around May 1, 2000. The congressman deposited one check, for $70,000, in his personal bank account in San Diego; he put the other, for $30,000, in his personal bank account at the Congressional Federal Credit Union in Washington.

About that time, Wilkes's company was the subject of a Pentagon inspector general's report because of complaints "alleging favoritism and inappropriate actions." Louis A. Kratz, a senior Pentagon procurement official, remembered being called by Wilkes and Cunningham seeking release of funds for ADCS.

Wade listed his occupation that year as a "consultant" to ADCS and gave a $5,000 donation to the company's political action committee. In 2002, Wade donated $29,500 to Wilkes's personal foundation, which sponsored a dinner honoring Cunningham that year.

The federal charging document said Cunningham used his position to get funding for programs for the two defense contractors and then pressured Pentagon officials to award them the contracts.

ADCS has received $80 million in Pentagon contracts since 1999, mostly for converting documents into digital format using proprietary software. It was not until late 2003 that Wade's company, MZM Inc., began receiving Pentagon contracts that eventually totaled more than $160 million, mainly for providing intelligence agencies with personnel who held high security clearances.

Wilkes and his wife, Regina, contributed nearly $140,000 to lawmakers and PACs between 2001 and 2004, according to data published by the nonpartisan Center for Responsive Politics. Wilkes was also a "Pioneer" in Bush's 2004 reelection campaign, a designation indicating he raised at least $100,000.

In 2003 and 2004, House Majority Leader Tom DeLay (R-Tex.) was ferried three times on corporate jets owned by Group W Transportation, another Wilkes company. Neither DeLay nor the company has disclosed the purpose or destination of the trips, which were billed to one of DeLay's PACs at a commercial flight rate as permitted under election law.

Wade made the first of hundreds of thousands of dollars in payments to Cunningham in November 2001, according to the plea agreement. That $12,000 payment went to an antiques store for three nightstands, one leaded glass cabinet, a washstand, a buffet and four armoires that were delivered to Cunningham.

Third and fourth co-conspirators, one identified as controlling a financial company in Rosedale, N.Y., and the other as president of a mortgage company in Greenvale, N.Y., are introduced in the plea agreement. Based on mortgage documents and other public records, the references appear to correspond to Thomas T. Kontogiannis (No. 3) and John T. Michael (No. 4). According to the charging document, the third co-conspirator paid $200,000 to a company controlled by the fourth co-conspirator in December 2001 to help purchase an Arlington condominium Cunningham was buying.

Neither returned calls to his office yesterday.

Kontogiannis said in interviews in July that he bought Cunningham's 65-foot yacht in 2002 and helped finance the second mortgage on his new home in Rancho Santa Fe in late 2003 through Michael's company, Coastal Capital Corp.


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