Rep. Randy "Duke" Cunningham (R-Calif.), who is under federal investigation for his financial dealings with a defense contractor, ended a weeklong silence with a statement yesterday that asserted his innocence while acknowledging that he exercised "poor judgment" in the relationship.

The statement presented the congressman's predicament as a problem of public perception, and emphatically denied any suggestion that he had funneled taxpayer-paid benefits to the contractor in exchange for personal favors.

Cunningham was responding to newspaper accounts in his district over the past two weeks about his friendship with Mitchell J. Wade, president of MZM Inc., a Washington-based defense contractor. Cunningham serves on the powerful House Appropriations subcommittee that hands out funds for the military.

One report detailed the sale of Cunningham's house in Del Mar, Calif., to Wade two years ago. Wade paid Cunningham $1.675 million and took a $700,000 loss when he resold it months later. Another report said Cunningham, while in Washington, has been living on a 42-foot yacht owned by Wade. The boat, which Wade named the Duke Stir, apparently after the congressman, is docked on the Potomac River.

In the statement, Cunningham said it was not appropriate to answer specific questions because "there is now a legal inquiry underway" and that he had hired an attorney. Cunningham had not previously commented on reports that the FBI is investigating his activities with Wade.

"I want my constituents to know that I have acted honorably and honestly," he wrote. "I recognize, however, that I showed poor judgment in selling my home in Del Mar to a friend who does business with the government."

"I failed to adequately consider how this transaction might be perceived by others. . . ." he added.

The congressman characterized the house sale as a transaction of convenience for both men. Cunningham's statement said Wade expressed interest in buying the house for his company after Cunningham told Wade that he and his wife were thinking about selling it.

Cunningham said he did not put the house on a public multi-listing or hire a real estate agent in order to save money "like most people selling their own home." He said he and Wade consulted comparable home-sale data before agreeing on a purchase price.

Cunningham asserted that Wade wanted a house and office space near MZM's operations near Miramar Marine Corps Air Station. It could not be determined what business MZM had then in San Diego.

The lawmaker also defended his boat arrangement as proper. He disclosed that in lieu of rent, he has paid "dock fees" and "service and maintenance" charges for the boat that have totaled "well over" $13,000 since April 2004. Previously, he had been living on his own, larger boat at the Capital Yacht Club.

The congressman told the San Diego Union-Tribune that he had supported the efforts of Wade's firm to get federal contracts. In his statement yesterday, Cunningham said: "I want my constituents to know that, despite my personal friendship with Mr. Wade, I gave his company, MZM, no preferential treatment."

Cunningham said he "advocated funding" for a human intelligence program, which he did not name, that was supported by other lawmakers and the Bush administration. MZM has done extensive work for an Army intelligence center in Charlottesville, among other agencies, under a contract that has paid it more than $163 million since late 2002, according to Defense Department officials.

Staff writer Renae Merle and researcher Meg Smith contributed to this report.

Rep. Randy "Duke" Cunningham