Grand jury questions three on Cunningham

By: WILLIAM FINN BENNETT - Staff Writer / NC TIMES

SAN DIEGO ---- A federal grand jury investigating U.S. Rep. Randy "Duke" Cunningham's financial ties to a defense contractor met behind closed doors Tuesday, taking testimony from three people associated with a Washington marina where the congressman lived on the defense contractor's 42-foot yacht, called the "Duke-Stir."

Appearing before the grand jury at the downtown federal building were Capital Yacht Club dock master Kelvin Lee; the club's commodore, Robert McKeon; and Scott Schramm, the man who owned the boat before Washington defense contractor Mitchell Wade, who along with Cunningham is at the center of the investigation.

Coast Guard records show that Schramm owned the boat, then called "Buoy Toy," before Wade. After Wade bought the boat, its name was changed to Duke-Stir. In a recent written statement, the 63-year-old Cunningham said he moved onto the boat in April 2004. Wade registered the boat as the Duke-Stir in his name in December 2004, Coast Guard records show.


In written statements, the eight-term congressman who represents the 50th District has said that his living arrangements on the boat were strictly aboveboard because he paid Wade $13,000 for maintenance and docking fees in lieu of rent. However, a San Diego yacht expert said recently that in his opinion, based on the estimated resale value of a boat of that type, Cunningham should have paid significantly more in rent during the approximately 14 months he lived aboard the 42-foot yacht.

Federal law prohibits members of Congress from accepting gifts of more than $100 a year from a single source.

The question of whether the living arrangements were ethical or legal is just one piece in an ongoing federal investigation into Cunningham's dealings with the contractor, who also bought Cunningham's Del Mar Heights home in late 2003 for what appeared to be hundreds of thousands of dollars more than the going rate for similar homes in the neighborhood. Federal investigators are scrutinizing the business arrangements and whether the congressman used his position on a powerful House subcommittee to steer contracts toward Wade's company, MZM Inc., which saw a huge leap in revenue in the last few years.

Cunningham has proclaimed he's innocent of any wrongdoing, although he has acknowledged that he used bad judgment in doing business with a friend who receives defense contracts from the government. On Thursday, the former Top Gun pilot and decorated Vietnam war veteran announced that he would not seek re-election to his congressional seat in 2006, citing the mounting pressure and stress on him and his family.

Before Tuesday's hearing, the North County Times spoke briefly with Schramm. Asked whether he still owned the boat at the time Cunningham began living onboard, Schramm said he did not.

He added that he couldn't remember any details about the sale of the boat.

"I sold the boat and that was the last time I saw it," he said.

First Schramm, then Lee and later McKeon finished their testimony.

Then, one at time, they were whisked into an elevator by a man who identified himself as a special agent for the Internal Revenue Service.

The North County Times attempted to interview both Lee and McKeon as they entered the elevator. Both said: "No comment."

Federal grand jury rules prohibit jurors or members of the court from talking about anything related to their duties on the jury. However, witnesses are not prohibited from talking about their testimony, grand jury officials said this week.

Seen leaving the grand jury room were Assistant U.S. Attorneys Phillip Halpern and Sanjay Bhandari. Asked if he or Bhandari were the prosecutors working on the grand jury investigation of Cunningham and MZM, Halpern said he could not comment on any aspect of grand jury proceedings.

Grand juries are composed of 23 members and meet in secret, interviewing witnesses such as the three who left the grand jury room Tuesday morning. The jury now looking into the Cunningham case will have no role in determining the guilt or innocence of any charge. Rather, they will simply listen to the evidence brought before them and decide whether someone should be charged with a crime.

Former federal prosecutors have said they expect that it will be several months before the grand jury reaches a conclusion on whether to issue criminal indictments or drop the case.

On July 1, dozens of federal agents from the U.S. attorney's office, FBI, the IRS and Pentagon's Defense Criminal Investigative Service conducted simultaneous raids of Cunningham's Rancho Santa Fe home, as well as the Duke-Stir and MZM's Washington offices. The federal agents took away boxes of materials from each site.

A man who has a boat docked at the Capital Yacht Club said last week that following the raids, other federal agents made repeated visits to the yacht club and questioned people there.