AP Wire | 08/18/2005 | Federal government files lawsuit against U.S. rep seeking house

Associated Press

SAN DIEGO - The federal government has filed a lawsuit against U.S. Rep. Randy "Duke" Cunningham that alleges he should forfeit his home because it was purchased with ill-gotten funds.

Notice of the lawsuit and the government's interest in the property was filed with the county recorder's office on July 21. The notice, called a lis pendens, is a legal notification that a lawsuit has been filed with an interest in the property.

However, there was no public record of the lawsuit at the U.S. District Court in San Diego.

"Please take notice," the document reads, "that a civil lawsuit is now pending in the United States District Court ... which involves title to (Cunningham's house)." The document also cites a violation that pertains to bribery and conflicts of interest.

Cunningham, an eight-term Republican, has been dogged by an investigation into his financial dealings with longtime friend Mitchell Wade, the founder of defense firm MZM Inc.

Wade purchased Cunningham's 3,826-square-foot house north of San Diego in 2003, then took a $700,000 loss when he resold it a year later. During that span, home prices in San Diego County rose an average of nearly 25 percent.

At the same time, MZM Inc. was increasing its federal contracting business. A federal grand jury is investigating the deal with Wade and the FBI has already served searched warrants looking for documents.

Cunningham, whose term ends in January 2007, said last month that he will not seek re-election.

His attorney, Lee Blalack, told the San Diego Union-Tribune that he had filed a motion challenging the U.S. government's legal claim on Cunningham's house in Rancho Santa Fe. Blalack wants the notice to be expunged or the lawsuit to be unsealed.

The home a five-bedroom, eight-bath Spanish colonial estate on Via Del Charro was listed for sale this week for $3.5 million. However, the government's declaration that it has a claim on the property makes a sale difficult for the time being, local real estate agents said.

The house was purchased from Douglas Powanda, a former executive with Peregrine Systems, who is awaiting trial on fraud charges for his alleged role in an accounting fraud conspiracy.


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