Cunningham civil suit put on hold North County Times - North San Diego and Southwest Riverside County News

By: MARK WALKER - Staff Writer

NORTH COUNTY ---- A judge has ordered a temporary halt in the federal government's civil suit against U.S. Rep. Randy "Duke" Cunningham, ruling that allowing the case to continue could jeopardize an ongoing criminal investigation of the congressman.

U.S. District Court Judge Dana M. Sabraw ruled that the U.S. attorney's office has shown that allowing Cunningham's attorneys to question government witnesses could "compromise the ongoing criminal investigation."

The suit seeks to stop the congressman and his wife, Nancy, from selling their gated, five-bedroom Rancho Santa Fe estate and using the proceeds as they wish.


Cunningham, a member of the House Appropriations Committee and its Defense Subcommittee, is the target of a San Diego federal grand jury investigation over his dealings with two defense contractors and a New York developer.

The Escondido Republican faces a bribery allegation based on the government's contention that he "demanded and received" money from one of the contractors and should not be allowed to profit from the sale of his home.

The Cunninghams have been trying to have the civil suit tossed in order to sell the home and buy a new residence.

Cunningham attorney K. Lee Blalack said Tuesday that he was disappointed that the stay had been granted, but pleased the judge limited any further action in the case to 60 days. Sabraw's ruling issued in San Diego late last week leaves the door open for the government to seek a stay beyond the 60 days.

In another development, Nancy Cunningham has hired San Diego attorney Michael Attanasio to represent her interests in the Rancho Santa Fe estate, which the couple have put up for sale for more than $3 million.

"There's no dispute that some portion of the home is community property and we have been retained to make sure Mrs. Cunningham's rights as a spouse under California law are protected," Attanasio said Tuesday. "That's really a different subject from the action against the congressman."

Attanasio added that he and other members of the firm where he works are reviewing the judge's order staying the civil suit to figure out their next steps.

In an Oct. 13 filing, Attanasio argued that Nancy Cunningham is an "innocent owner" of the home and that her financial interest in the property should be protected.

In July, the U.S. attorney's office filed the forfeiture action, contending that the $2.55 million the Cunninghams paid for the property involved money obtained from a bribe.

The action was filed after Cunningham announced he would sell the home and would not seek re-election to the 50th Congressional District seat.

Cunningham has denied any wrongdoing, but federal prosecutors allege that he coerced defense contractor Mitchell Wade to pay more for the couple's former home in Del Mar Heights than it was worth.

Wade, founder of MZM Inc., paid the couple $1.675 million for the property and then sold it a few months later for $700,000 less than what he gave the Cunninghams.

That grand jury probe was launched in late June following a published report of Cunningham's real estate deal with Wade, described by the 63-year-old lawmaker as a personal friend and campaign contributor.

The FBI, IRS and the Pentagon's Defense Criminal Investigative Service are leading the fieldwork in the investigation and broadened the probe late in the summer to include Cunningham's dealings with another contractor, ADCS of Poway.

Federal authorities also have searched the home and business of New York developer Thomas Kontogiannis, who purchased a boat from Cunningham and whose family's mortgage company has loaned the congressman money.

A defense fund was launched by the congressman last month and has been receiving contributions almost daily, according to Kenneth Batson, the longtime treasurer of Cunningham's campaign committee appointed to serve as trustee of that fund. Batson refused, however, to say how much has been raised.

Last month, the Federal Election Commission ruled that Cunningham also could use more than $650,000 in what was to have been the war chest for a 2006 re-election bid in order to pay his legal bills.

At the congressman's Capitol Hill offices, spokesman Mark Olson wrote in an e-mail Tuesday that Cunningham will soon sit as co-chairman of a joint subcommittee meeting discussing homeland security and the role of the chief intelligence officer.

Cunningham also will be involved in ironing out the differences in House and Senate defense appropriations bills, and will probably participate in addressing differences between the chambers' measures on labor, health and human services and education spending, according to Olson.

Federal authorities have consistently refused comment on the grand jury's criminal investigation or when it is likely to conclude.

Last week, Assistant U.S. Attorney Phillip Halpern spoke with a reporter about the civil suit. But when asked about the grand jury's work, Halpern quipped, "What grand jury investigation?"