Congressman's Career Ends With the Wrong Deal

By Seth Hettena and Erica Werner, The Associated Press
Published: July 18, 2005
SAN DIEGO—After eight terms in Congress, Randy “Duke” Cunningham had become part of a culture of perks and friendly deals. By his own admission, he finally made at least one deal he shouldn’t have.

The former “Top Gun” Navy fighter pilot sold his home in the seaside community of Del Mar to a defense contractor at a price that may have been inflated by $700,000 or more. Cunningham said he did not profit improperly, but even he conceded it looks bad.

“I should have given more thought to how such a transaction might look to those who don’t know me,” Cunningham said Thursday in San Marcos, Calif., as he announced he would not seek re-election next year.

A federal grand jury is considering whether Cunningham should be charged with a crime. But records indicate that Cunningham’s mutually beneficial relationship with defense contractor Mitchell Wade was just one example of the congressman partaking of favors that may not be illegal but raise questions of propriety.

About three years ago, Cunningham, who has spent the past 36 years in the Navy and then in Congress, began to surround himself with the trappings of wealth. He used the proceeds from the sale of his Del Mar home to move into a $2.55 million, seven-bath mansion in the exclusive community of Rancho Santa Fe _ a home he said Thursday he plans to sell, with a portion of the proceeds going to charity.

When in Washington, he lived on Wade’s 42-foot yacht, the Duke Stir, docked at the private Capital Yacht Club. Several yachts down was Rep. Gary Ackerman, a New York Democrat, living on a boat he owned.

Cunningham, as a member of House defense appropriations and intelligence committees, had spending and policy control over classified work that Wade’s company did for the military. He acknowledges pushing funding for Wade’s company, MZM Inc., along with other firms. He also promoted another company with ties to Wade, ADCS Inc. MZM was at one time an ADCS subcontractor, and both companies donated generously to Cunningham’s campaigns.

A charitable foundation started by ADCS President Brent Wilkes spent $36,000 hosting a black tie “Tribute to Heroes” gala in 2002 that feted Cunningham with a trophy naming him a hero, according to the event’s Web site and tax filings. The same year, Wade donated nearly $30,000 to Wilkes’ foundation. Messages left for Wilkes and an ADCS spokeswoman were not returned.

Wade also founded a charity, the Sure Foundation, which employed Cunningham’s wife and daughter as unpaid advisers. In December, Cunningham handed out silver dollars to Iraq war veterans at MZM’s Christmas party at the Four Seasons Hotel in Washington, according to The Washington Post.

Questions have also been raised about Cunningham’s relationship with a New York businessman convicted in a bid-rigging scheme. Cunningham made $400,000 selling his 65-foot flat-bottom riverboat to the businessman, Thomas Kontogiannis, who called the boat “a steal” even though it isn’t seaworthy. A company run by Kontogiannis’ nephew and daughter helped Cunningham finance a condominium in Alexandria, Va., and a house in Rancho Santa Fe.

Cunningham’s business, Top Gun Enterprises, came under scrutiny for selling $575 Buck knives emblazoned with the image of the congressional seal. The site was quickly taken down.

Cunningham, who became the Vietnam War’s first fighter ace after he shot down five enemy aircraft, will be just the latest lawmaker to leave Washington under a cloud of ethics questions. It’s a distinction he shares with former Democratic House Speaker Jim Wright of Texas, former Rep. Dan Rostenkowski, D-Ill., and others.

Some never left: Sen. John McCain of Arizona survived accusations and an ethics rebuke over intervening on behalf of a savings and loan executive, and House Majority Leader Tom DeLay, R-Texas, retains his post despite allegations that some of his travel expenses were improperly paid for by a lobbyist.

Some say Cunningham fell victim to one of the hazards of life in Washington, where lobbyists and businessmen cozy up to the lawmakers who can help them.

“It’s got to be tempting to allow yourself to be flattered, buttered up, helped, given favors and so forth,” said Gary Jacobson, a political scientist at the University of California, San Diego. “It’s hard to refuse them unless you very consciously recognize that it’s one of the permanent ethical challenges of that life.”

Cunningham’s defense attorney, Lee Blalack, who declined to comment for this story, has said that all the congressman’s business dealings were above board. Cunningham’s defenders note that all members of Congress accept campaign contributions and promote the interests of local businesses. Some sympathetic observers also say that in Washington, right and wrong are not always black and white.

“Is it illegal to have a friendship with someone who has business with the government? And if that’s not illegal, then what kinds of relationships are proper or improper?” said Ron Nehring, chairman of the San Diego County Republican Party. “Those are amorphous questions with amorphous answers.”


Associated Press reporter Erica Werner contributed to his story from Washington, D.C.

Duke's demise

Congressman cast his own ethics into doubt

Sunday, July 17, 2005 - For the first time in a great while, Rep. Randy "Duke" Cunningham has done something that benefits all of his constituents and not just himself: He's called an end to his political career.

Smart move, Duke. It's about time.

The San Diego Republican was operating under a dark ethical cloud after it became known that he sold his home at an inflated price to a federal defense contractor, which, in turn, resold the house for $700,000 less.

This came at a time when the Southern California real-estate market was booming.

While no crime has been proved, it sure looks like the contractor was buying the support of the congressman, who just so happened to serve on the House Appropriations defense subcommittee.

In calling it quits, Duke said, "Quite simply, right now I may not be the strongest candidate."

You don't say.