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Press Conference to Deliver Petition Urging Rep. Cunningham Resign Immediately to Be Held Today at Noon at Escondido District Office

8/18/2005 1:03:00 PM


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To: Metro and Assignment desks

Contact: Matt O'Connor of the North County Unity Coalition, 619-647-9306

News Advisory:

-- Press Conference to Deliver Petition Urging Rep. Cunningham Resign Immediately to Be Held Today at Noon

-- New Developments TODAY Compel Rep. Cunningham's Resignation

-- North County Unity Coalition and partner organizations to announce plans to urge member of Congress forward complaint over numerous alleged violations to House Ethics Committee

North County Unity is holding a press conference at the Escondido Transit Center TODAY at 12 noon to discuss its drive to urge Congressman Randy "Duke" Cunningham to resign his 50th Congressional District seat immediately. As part of the conference, the coalition's Communications Chair, Matt O'Connor will deliver petitions the organization and its partners have been gathering for the past 2 weeks from constituents and area residents alike to Cunningham's District Office, located 1 block away at 613 West Valley Parkway, Escondido, Calif. The event is open to the public, and signatories to the petition are encouraged to attend.

An additional function of the conference will be to call attention to the need for a member of Congress to forward a complaint with the House Ethics Committee to initiate a formal investigation of the numerous charges of corruption Rep. Cunningham has been accused of. In a previous e-mail to over 3,000 activists in the region, the North County Coalition has called for residents of surrounding districts to step forward and formally request their Representative stand up for open and accountable government.

Representatives with the nonpartisan watchdog group Citizens for Responsibility and Ethics in Washington (CREW) will be joining the North County Coalition at the press conference. Their Executive Director, Melanie Sloan is traveling to San Diego from Washington, DC for the event, to discuss the formal complaint they have prepared against Rep. Cunningham, available for a member of the House to forward "in good faith." The complaint is on the CREW website at http://www.citizensforethics.org. Sloan contributed an op-ed piece to the San Diego Union-Tribune in June in which she declared, "common sense tells you that in the people's House, members of Congress should be held accountable for their conduct."

The designer of the new ResignRandy.org Website, created to collect signatures for the Cunningham resignation petition online, Rick Hall, will also speak at the press conference. Hall will discuss his involvement in organizing community activists who have been outraged by the charges of bribery and corruption leveled against Rep. Cunningham over the past 2 months. In an e- mail message to signatories to the RebukeDuke.org Website he launched in June, Hall appealed for Cunnigham to resign so his constituents "can elect his replacement as soon as possible, because the people he represents deserve representation."

A downloadable flyer with details on the conference is available online at the organization's 'Supported Action/Advocacy' page at their Website, at http://www.ncunity.org/action.php. Members of the press who wish to cover the conference may contact North County Unity's Communications Chair Matt O'Connor at 619-647-9306, or by sending e-mail to moconnor@NCUnity.org or CREW's Deputy Director Naomi Seligman at 202.841.5096.

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Defense contractor's work examined in 1999 audit North County Times - North San Diego and Southwest Riverside County News

By: MARK WALKER and WILLIAM FINN BENNETT - Staff Writers

NORTH COUNTY ---- The work done by ADCS Inc., the Poway company raided by federal agents Tuesday, was the subject of a 1999 audit prompted by complaints that two unidentified congressmen had pressured the Defense Department to steer work its way, federal records show.

The audit, conducted by the Department of Defense Inspector General's office, examined how contracts were awarded and funding was allocated for a multimillion dollar program to convert paper documents to a computerized format, work that ADCS performs.

The company reopened Wednesday after shutting down when several agents from the FBI, IRS and the U.S. Defense Department Criminal Investigative Service arrived Tuesday morning with a warrant to search the company's records. Agents also searched the Poway home of the company's owner, Brent Wilkes.


ADCS, which received nearly $76 million in Defense Department contracts between 2000 and 2004, has been a frequent campaign contributor to U.S. Rep. Randy "Duke" Cunningham, R-Escondido, who is the subject of a San Diego federal grand jury investigation.

ADCS officials declined comment on Wednesday. Wilkes, who also is a member of the Del Mar Fair Board, did not return telephone calls.

A law firm representing the company issued a written statement late Wednesday afternoon that said the company was cooperating and that it was not immediately clear what the government was after.

"ADCS strongly believes that all of its actions have been proper and appropriate," the statement from the San Diego firm Coughlan, Semmer & Lippman read. "ADCS is confident the government will come to the same conclusion."

Tuesday's search of the firm by federal authorities is the second major search by federal agents since the grand jury began its investigation in June. The panel took up the case following a report that Cunningham sold his Del Mar Heights home to another defense contractor, Mitchell J. Wade, for $700,000 more than Wade would sell the property for less than a year later.

On July 1, the same federal agencies involved in Tuesday's action conducted unannounced searches at Cunningham's home in Rancho Santa Fe and at Wade's home in Washington, D.C. They also searched the offices of MZM Inc., the company owned by Wade, and his 42-foot boat, the Duke-Stir, that Cunningham has said he stayed aboard for more than a year starting in April 2004, while in Washington.

Gary Comerford, a spokesman for the Department of Defense Criminal Investigative Service in Arlington, Va., refused to talk about the investigation but hinted that Tuesday's actions wouldn't be the last.

"We won't discuss anything to do with an investigation," Comerford said, later adding, "We have a lot of work to do out there."

According to the 1999 audit report, three companies received a combined $9.73 million for contracts that had not been authorized by a federal team formed to prioritize spending on such projects. News reports from 1999 show that ADCS received a $3.9 million federal contract to create a digital stockpile of documents relating to the Panama Canal.

The funding came after two members of Congress and a Defense Department acquisition officer intervened, according to the report.

"The Assistant Deputy Under Secretary requested the audit because of several queries from concerned contractors alleging favoritism and other inappropriate behavior," the report states.

The Inspector General's office said Wednesday it could not provide the names of the congressmen the report referenced. It also could not name the companies that complained about the alleged favoritism.

The Washington attorney Cunningham has hired, K. Lee Blalack, said late Wednesday the congressman is proud of his association with ADCS.

"Duke cannot comment on the government investigation but he considers Mr. Wilkes a personal friend," Blalack said. "He has been proud to support the work of ADCS and other local companies that help defend our great country. It doesn't take an FBI raid to figure out that Duke has long supported the defense industry that employs thousands of his constituents."

While ADCS is not specifically named in the audit report, the work performed by the company, conversion of Panama Canal architectural documents to a computerized format, is mentioned.

Prior to the report being published, the Inspector General's office made several suggestions intended to increase competitiveness in the awarding of contracts. Because the auditors received promises changes would be made, they decided not to make formal recommendations, the report states.

Blalack said he has not seen the audit report but that if Cunningham was one of the lawmakers who interceded it should not come as much of a surprise.

"There is nothing inappropriate nor unusual about a member of Congress calling the Pentagon on behalf of a constituent regarding the use of appropriated funds," he said.

Cunningham, who has denied any wrongdoing and has said he welcomes the federal probe, will be in the spotlight again today. A North County group closely affiliated with the Democratic Party and representatives of a Washington watchdog group are scheduled to conduct a news conference outside his Escondido district office calling for his immediate resignation.

The group, North County Unity Coalition, says it will deliver about 1,000 signatures it has collected in the last two week calling for his resignation.

In July, Cunningham announced he would not seek re-election and that he and his wife planned to sell the Rancho Santa Fe home they purchased after they sold their Del Mar Heights residence.

Cunningham is home while Congress takes its annual August recess but has not made any announced public appearances and none are planned, Olson said.

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.

Defense Contractor Sold to N.Y. Firm

MZM Owner Tied to Grand Jury Probe

By Charles R. Babcock
Washington Post Staff Writer
Thursday, August 18, 2005; D01



Veritas Capital, a New York private equity firm, announced yesterday that it will buy MZM Inc., a District-based defense contractor whose business has been in turmoil since its founder's financial dealings with a congressman triggered a grand jury investigation in June.

The purchase price was not disclosed, and it could not be learned how much Mitchell J. Wade, who started MZM in 1992 and owned the vast majority of the private company's stock, will receive. Veritas said in a written statement that the agreement includes existing contracts and other selected assets of MZM but "only specific liabilities associated with the ongoing operations of those assets."

Wade stepped down as head of the company in June after news reports that he did financial favors for Rep. Randy "Duke" Cunningham (R-Calif.) while the lawmaker pushed funding in Congress for programs on classified military intelligence programs on which MZM worked.

Wade bought Cunningham's home near San Diego in late 2003 and resold it several months later at a $700,000 loss.

He also let the congressman live rent-free on his 42-foot yacht, the Duke-Stir, which was docked on the Potomac River. FBI and other federal agents raided MZM's office, Wade's home and boat, and Cunningham's home July 1.

Cunningham has denied any wrongdoing. He announced last month that he will not run for reelection next year.

Yesterday's announcement said Veritas will make the acquisition through a newly created subsidiary, Athena Innovative Solutions Inc. It noted that MZM has 420 employees, 85 percent of whom have top-secret security clearances.

MZM employs many former military intelligence officials and some former FBI and CIA officers. It does counterintelligence work for the Pentagon and other intelligence work for an Army intelligence center in Charlottesville and a special operations command in Tampa, Fla.

The company won its first prime contracts from the federal government in late 2002 and has had more than $160 million in orders from defense agencies since then. The Pentagon cut off new work for the firm through its most lucrative contract in June because a draft inspector-general report found that it had not been competitively awarded under current rules.

Robert Rubin of Aronson Capital Partners of Rockville, who follows defense acquisitions, said, "Veritas is making a major play in homeland security." Bringing aboard so many people with top-level clearances "is clearly a plus," he said, adding that it makes sense to rename the company because of "the cloud" over MZM from the investigation.

Veritas last year bought portions of DynCorp, which has a major presence in the Washington area.

Robert B. McKeon, president of Veritas Capital, said in a statement that the new company, Athena, "is a leading intelligence services company providing unique intelligence capabilities and highly qualified people to numerous government agencies. . . . Our goal is to build on this exceptional talent base to continue to grow the company through new program wins as well as acquisitions."

Veritas said the acquisition is expected to close in September.

James C. King, a retired three-star general who replaced Wade as MZM's chief executive, was described in the announcement as the chief executive of Athena.

He said in a written statement that the new company is "particularly enthusiastic" about working with Veritas's advisory council. He cited Richard L. Armitage, the former deputy secretary of state, and several generals and admirals, including Barry R. McCaffery, who commanded U.S. ground troops in the 1991 Persian Gulf War, and Anthony C. Zinni, former commander in chief of U.S. Central Command.

© 2005 The Washington Post Company