More legal wrangling in Cunningham case North County Times - North San Diego and Southwest Riverside County News


NORTH COUNTY ---- A flurry of legal activity in recent days has created a new twist in the case to prevent U.S. Rep. Randy "Duke" Cunningham from selling his Rancho Santa Fe estate and keeping the profits.

Late last week, Cunningham's attorneys asked a federal judge to deny prosecutors' request to put off a civil suit against the congressman. They also asked the judge to allow Cunningham to sell his Rancho Santa Fe estate ---- appraised at $3.3 million ---- and keep most of the proceeds.

According to a defense motion filed with the court Friday, the prosecution wants to hold off on pursuing the civil case out of concerns that civil court proceedings might reveal information that could hurt its criminal investigation of Cunningham. The eight-term congressman is being investigated by a federal grand jury on allegations of bribery, allegations which he has vigorously denied.

Cunningham, R-Escondido, is a Republican who represents North County's 50th Congressional District which covers most of North County.

Cunningham's lawyers say that by delaying the completion of the civil case, prosecutors are preventing them from getting information that could help them get that case dismissed. They also argue the delay is keeping the Cunninghams from profiting from the sale of their Rancho Santa Fe home.

The Cunninghams' legal bills are projected to be as high as $1.5 million for both cases.

A federal grand jury is investigating the 63-year-old congressman's financial ties to two defense contractors and a New York businessman. The same U.S. Attorney's office prosecutors who are pursuing that case also recently filed a civil suit against Cunningham asking the court to give the government the title to the couple's Rancho Santa Fe property. They said because the Cunninghams bought the 7,800-square-foot home with money obtained through an alleged bribe, they should have to forfeit ownership.

The government also filed a lien on the home that would have made it difficult to find a buyer and would have reduced its sale price, Cunningham's attorneys alleged. The lien does not prevent the sale of the home.

On Thursday, the court issued a proposed order that would lift the lien, allow the sale and hold the proceeds in an escrow account pending the outcome of the civil case.

On Friday, Cunningham's attorneys asked the court to let the civil case continue. They also asked the judge to allow the Cunninghams to keep most of the money from the home sale. A hearing on the matter is scheduled for Oct. 14.

Prosecutors allege that allowing the civil case to become public during court proceedings could jeopardize their successful prosecution of the secret criminal investigation.

Assistant U.S. Attorney Phillip Halpern said Monday that he would have no comment for this story.

One of Cunningham's attorneys, Washington-based K. Lee Blalack, also said he would have no comment.

"We will let the (court pleadings) speak for themselves," Blalack said Monday.

In motions filed with the court Friday, Cunningham's attorneys asked the judge to deny the U.S. Attorney's office's request to postpone the civil case.

In filing the lawsuit against Cunningham in August, prosecutors alleged that the 63-year-old congressman bought the home in part with money that he had "demanded and received" from Mitchell J. Wade, the former owner of the defense firm MZM, Inc.

Prosecutors allege that the money from the sale of a previous Cunningham home in Del Mar Heights to Wade in late 2003 ---- for $700,000 more than Wade would sell it for 11 months later, was obtained in violation of federal bribery statutes. Because of that, prosecutors have said, the proceeds from the sale of the Del Mar Heights home should be forfeited to the government.

Cunningham sold the Del Mar Heights home to Wade for $1.675 million in late 2003, and used the proceeds from that sale to help pay the $2.55 million price of the Rancho Santa Fe around the same time.

The County Assessor's office later determined that the assessed value of the Del Mar Heights home at the time of the sale was $1.375 million.

Cunningham's attorneys say that even if the government were able to prove its allegations of bribery against Cunningham, the amount government would have a claim on is much less than the assessed $3.3 million value of the Rancho Santa Fe home. His attorneys say that the government should receive no more than the $300,000 difference between the $1.675 million sale price of the Del Mar Heights home and its $1.375 million assessed value.

Contact staff writer William Finn Bennett at (760) 740-5426, or wbennett@nctimes.com