SignOnSanDiego.com > News > Politics -- Deal lets Cunningham sell home amid inquiry

By Onell R. Soto
October 5, 2005

Prosecutors and lawyers for Rep. Randy "Duke" Cunningham have reached a deal to allow the politician to sell his Rancho Santa Fe home while a federal investigation continues into whether it was bought with proceeds from a bribe.

As part of the agreement, a federal judge ordered Thursday that proceeds from the house sale – after mortgages and fees are paid – be placed in an escrow account.

So instead of fighting over whether Cunningham and his wife, Nancy, should lose the house, lawyers and prosecutors will battle over whether he should forfeit the money from its sale to the government, and how much.

Prosecutors also agreed to remove from property records a notice that the house is subject to forfeiture.

Prosecutors said in a civil forfeiture lawsuit filed in July that the Republican congressman bought the Rancho Santa Fe house in part with a bribe they said was made in the form of an overpayment for Cunningham's previous home in Del Mar Heights.

Cunningham and his wife sold the Del Mar Heights home in November 2003 for $1.675 million to Mitchell Wade, a friend who was a government contractor getting millions of dollars in business from the Pentagon.

In court papers, prosecutors called that a bribe for which Cunningham lent Wade his influence in Congress, where Cunningham sits on a subcommittee that oversees Pentagon spending and another that deals with intelligence matters.

Wade sold the Del Mar Heights home at a $700,000 loss in October 2004 even as the local real estate market was sizzling.

Cunningham denies he broke the law. His lawyers say the house was actually worth what Wade paid for it.

But in papers they filed in federal court Friday, Cunningham's lawyers argued that, at most, Wade overpaid by $300,000 and, as a result, that's all the government should be allowed to seize in the event they prove their allegations.

In April 2004, the county assessed the home's value at $1.375 million.

That assessment, based on what other houses in the neighborhood were fetching, indicated that the Cunninghams were paid more than market value for the house, David Butler, chief deputy of valuation at the assessor's office, said in an interview.

When Wade resold the house for $975,000 a year ago, the county accepted that price as an accurate fair market value, Butler said.

Cunningham's lawyers are asking Judge Dana M. Sabraw to order that just $300,000 of the sale proceeds go into the escrow account and to allow the Cunninghams to get the rest of the money.

"The Cunninghams have raised a strong argument in their favor as to the issue of what money, if any, is subject to forfeiture in this case," said Richard Barnett, a forfeiture expert.

Separately, Nancy Cunningham is seeking to keep half the proceeds of the Rancho Santa Fe house sale because prosecutors aren't accusing her of any criminal activity.

The Cunninghams recently dropped the asking price for the home to $3.15 million. They had sought $3.5 million in August.