www.GovExec.com - Contracting probe could extend to CIA (12/4/05)

By Jason Vest

Federal investigators in San Diego have made it clear that while just-resigned Rep. Randy "Duke" Cunningham pled guilty last week to taking bribes from defense contractors, their public corruption probe will not stop at Cunningham. Numerous current and retired CIA officials say they will not be surprised if the investigation touches the CIA in general, and it's third-ranking official in particular.
"Though everyone has been talking about what Cunningham did for contractors from his position on [the House] Defense Appropriations [subcommittee], you also have to remember that he had a seat on [the Permanent Select Committee on] Intelligence too, which is also a good position to help contractors from, particularly if they want to do business with the CIA," says a veteran CIA officer. "But the real question I think is, if those contractors were doing business with the CIA, did they need Cunningham? And even if they didn't, the question is, even if he didn't do anything, did one the highest-ranking agency officials have any idea what his friends were up to?"

According to past and present CIA officials interviewed over the past month, CIA executive director Kyle "Dusty" Foggo--whose career duties have encompassed letting CIA contracts--has had a long, close personal relationship with two contractors identified (though not explicitly named) in court papers as bribing Cunningham: Brent Wilkes of the Wilkes Corp., whose subsidiaries include defense contractor ADCS; and former ADCS consultant Mitchell Wade, until recently president of defense contractor MZM, Inc. It is a relationship, the CIA officials say (with some putting a particular emphasis on Wilkes), that has increasingly been of concern.

One current and two retired senior CIA officials told Government Executive that (as noted last week by reporter Laura Rozen in The American Prospect's TAPPED blog) the relationship of Wilkes and Foggo--who the CIA's Web site declares is "under cover and cannot be named at this time," even though he is pictured and identified on a federal charity web page--has been a subject of increasing concern by some at Langley.

Another recently-retired senior agency official, while not naming Wilkes or Wade by name, also noted concerns borne out of both personal experience with and reports from colleagues about Foggo. "If you were a case officer and worked with him, you'd be saying to yourself, 'I've got to watch this guy,'" says the former official. "There is one contractor with whom he enjoys a very, very, very close relationship."

According to several of the officers interviewed for this article, Foggo and Wilkes have been friends since at least their college years at San Diego State University in the 1970s, where they were roommates. According to several regulars at Washington's Capital Grille, the two jointly lease one of the restaurant's private wine lockers.

After a brief stint in law enforcement, Foggo entered the CIA through the Presidential Management Intern program, and began work in what was then known as the Directorate of Administration (DA), the CIA organization that, among other things, handled a significant portion of the agency's contracting.

Foggo belonged to the DA's Management General Services unit, whose personnel, while not case officers who directly recruit and oversee spies, nonetheless received the same training as covert-action oriented Directorate of Operations officers.

MGS officers ran operational support programs in the field, a critical job directly below the agency's station chiefs. MGS officers had unique powers, including sole access to and oversight of a station's funds, as well as handling a station's accounting and contracting.

"The MG guy is the station's contracting authority, and is responsible for acquiring whatever a station needs to function, and to keep it running---the glue the holds it all together and gets anyone anything they need," says a veteran logistics officer.

While most federal government contracts are openly solicited, competitively bid and have their details publicly available, by virtue of its mission the CIA is not subject to the same rules. MG officers in particular have historically had great leeway.

"While the process is the same as anywhere else--in theory, you go to the place you can get the best deal--you're not going to find our stuff on the federal schedule, and the payment will come either through a company we set up or some other governmental cover," says a recently-retired MGS veteran. "Historically MG officers have been able to sole-source, and for smaller contracts, in some cases up to the half-million range, have not needed Langley's approval. A lot of smaller sole-source contracts can add up for a contractor."

Prior to becoming executive director, Foggo's postings included stations in Latin American and Europe. One of his first assignments was Honduras in the early 1980s, where one now-retired CIA officer recalls seeing him at least once with a visiting Brent Wilkes, who was there with "some kind of congressional delegation" in a "kind of vague" capacity.

Directly before coming executive director, Foggo was chief of the CIA's support base in Germany, which provides its Middle East stations, including Baghdad, with logistical support. While there, according to a recently retired CIA official, he let at least one contract to Wilkes. A veteran CIA administrative officer also noted that while Foggo has spent most of his career as an MGS officer, he also did a stint in the agency's Directorate of Science and Technology, "where a lot of really big contracts are handled."

Cunningham's Fall From Grace, Power - Los Angeles Times

Running for Congress as someone 'we can be proud of,' he was greeted as a hero and celebrity. Then came the tirades and the corruption.
By Peter Pae, Tony Perry and Richard Simon
Times Staff Writers

December 5, 2005

WASHINGTON ? Bombastic and prone to speak first and think about it later, Randy "Duke" Cunningham was never known for understatement or the subtle approach in Congress. But the rampage he went on in the spring of 2000 was something else, even by his standards.

Three years earlier, using his position on a House defense subcommittee, he had bulldozed the Pentagon into buying a $20-million system it didn't want for digitizing paper documents. Predictably, the military dragged its feet on implementing the system, and Cunningham exploded.

During a subcommittee hearing, the California Republican demanded that the Pentagon official he blamed for the delays be fired.

"I want Lou Kratz removed from office," Cunningham thundered. "I think he's incompetent. And I'm calling for his removal. I've had it."

At the time, Cunningham's harsh rhetoric and extreme advocacy for a relatively minor program attracted virtually no attention.

More than five years would pass before it became clear exactly why Cunningham had gone to such extremes: The small information technology company involved with the digitization project was allegedly one of two obscure defense contractors that secretly showered Cunningham with an estimated $2.4 million in cash and expensive gifts ? including a Rolls-Royce, money to buy a posh 8,000-square-foot house, and a cornucopia of antique furniture, Oriental rugs and jewelry.

Last Monday, in a move that left many of his friends and colleagues professing shock and bewilderment, Cunningham, 63, pleaded guilty to federal corruption charges and announced he was resigning from Congress.

Washington is no stranger to congressional scandals; even now, several others are swirling around the Capitol. But the Cunningham case stands apart, both for the brashness of his actions and for the dizzying nature of his fall.

When it comes to using power in Congress and dealing with private companies and individuals, members of the House and the Senate have ways of achieving their ends while staying safely inside none-too-confining laws and ethics rules. But Cunningham seems to have been ignorant or disdainful of such niceties. As set out in the indictment and plea agreement, he operated like an old-fashioned ward boss with his hand out.

"The conduct is certainly brazen," said Kenneth Gross, a Washington lawyer and former chief of enforcement at the Federal Election Commission. "It is hard to understand what was going on in his mind."

For example, on two occasions, Cunningham took personal checks for $70,000 and $30,000 and, disdaining subterfuge, put both in his personal bank accounts, including one at the Congressional Federal Credit Union in the Rayburn House Office Building.

The collection of antique furniture that a contractor bought for Cunningham's house in Rancho Santa Fe in San Diego County using a company credit card is so precisely cataloged that it suggests the congressman had provided a shopping list.

Then there are the ironies of Cunningham's rise and fall.

Cunningham came to Washington from the San Diego area 15 years ago with the campaign slogan "A Congressman We Can Be Proud Of." He was replacing a Democrat who had been driven from office by charges of sexual harassment. Two years later, in 1992, when Cunningham was redistricted out of his first seat, he took over a seat from a Republican incumbent who had been tainted by the House banking scandal.

A Vietnam War hero who shot down five enemy planes and received the Navy Cross, two Silver Stars, 15 Air Medals and a Purple Heart as a Navy fighter pilot, Cunningham was one of the most decorated fliers from that war. In Washington, he was an instant celebrity, sought out by the news media and admired by colleagues for his heroism and his special knowledge of the armed forces.

Nor was the political market value of a good-looking, outspokenly patriotic military hero lost on Republican leaders at the time.

"I already consider him a treasure who I could send out anywhere in the country and be confident of his drawing power," former Rep. Guy Vander Jagt (R-Mich.) told The Times in 1991 when he was chairman of the National Republican Congressional Committee.

"The older members treat him more like a celebrity than a freshman," Vander Jagt said. "In the short time he's been here, Duke's captured more attention than any other freshman I've ever seen."

It was a brilliant beginning to a career that would run for 15 years. Then, seemingly in the blink of an eye, Cunningham was an admitted felon, "in the twilight of his life," as he put it, facing up to 10 years in prison. He will appear before a federal judge in February for sentencing.

A 'Top Gun' in Congress

In his glory days, Cunningham walked the halls of Congress with a bear-like swagger that reminded people of John Wayne.

Although he was not the model for Tom Cruise's character in the blockbuster movie "Top Gun," he had been the real thing in the Navy, and he liked to tell people that some of his exploits were reflected in the film, like buzzing the tower at Miramar Naval Air Station. His offices were replete with military knick-knacks, and his press secretary used to send out news releases on the anniversary of his Vietnam shoot-downs.

At the Pentagon, he was known as a congressman who was always eager to fly in the latest jets.

No one, including his staff, considered Cunningham a deep thinker. He depended on others to handle the details. But he was one of the party faithful, counted on to speak up in party meetings and rally the troops for the cause of the day.

Personally, his taste ran to country music and cowboy novels ? which made the French antiques and Oriental rugs he took from contractors seem anomalous.

In the House, he was seen as an amiable colleague, the kind of man who listened appreciatively when someone had a joke and was more comfortable working a room than discussing the fine points of policy.

"I never heard anybody say a bad word about Duke. I think he was an easy guy to like," said Patrick J. Toomey, a former GOP congressman from Pennsylvania. "He always did have a special status ? as a war hero."

Cunningham had an emotional streak too, especially if the subject was Americans in uniform. During a 1995 debate, he choked back tears recounting the experience of an American POW in Vietnam who, Cunningham said, had painstakingly sewn a flag onto the inside of his shirt.

In recent years, Cunningham was best known for advocating a constitutional amendment to protect the American flag from "physical desecration."

Sometimes he got into trouble for his blunt remarks. In 1995, criticizing Democrats for supporting defense budget cuts, he called them "the same ones who would put homos in the military." (Later, when a gay rights group held a news conference to condemn him, Cunningham showed up and declared, "If the term 'homos in the military' is offensive, then I apologize and I will not use it again.")

He Lands Key Seats

Although born in Los Angeles, Cunningham grew up in the rural community of Shelbina, Mo., where his father ran a dime store, and where father and son loved to hunt pheasant and deer. He graduated from the University of Missouri and was a swimming coach in Hinsdale, Ill., before enlisting in the Navy.

Fit and with great reflexes, he became an F-4 Phantom pilot in Vietnam before becoming an instructor at the Top Gun school in San Diego. He loved the camaraderie of Navy pilots. He left the Navy in 1987.

Local GOP leaders recognized his potential political appeal and ran him for Congress in 1990 against Democratic Rep. Jim Bates, the incumbent who had been rebuked the year before by the House Ethics Committee over sexual harassment complaints. Until then, Cunningham was so apolitical that he had never voted.

Cunningham won that first seat in a close race, the only one of his career ? in part because redistricting moved him into progressively more Republican, as well as more affluent, areas.

In Washington, his war record got him a spot on the Appropriations Committee in 1997, where he was a natural for the defense subcommittee. He was put on the Permanent Select Committee on Intelligence in 2001 and this year was named chairman of its Terrorism, Human Intelligence, Analysis and Counterintelligence Subcommittee.

Cunningham's committee assignments, as well as his increasing seniority, gave him a unique opportunity, government procurement experts say. As a member of the Intelligence Committee, he was in a position to promote particular programs, and much of the committee's work is classified and thus shielded from normal oversight.

As a member of the Appropriations subcommittee on defense, Cunningham could push for funding approval for programs such as the digitizing system that prompted him to threaten the defense official's job in 2000. That program used services provided by ADCS Inc., located in Poway, Calif., and founded by Brent Wilkes, a supporter of Cunningham and other Republicans.

In the end, the Pentagon prevailed in that battle and the official, Kratz, kept his post. The Defense Department began scaling back the program in 2001, partly by winning support from the Bush White House, which Cunningham declined to fight.

But by then, a new chapter was opening: An even more obscure company, based in Washington, had entered the picture.

The plea agreement that Cunningham signed referred to the contractors who paid him off as "co-conspirator No. 1" and "co-conspirator No. 2." A lawyer for Wilkes of ADCS confirmed Friday that his client was the first co-conspirator. The lawyer, Michael Lipman, declined to elaborate.

Real estate records and a San Diego Union-Tribune report published in June indicated that the second co-conspirator was Mitchell J. Wade, who owned MZM Inc., the Washington firm. Wade had worked for Wilkes as a consultant, Lipman said.

Neither Wilkes nor Wade could be reached for comment. In Washington and in San Diego, federal grand juries are continuing to investigate the case. Cunningham also could not be reached for comment.

Fledgling Firm Takes Off

MZM Inc. was incorporated in 1993 but had not posted any revenue as late as 2001. Still, the company began paying for Cunningham's expenses, according to court documents. In November 2001, a company check for $12,000 paid for three nightstands, a leaded-glass cabinet, an antique washstand and four armoires.

In December 2001, a $50,000 company check was sent to a mortgage banker, who in turn made out a check to Cunningham for the same amount. In January 2002, the company's American Express card was used to purchase a leather sofa and a sleigh bed for Cunningham.

In all, more than $100,000 in cash and furnishings were given to Cunningham even before MZM had posted its first revenue.

Although MZM had no experience with government contracts, the General Services Administration in May 2002 placed the company on a list of approved information technology service providers, a key step for the company to get business from federal agencies.

The first contract, worth $140,000, came from the White House ? to provide office furniture and computers for Vice President Dick Cheney.

Two weeks later, on Aug. 30, 2002, Wade purchased a yacht, later christened "Duke-Stir," for $140,000, according to court documents. Cunningham used the yacht, docked at the Capital Yacht Club, as his home in Washington ? and the scene of parties for lobbyists and others.

The money and gifts MZM gave Cunningham were a small price to pay for the ultimate prize. In September 2002, the General Services Administration signed a so-called blanket purchase agreement with MZM totaling $250 million over five years.

Under the agreement, specific computer services for the Pentagon would be contracted to MZM without competition.

Such contracts are typically used to expedite routine ordering of such things as office supplies, but in recent years they also have been used to buy sophisticated equipment and services from specialized technology companies.

"It just makes no sense," said Keith Ashdown, vice president for policy at the government watchdog group Taxpayers for Common Sense. "How does someone with little experience get a blanket contract?"

Though court documents offered few specifics, Cunningham essentially admitted that he was the answer. As his influence grew on the Appropriations Committee, he apparently bullied Pentagon officials on the MZM contract much the way he had on money for ADCS, watchdog groups said.

"Cunningham was an 800-pound gorilla who could get his way in a room with a mid-level contracting officer," Ashdown said.

As federal dollars poured in to MZM, Wade began to reward the lawmaker more lavishly, culminating with his purchase of Cunningham's home in the San Diego neighborhood of Del Mar Heights for $1.675 million ? about $700,000 more than he was able to sell it for nine months later.

The windfall enabled Cunningham to move to the home in Rancho Santa Fe, a more exclusive and prestigious area.

Reports of the house deal began to unravel Cunningham's game.

In addition to facing possible time in prison, he must disgorge most of his ill-gotten gains and could be fined as much as $350,000. He also faces potentially huge legal fees.

On that score, at least, he may find some relief in the form of his war chest of campaign contributions. According to Kenneth Batson, treasurer of the former congressman's campaign committee, donors have given their permission to shift about $500,000 of their contributions to a defense fund.

Veering Off Course

In the end, what puzzles most of those who knew Cunningham is how a man who had so much going for him could have gotten into such a mess.

Some think it began in 1998, when he underwent surgery for prostate cancer. Friends say the experience left him physically weakened and emotionally shaken. Convinced that he would not enjoy a long life, this theory goes, Cunningham decided to maximize the pleasure of whatever time he had left.

About the same time, he lost some of his veteran staffers, and their younger replacements may have been less able to protect Cunningham from himself.

Others believe that the years Cunningham spent in Washington while his wife, Nancy, worked as a school district administrator in Encinitas, north of San Diego ? as well as rumors that swirled around the boisterous parties on the Duke-Stir ? strained his marriage, and that the lavishly furnished mansion represented an effort to make things up to his wife. (The couple are now estranged.)

It was also in the late 1990s that Cunningham met Wade, who had worked in the Pentagon and was in the Navy Reserve. The two became close. Wade, Cunningham told friends, "is the younger brother I never had."

The operative theory among some of Cunningham's supporters is that the contractors played on Cunningham's years of public service, suggesting he had earned the kind of luxuries he could not afford on his own.

Rep. Jack Kingston of Georgia, vice chairman of the House Republican Conference, who served on the House defense appropriations subcommittee with Cunningham, said, "I think what happened in this situation is that you develop friendships, and those friends see you after hours, on the weekends, and they have nice play toys ? boats, access to golfing, country clubs, credit cards ? and you're becoming friends with the guy and you don't think that much of it, and before you know it you get caught up in it."

Whatever the reason, the magnitude of Cunningham's fall was suggested by an incident Kingston related. The Georgia Republican's sister, who had served in the Navy, was more impressed that her brother knew Cunningham than any other House member, including Newt Gingrich.

"The guy is truly a genuine war hero," Kingston said. "He's probably just twisting on that legacy being tarnished now."

Pae reported from Los Angeles, Perry from San Diego and Simon from Washington. Times staff writers Richard A. Serrano and Richard T. Cooper in Washington contributed to this report.