Cunningham's mansion proceeds still under debate | North County Times

By: MARK WALKER - Staff Writer

Federal prosecutors and attorneys for Randy "Duke" Cunningham have resumed skirmishing over how to divide the proceeds from the sale of the Rancho Santa Fe mansion that became the focal point of a scandal that led to the former 50th District congressman's resignation after he admitted taking bribes and cheating on his taxes.

Randy and Nancy Cunningham sold the gated mansion for $2.6 million earlier this month, and a hold has now been lifted on the government's civil suit over who gets that money. The suit had been on hold while the criminal probe was under way.

The more than 7,000-square-foot mansion was the catalyst for a San Diego federal grand jury investigation that resulted in Randy Cunningham's Nov. 28 guilty plea and Dec. 1 resignation.

His portion of the proceeds were forfeited to the government in his guilty plea. But Nancy Cunningham, who argues she is an innocent party, is fighting for what she contends through her attorneys is a portion of the money she is entitled to under state community property laws.

Shortly after Cunningham announced in July he would not seek re-election and that he and his wife were planning to sell the home, government attorneys filed suit, contending the gated estate was purchased through bribes that Randy Cunningham had demanded and to which he admitted in his guilty plea.

During a conference Friday, prosecutors and attorneys for the Cunninghams told U.S. District Court Magistrate Anthony J. Battaglia that they were "close to completing a resolution" with regard to Randy Cunningham's interests in the more than 7,000-square-foot home, according to a two-page report filed by the magistrate.

Battaglia's report indicates Nancy Cunningham's claim to an unspecified portion of the money is far from being resolved. The magistrate wrote the attorneys reported being close to "completing a resolution with regard to the interest of Mr. Cunningham and are discussing a resolution with regard to the interest of Mrs. Cunningham."

Nancy Cunningham's attorney, Michael Attanasio, said she continues to assert a claim to money from the sale. He would not say how much she is seeking.

"Mrs. Cunningham will continue to protect her community property rights and will seek to reach a fair agreement with the government regarding those rights," Attanasio said.

In October, Attanasio filed an argument in the case contending that Nancy Cunningham was what is known in the law as "an innocent owner." He declared that she had no knowledge of any ill-gotten gains used by the couple when they purchased the home in late 2003 for $2.55 million.

In a declaration filed in the fall by Nancy Cunningham, she said she was "unaware" of any acts of bribery committed by Randy Cunningham.

She also has argued that any money the government is seeking stemmed from actions by others and that the liability should "be apportioned according to the relative degrees of fault."

In the plea agreement and an accompanying outline of its criminal case against her husband, government attorneys never mention Nancy Cunningham.

Last week, the three assistant U.S. attorneys handling the case, Jason Forge, Phillip Halpern and Sanjay Bhandari appeared on San Diego's KPBS "Full Focus" television show. When asked during the program whether Nancy Cunningham was under any scrutiny, Forge declined to comment beyond saying the plea agreement was specific to Randy Cunningham only.

The Rancho Santa Fe home was bought by the Cunninghams after they sold their home in Del Mar Heights to defense contractor Mitchell Wade for $1.675 million. Eleven months after he made the purchase, Wade sold the Del Mar Heights home at a $700,000 loss.

Wade, who sources have alleged is one of the co-conspirators in the Cunningham plea agreement, is the founder of MZM Inc., a Washington defense firm that relied on Cunningham and his position in Congress to help secure Defense Department contracts.

Wade and Brent Wilkes, owner of Poway defense firm ADCS, remain subjects of the ongoing criminal investigation.

The next action in the civil suit involving the Rancho Santa Fe property is set for Jan. 18, at which time "further dates and deadlines for settlement or litigation will be set," the magistrate wrote in his report following Friday's case conference.

Randy Cunningham is scheduled to be sentenced Feb. 27. He faces up to 10 years in federal prison and a $350,000 fine.