North County Times / The Californian - Top Stories - Report says Cunningham wore wire

By: MARK WALKER - Staff Writer

Authorities on Friday refused comment on a report that former 50th District Congressman Randy "Duke" Cunningham wore a wire to record conversations with unidentified associates before pleading guilty to tax and bribery charges in November.

The report published on TIME magazine's online edition quoted unnamed sources as saying Cunningham wore the wire to help federal authorities collect evidence against others involved in the case.

Debra Hartman, a spokeswoman for the U.S. attorney's office in San Diego, said there would be no comment on the story from the federal prosecutors in charge of the Cunningham investigation.


K. Lee Blalack, Cunningham's chief attorney, said in an interview from his office in Washington that he would not discuss any specifics of the report.

"I am not going to discuss the particulars of any cooperation that Duke may have been involved in," Blalack said.

FBI spokeswoman Jan Caldwell in San Diego said her agency will "neither confirm nor deny" the story on TIME's Web site, www.time.com.

Cunningham, 64, remains free on his own recognizance pending sentencing after pleading guilty on Nov. 28 to one count of bribery and one count of tax evasion. He admitted taking more than $2.4 million in bribes in the form of cash and goods and cheating on his taxes between 2001 and 2004.

In the plea agreement, Cunningham admitted steering contracts to two defense firms in exchange for the cash and gifts, which included a Rolls-Royce, a variety of antiques and Persian rugs.

The former congressman's undoing came after it was reported that defense contractor Mitchell Wade had paid $1.675 million for Cunningham's home in Del Mar Heights in late 2003. Wade, founder of MZM Inc. of Washington, then sold the home for $700,000 less than he paid.

Federal authorities last summer raided MZM and searched Wade's offices and home. A similar raid was conducted at the offices of defense contractor ADCS of Poway and at the home of that firm's founder and owner, Brent Wilkes.

Neither Wilkes nor Wade has been named in any federal documents, but widespread reports say they are two of four unindicted co-conspirators referred to in the Cunningham plea agreement.

A third unindicted co-conspirator has widely been reported to be Thomas Kontogiannis, a New York developer who provided money to Cunningham to purchase a Washington condominium and was involved in a boat transaction with him.

All three have been described by Cunningham as personal friends and each were regular campaign contributors.

According to other published reports, the fourth unindicted co-conspirator is John T. Michael, chief executive officer of Coastal Capital Corp., a New York mortgage lender. Michael is a nephew of Kontogiannis' wife.

Cunningham, a former Navy flying ace, faces up to 10 years in federal prison and a $350,000 fine when he is sentenced. The sentencing is scheduled to take place before U.S. District Judge Larry Alan Burns in San Diego on Feb. 27.

The story in TIME said Cunningham wore the wire during a "short interval between the moment he began cooperating with the feds and the announcement of his guilty plea."

After consistently denying any wrongdoing following the initial reports of the home transaction, sources have told the North County Times that it was Cunningham who asked his attorneys to enter into discussions with federal prosecutors leading to his guilty pleas.

In other news related to the Cunningham case, a civil suit filed by federal prosecutors to block Cunningham and his wife, Nancy, from receiving the proceeds of a sale of a gated estate they purchased in Rancho Santa Fe following the sale of their Del Mar Heights home has once again been put on hold.

In court papers filed Thursday, U.S. District Judge Dana Sabraw in San Diego agreed to delay any action in the case for at least 60 days.

In his plea agreement, Randy Cunningham gave up any rights to the sale proceeds. Nancy Cunningham, however, continues to assert she did nothing wrong and is entitled to an unspecified portion of the $2.6 million for which the home sold in December.

"The government asked us to stay that case for now and of course we agreed," Blalack said.

Cunningham's plea agreement requires he cooperate with federal investigators, who say their probe of the unindicted co-conspirators continues. The agreement also requires he undergo a polygraph examination if asked, and that he file amended tax returns for 2001 through 2004.

Cunningham lost his congressional salary when he resigned, and a legal defense fund he established last year to help pay his attorneys fees has been shut down after collecting about $70,000.

That money along with about $560,000 in his campaign account has all been paid to the attorneys, Cunningham's longtime campaign treasurer Kenneth Batson said Friday.

The Federal Election Commission last year ruled that Cunningham could use the money in his campaign account, which is separate from the legal defense fund he later established, to pay the legal bills.

"I've dispersed most of it to the defense attorneys," Batson said. "I'm holding a little in there to take care of some remaining administrative matters."