North County Times / The Californian - Top Stories - Alleged Cunningham co-conspirator has checkered past


A look at one of the alleged, unindicted co-conspirators in the Randy "Duke" Cunningham scandal shows a man with a checkered past, replete with a conviction for bribery and another for phony visas ---- a man whose sentences did not include a single day behind bars.

Sources close to the investigation have confirmed that New York businessman Thomas Kontogiannis is being investigated as one of four men from whom Cunningham received bribes. Court documents do not name the men, but refer to them as "co-conspirators."

Cunningham, the former congressman for most of North County, pleaded guilty Nov. 28 to taking more than $2.4 million in bribes in exchange for steering tens of millions of dollars in government contracts to two defense contractors.

From a distance and to colleagues, the Long Island resident seemed an old friend, a successful businessman, a man who enjoyed the good life on the water.

But a closer look shows that the Greek-born real estate developer eluded jail for a number of crimes, including his participation in a massive bribery scheme with a New York school official in exchange for contracts.

Then came the Cunningham scandal, in which Kontogiannis is suspected of giving the then-congressman hundreds of thousands in bribes.

Those bribes allegedly included overpaying for a 65-foot party boat that belonged to Cunningham and financing real estate deals that were described as bribes in Cunningham's plea agreement.

Lender link
A common thread in the Cunningham case is a mortgage company, Coastal Capital Corp.

Virginia's Bureau of Financial Institutions lists John T. Michael as the chief executive officer for the Greenville, N.Y.-based company. According to news reports, Michael is the nephew of Kontogiannis' wife. In an earlier interview, Kontogiannis told the North County Times that his daughter is also a principal in the company. A source close to the investigation has confirmed that Michael is alleged to be co-conspirator No. 4.

San Diego County property records show that company held more than $1 million in mortgages on Cunningham's Rancho Santa Fe estate. The loans were then alleged to have been paid off by two other co-conspirators.

Virginia property records show that Coastal Capital also was the lender for Cunningham's mortgage in his $350,000 purchase of an Arlington, Va., condominium in 2002. Court records show that alleged co-conspirator No.3 ---- who sources close to the investigation have identified as Kontogiannis ---- gave Cunningham $200,000 toward its purchase. Coastal then loaned the $150,000 difference to Cunningham to complete the deal.

Reached by phone last week, Kontogiannis' New York attorney, Gregory J. O'Connell, would not talk about any alleged involvement in the bribery of Cunningham.

"Mr. Kontogiannis has not been accused (of) or charged (with) any wrongdoing in connection with this Cunningham affair, and I have no comment beyond that," he said.

Agents with the FBI, the Internal Revenue Service and other federal departments raided Kontogiannis' New York home and offices in September in connection with the Cunningham case.

In addition to the allegedly fraudulent real estate transactions, court documents also allege that co-conspirator No.3, as Kontogiannis is referred to in court documents, funneled more than $300,000 in payments to a company owned by Cunningham.

The investigation involving Cunningham is not Kontogiannis' first brush with federal investigators.

The Long Island resident pleaded guilty to fraud and conspiracy in federal court in 1994 in an overseas visa scam, and again in 2002 on New York state charges relating to a multimillion-dollar bribery scheme.

Criminal convictions
Kontogiannis' criminal past appears to date to at least 1994. After he and a U.S. Embassy official were arrested by the FBI in Athens, Greece, both men later pleaded guilty to charges of taking bribes to supply fraudulent U.S. visas, and Kontogiannis later was sentenced to five years' probation, according to an article in the New York Post in 2000.

Then, in 2000, Kontogiannis, along with the superintendent of a Queens County, N.Y., school district and three other co-defendants and five corporations ---- three of them owned by Kontogiannis ---- were charged with 123 counts of having rigged bids, paid bribes and received kickbacks to fix more than $6 million in school computer contracts, court records show.

The indictments accused Kontogiannis and one of the other co-conspirators of having received more than $2 million of the contract money in kickbacks.

Court records show that in 2002, Kontogiannis pleaded guilty to reduced charges, and he and his co-conspirators agreed to pay nearly $5 million in restitution to the school district. He paid part of the settlement with money from a mortgage on a commercial building owned by his wife.

"The defendants' fraudulent scheme victimized the children of Southeast Queens who lost critically needed classroom resources as a result of the defendants' greed and corruption," District Attorney Richard A. Brown stated at the time of the guilty pleas.

Once again, Kontogiannis escaped any jail time, instead receiving five years on probation.

A parallel civil suit charging the defendants with racketeering was settled as part of the plea arrangement. In a Friday phone interview, an attorney in that civil suit said he wasn't surprised that Kontogiannis' sentence didn't include time behind bars.

"The fact that there was $5 million in restitution was what made everybody happy," New York City Assistant Corporation Counsel Eric Proshansky said. "We were more happy to get the money back than to see him get any jail time."

In a Thursday telephone interview, a Queens County prosecutor in the bribery case said that at the time of the plea agreement, her office was aware that Kontogiannis had been convicted in the federal visa case, as reported in the New York Post.

However, she said, despite the prior conviction and his involvement in the bid-rigging case, she believes that his sentence in the bribery case was appropriate.

"There is always going to be somebody who will comment in favor of or against a certain (sentence)," said prosecutor Carmencita N. Gutierrez. "Based on the investigation and the nature of the case and information available to us, we believe the disposition was appropriate."

Building relationships
The relationship between Cunningham and Kontogiannis began in the early 1990s, according to The Washington Post. Kontogiannis said he had served in the Greek navy before coming to the United Sates. He told reporters that he and Cunningham met at a Washington function 15 years ago, and have gotten together a couple of times a year.

In 2000, during the investigation of the school district case, Cunningham wrote a letter to the Queens County district attorney, Brown, suggesting that Kontogiannis might be the victim of a political vendetta against school district Superintendent Celestine Miller.

"It has come to my attention that a case has been filed against Tom Kontogiannis in New York's 29th school district. It has been alleged that there may be a political agenda being waged against former Superintendent Celestine Miller by a company allegedly not capable of completing a contract, and therefore Mr. Kontogiannis is being allegedly victimized," Cunningham wrote.

The day after that letter was received, charges were filed against Kontogiannis and Miller.

It wasn't the only time Kontogiannis sought help from the eight-term congressman and Vietnam War Navy ace.

After his conviction, Kontogiannis then sought Cunningham's advice on seeking a pardon from President George W. Bush, Kontogiannis told reporters in July. He said Cunningham steered him to a Washington law firm.

But in the most recent case, the first indication of a link between Kontogiannis and Cunningham surfaced when Kontogiannis told the North County Times he had bought a 65-foot flat-bottomed boat in 2002 from Cunningham for $627,000. Cunningham had bought the boat from another member of Congress five years earlier for $200,000.

After reports surfaced of the boat deal between Cunningham and Kontogiannis, a San Diego yacht broker said that, based on the age, type and features of the boat, he would estimate its maximum value at $200,000, "unless it has a Picasso onboard."

In another sign of their flourishing relationship, the following year, Kontogiannis accompanied Cunningham by private jet on a fact-finding mission to Saudi Arabia, Rep. Ken Calvert, R-Riverside, said Thursday.

In 2003, Cunningham made two trips to Saudi Arabia that were paid for by San Diego businessman and naturalized U.S. citizen Ziyad Abduljawad, according to congressional travel reports. Calvert said he accompanied Cunningham on one of those trips.

On their way to Saudi Arabia, they stopped in Athens and picked up Kontogiannis, Calvert said.

Calvert added that he hadn't known beforehand they would be picking up Kontogiannis, whom he had not before met. He hasn't seen Kontogiannis since, Calvert said, adding that Cunningham described the Greek native as a friend and a successful New York businessman.

And while Kontogiannis did participate in some of the meetings that he and Cunningham had with Saudi ministers, Calvert said that Kontogiannis "wasn't involved in any classified or high-level information as far as I can recall."

"If I had known his background, I wouldn't have felt very comfortable, but I didn't know," he said.

Officials with the U.S. attorney's office in San Diego have said that the investigation is continuing, but have declined to say if indictments will be issued against the co-conspirators.

San Diego FBI spokeswoman April Langwell said Thursday that investigators "are getting their ducks in a row."

Based on descriptions in the court records, also confirmed by sources close to the investigation, two of the other alleged co-conspirators appear to be Mitchell Wade, the founder of Washington defense contractor MZM Inc., and Brent Wilkes, founder of Poway defense contractor ADCS Inc.

Staff writer Teri Figueroa contributed to this report. Contact staff writer William Finn Bennett at (760) 740-5426 or wbennett@nctimes.com. To comment, go to www.nctimes.com.