Randy "Duke" Cunningham avoids maximum sentence

By: Mark Walker, William Finn Bennett and Teri Figueroa - Staff Writers

SAN DIEGO ---- Randy "Duke" Cunningham's five-year saga of greed and corruption came to a tear-filled ending Friday when the former 50th Congressional District lawmaker was sentenced to more than eight years in federal prison and ordered to pay $1.84 million in back taxes.
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"Your honor, I have ripped my life to shreds," the 64-year-old Cunningham told U.S. District Judge Larry Alan Burns during a tearful 10-minute address to a packed courtroom. "I made a very wrong turn. I will spend every day for the rest of my life seeking to atone."

After hearing arguments from defense attorney K. Lee Blalack and the three assistant U.S. attorneys who prosecuted the case, Burns sentenced Cunningham to eight years and four months. Prosecutors said it was the longest sentence ever given to a U.S. congressman.

The judge rejected Cunningham's request for time to visit his 91-year-old mother before reporting to prison, saying that Friday was "judgment day" and ordering the tarnished war hero to be taken into immediate custody by U.S. marshals.

Cunningham pleaded guilty to bribery and tax evasion charges Nov. 28, admitting he took more than $2.4 million in bribes from defense contractors.

During his address to the court, a subdued and repentant Cunningham said he has placed his life in the hands of God, and at times in recent months wondered if he would take his own life.

"Some days, I didn't know if I could cope with the pain."

None of Cunningham's three adult children were in the courtroom, nor was his estranged wife, Nancy.

Prosecutors want wife
 

Cunningham told the court his wife, who has not been charged with any crimes, had no knowledge of his misdeeds as they were taking place. At one point, he turned toward prosecutors and pleaded with them to leave Nancy Cunningham alone. Federal prosecutors had sought a maximum 10-year sentence for the former congressman.

"He is the first-ever member of Congress to be convicted of demanding and receiving more than $2.4 million in bribes," Assistant U.S. Attorney Jason Forge said after the hearing. "Here was a man who had just about everything yet he demanded more."

Defense attorney Blalack argued for a six-year sentence during the three-hour hearing at the federal courthouse in downtown San Diego.

Blalack argued Cunningham had acknowledged his guilt and cooperated with authorities. He said the former congressman's Vietnam War record and charitable act merited a six-year sentence.

"This man has been humbled beyond belief," Blalack said. "The question is, how much is enough?"

Falling down


Cunningham appeared a defeated shell of a man Friday, one that was held up by his attorneys in more ways than one.

On his way into the courthouse, Cunningham stumbled and fell as two cameramen filming his arrival tripped and fell in front of him.

When he first entered the court, Cunningham, wearing a dark suit and looking frail and nervous, was greeted by several well-wishers, including U.S. Rep. Duncan Hunter, R-El Cajon.

At precisely 1 p.m., Burns entered the wood-paneled courtroom packed with more than 100 spectators and dozens of reporters.

First to address the court was Blalack, the Washington attorney who has represented Cunningham since he came under scrutiny in June after it was reported that defense contractor Mitchell Wade purchased his Del Mar Heights home in late 2003 for $700,000 more than he would sell it for less than a year later.

During his 30-minute argument, Blalack recounted Cunningham's service during the Vietnam War in which he became one of only two ace pilots during that conflict by shooting down five enemy fighters.

Blalack said the longtime GOP lawmaker has been estranged from his wife and his family since the first revelation of his wrongdoing and that a 10-year prison sentence would be akin to a death sentence because of Cunningham's age and medical condition, which includes recurring prostate cancer.

"He agrees his conduct is a violation of the public trust and his sentence should be severe enough to send a message," Blalack said.

But prosecutor Forge said Cunningham deserved the maximum sentence because of the five years he took bribes starting in 2000.

"He committed crime after crime because he wanted more."

Assistant U.S. Attorney Phillip Halpern argued that Cunningham effectively turned two "insignificant businessmen" into major defense contractors with Pentagon work that wasn't necessary and took money from other vital defense programs.

"The defendant sold out his office," Halpern said.

The two contractors he referred to were defense firm founder Mitchell Wade of Washington's MZM Inc., and Brent Wilkes, owner of a Poway defense firm called ADCS. Wade pleaded guilty to bribery and election fraud a week ago and faces 11 years in prison. Wilkes remains under investigation, as does New York developer Thomas Kontogiannis and his son-in-law, John T. Michael.

Prosecutors point to menu


At one point during his address, Halpern waved a plastic evidence envelope containing the "bribe menu" that Cunningham used to lay out his price for securing Pentagon work for the defense contractors.

"It was this memorandum that memorialized the price of betrayal," Halpern said. "He failed to put the nation's interests ahead of his own greed."

In responding to Cunningham's statement that he had made a wrong turn, Burns said it was much more.

"It wasn't a one-time lapse," the judge said to Cunningham. "It wasn't a one time U-turn. You made a U-turn and kept going for five years."

Outside the courthouse after the sentencing, Rick Gwin, special agent in charge of the Pentagon's Defense Criminal Investigative Service western regional office, said that he is not convinced Cunningham has been fully cooperating with the ongoing investigation.

"I don't know that we are necessarily getting all the cooperation we should from him," Gwin said. "Maybe once he is sitting in a jail cell we will get more cooperation."

Blalack said he is hopeful that further cooperation with federal investigators may result in a reduction in the prison sentence. The federal prison system allows only 54 days credit per year for good behavior. Assuming he earns good-behavior credit and there is no further reduction in his sentence, Cunningham will have to serve seven years and one month.

As he left the courthouse, Congressman Hunter said he continues to worry about Cunningham and his family.

"I was here as Duke's friend," Hunter said. "Our job now is to help his family make sure Duke stays alive."

'Sad but well-deserved'
 

Prosecutors were less merciful. Speaking to reporters in front of a bank of microphones after the sentencing, Forge said he hoped the prison term would help restore public confidence in elected officials. "Frankly, today's sentencing is a sad but well-deserved end to Mr. Cunningham's career," Forge said.

Once investigators discovered the bribe menu, which Forge cited as his most "flagrant act," prosecutors said they knew Cunningham's fate was sealed.

Cunningham will be held initially at the Metropolitan Corrections Center in San Diego until the middle of next week and then transferred to a Federal Bureau of Prisons medical facility for an evaluation before being assigned to a prison.

Burns said he would recommend that Cunningham serve his time at the federal correctional facility operated by a private contractor at Taft near Bakersfield.

In addition to his prison sentence, Cunningham has to file amended tax returns for the years 2000 through 2004. To meet his tax bill, Burns ordered he pay $1,500 a month while in prison and $1,000 a month after his release. At that rate, it would take 140 years to pay the $1.84 million bill.

Cunningham's remaining source of income is from his military and congressional pension.

In the end, Burns said he carefully pondered all of the evidence, written arguments from prosecutors and Blalack and the more than 40 letters sent to him asking for leniency.

"What you did was aggravated in scope, duration and nature," Burns said.

Contact staff writer William Finn Bennett at (760) 740-5426 or wbennett@nctimes.com.

Contact staff writer Mark Walker at (760) 740-3529 or mlwalker@nctimes.com.

Contact staff writer Teri Figueroa at (760) 631-6623 or tfigueroa@nctimes.com.

Quotables


"Your honor, I have ripped my life to shreds."

Former Congressman Randy "Duke" Cunningham before being sentenced

"It wasn't a one-time lapse. ...It wasn't a one time U-turn. You made a U-turn and kept going for five years."

Judge Larry Alan Burns to Cunningham

"Here was a man who had just about everything yet he demanded more."

Assistant U.S. Attorney Jason Forge

"Eight years and four months is a long sentence for a 64-year-old man, for something that some would consider to be a white-collar crime. But the public trust must be kept and it wasn't kept here."

Rep. Darrell Issa, R-Vista

"Maybe once he is sitting in a jail cell we will get more cooperation."

Rick Gwin, special agent in charge of the Pentagon's Defense Criminal Investigative Service

"Forgiveness and mercy are important. They should not be just for oppressed people but for those who do something wrong."

Father Joe Carroll, advocate for the homeless and friend of Cunningham

Previous Story:

Larry Alan Burns has served as a United States Magistrate Judge in the Southern District of California since 1997. As a Magistrate Judge, Judge Burns handles preliminary proceedings in federal criminal cases and manages a diversified docket of federal civil cases, including tort, contract, labor, insurance, patent, trademark, securities and civil rights disputes. Before his appointment to the bench, Judge Burns served as an Assistant U.S. Attorney for the Southern District of California (1985-1997) and as a San Diego County District Attorney (1979-1985).

As a federal and state prosecutor, Judge Burns tried over 150 cases to jury verdicts and argued more than 40 cases before the Ninth Circuit Court of Appeals. He is a fellow of the American College of Trial Lawyers and an Associate of the American Board of Trial Advocates.

Judge Burns received his undergraduate degree from Point Loma College (now Point Loma Nazarene University) in 1976. He attended the University of San Diego School of Law, where he received his J.D. in 1979. He was admitted to the California and federal bar in 1979.

Judge Burns and his wife, Kristi, have been married for 23 years and have two teenage sons.

Appointed by Bush

Faerstein

O.J.'s Shrink: Why He Didn't Testify for Defense A week and a day before the 10th anniversary of the murders of Nicole Brown Simpson and Ronald Goldman — and O.J. Simpson is busy giving interviews proclaiming his innocence. But there are a lot of people who worked on the case, in particular for the defense, just now starting to speak out to the extent that they can. Yesterday I told you about Dr. Rob Huizenga, Simpson's physician. Today, meet Dr. Saul Faerstein, the forensic psychiatrist who was Simpson's shrink during the summer of 1994, when he first went to jail.

Faerstein had worked on cases for "Dream Team" lawyers Robert Shapiro and Johnnie Cochran before, which is how he got called. He first saw Simpson on June 15, the same day as Huizenga. The next time he had a meeting with him was at Robert Kardashian's house on Friday June 17. He was in Kardashian's second floor library with several others including coroner Michael Baden and criminologist Henry Lee when Simpson slipped away in his Bronco.

Faerstein told me yesterday: "I saw O.J. two or three times a week that summer in jail until September when the trial" — really, preliminary hearings — "started."

Unlike Huizenga, Faerstein never testified in the trial. He could only have been called as a defense witness. But Faerstein's knowledge of Simpson's psyche would have made for explosive revelations under cross-examination.

"If I would have been helpful to O.J., would I not have been called?" he asked me rhetorically.

Egotism blamed in undoing of lawmaker Psychiatrist offers Cunningham profile By Onell R. Soto STAFF WRITER February 24, 2006 A psychiatrist says Randy “Duke” Cunningham's fall from Vietnam War hero to corrupt politician grew out of “an outsized ego and a mantle of invulnerability” that allowed him to rationalize his behavior. That mindset evolved from a military career in which Cunningham was taught to embrace aggressive tactics and ignore danger signs and enabled him to perform heroically during the Vietnam War, the doctor said. Advertisement   Those traits, imperative for fighter pilots, were so engrained in Cunningham that although he was expected to behave differently in Congress “the psyche cannot make such a U-turn easily,” said Dr. Saul Faerstein. That analysis is included in a report written for the former congressman's defense team for his sentencing next Friday. It is disputed by other medical experts and another former Navy pilot. Faerstein also said Cunningham suffers from a major depressive disorder, is suicidal and is “terrified” about his pending imprisonment. In the nine-page report, the Beverly Hills psychiatrist examined Cunningham's life history and documented myriad physical and psychological ailments for which he is taking a wide assortment of medications. Cunningham pleaded guilty in November to several charges for taking more than $2.4 million in bribes from defense contractors and others and resigned his seat in Congress. The report will be considered by Judge Larry Alan Burns in sentencing Cunningham. Prosecutors are asking for the maximum sentence of 10 years in prison. Defense lawyers suggest six years. They said Cunningham, 64, has fought prostate cancer and diabetes and has a life expectancy of seven years. A long sentence might mean he dies in prison, they said. Faerstein said Cunningham admitted his crimes during a 5½ -hour interview in which he cited “a culture of corruption in Washington.” Cunningham joined the Navy in 1966 and became a flying ace after shooting down three enemy planes in one day and was injured when his jet was hit. Cunningham cried while describing that battle, the psychiatrist wrote. Faerstein said Cunningham's “extraordinary deeds in the service planted a subconscious sense of entitlement which fed his rationalization to accept these gifts for his sacrifices.” Faerstein, an assistant clinical professor at UCLA's psychiatry department, has written psychological reports on hundreds of people accused of crimes, including O.J. Simpson, and is well-respected by colleagues. Navy officials said they couldn't comment yesterday on the psychiatrist's analysis but others rejected the finding. “I don't think naval aviation training ever trained anybody to be a crook,” said Jack Ensch. Ensch is a former Navy pilot shot down over North Vietnam who spent seven months as a prisoner of war and later served at the Top Gun flight training at Miramar Naval Air Station as Cunningham's executive officer. “There are numerous individuals who came from naval aviation, Air Force aviation, former combat pilots who went into politics and who, you know, didn't do what Randy did,” he said. The analysis also was criticized by Dr. Mark Kalish, a San Diego psychiatrist who regularly interviews defendants for the San Diego Superior Court. “That's psychobabble . . . . I just don't buy it for a second,” Kalish said. Psychology is useful to try to explain behavior, he said, but people must take responsibility. “There are explanations, but they aren't excuses,” Kalish said. Prosecutors will have a chance to respond to the psychological report and other arguments for leniency from Cunningham's lawyers but would not comment on the report yesterday. In the papers they've filed so far, prosecutors said that Cunningham wasn't merely accepting gifts. They say he demanded bribes that escalated into a “stunning betrayal of the public trust” unprecedented in congressional history. A chief piece of evidence, they said, is a “bribe menu” on congressional stationery in Cunningham's handwriting in which he lists how much he would charge to provide certain levels of government contracts. And prosecutors said Cunningham tried to fabricate evidence and tamper with witnesses even before his wrongdoing became public in a story in The San Diego Union-Tribune on June 12. That story detailed how Pentagon contractor Mitchell Wade of Washington, D.C., overpaid for Cunningham's Del Mar-area home at a time when Wade's company was landing millions of dollars in government contracts. Cunningham described himself as an idealist, conservative but independent, when he arrived in Washington, according to Faerstein's report. “He believes strongly that when he was approached to support the military and intelligence programs that Mr. Wade backed, he felt that his sponsorship of these programs was consistent with his belief in a strong military,” Faerstein said. “He recognizes now that Wade and others in Washington were part of a culture of corruption and that good motives may lead to bad decisions when that corruption infuses the relationships of the people involved in the process,” he said. Cunningham wasn't always blind to corruption. In a 1995 speech in the House he spoke in favor of legislation limiting gifts to members of Congress, proposing “zero, no trips, no gift, nothing, . . . nada.” “I have never been on a trip myself, never once, never taken my family,” he said, according to the Congressional Record. “I do not plan on doing it. I would love to go to Mexico where we have a lot of problems in common with California. But I have not done that. I think probably the most (valuable) thing I have ever received is a T-shirt or a golf hat.” That changed. Between 2000 and 2005, prosecutors said, Cunningham received envelopes of cash, antique furniture, jewelry and a Rolls-Royce, and he wined, dined and flew at the contractors' expense in exchange for his support. Ultimately, he demanded they pay off more than $1 million in mortgages on a Rancho Santa Fe mansion, prosecutors said. The psychological report traces Cunningham's life history as the son of a Union Oil truck driver in Los Angeles, his upbringing in Missouri, his military and political careers and his downfall after “some of the bright lines separating government, business and friendship became blurred.” The report is as interesting for what it leaves out as for what it includes, said a San Diego forensic psychiatrist who read it yesterday. “He doesn't use the word remorse,” said Dr. Glen Lipson. “This isn't a report where there's a lot of responsibility taken.” Lipson noted that Cunningham says he believed in the programs he took bribes to back. But that doesn't make sense, because implicit in taking a bribe is the idea that the support is dependent on the bribery. And the description of Cunningham's outsized ego is inconsistent with his health problems. “How can he feel like Superman when he has an artificial knee, he lost his thyroid, he had prostate cancer?” Lipson asked. “It's very hard to feel like Superman when you can't walk.” In the last year, as the investigation into his crimes gathered steam, Cunningham became depressed, lost 60 pounds and considered suicide, the psychiatrist said. A Washington, D.C., psychiatrist recommended hospitalization, but Cunningham refused. Instead, Cunningham sought help from a support group and another Navy ace with a history of depression.

Prosecutors await Cunningham's participation     By Onell R. Soto STAFF WRITER December 13, 2005 Former Congressman Randy "Duke" Cunningham pledged to cooperate in the corruption investigation that brought him down but has not yet begun to talk with investigators and prosecutors. "We're not at a point right now where we can say we have a good sense of how much ultimately Cunningham could provide as far as useful information," Assistant U.S. Attorney Sanjay Bhandari said. "That's going to take some time." Bhandari and the other two San Diego federal prosecutors who helped investigate Cunningham and secure his guilty pleas to conspiracy and tax evasion charges appeared last night on the KPBS-TV show "Full Focus." He said that Cunningham, like other white-collar criminals, is still going through the process of accepting responsibility for his crimes. "What I mean by accepting responsibility is something beyond standing in court and saying, 'Yes, I did commit offenses and I plead guilty under the plea agreement,' but actually going beyond a level of denial and minimizing their role and actually getting to a point where they can be helpful to you." Stern The investigation began in June after The San Diego Union-Tribune published a story by Copley News Service reporter Marcus Stern about a suspicious real estate transaction in which a defense contractor overpaid Cunningham for a Del Mar-area house. After that, federal agents uncovered a web of corruption involving house payments, fine antiques, a Rolls-Royce, use of a yacht, travel on private planes, meals and a variety of other bribes, including cash. "He was very close to getting away with this," prosecutor Phillip Halpern said. "Marcus Stern broke this story and did a great service to the public and to us." Halpern said it was the first time his 25 years as a prosecutor that he started a case because of a newspaper story. On Nov. 28, Cunningham, a Republican, resigned the House seat he held for 15 years after admitting he accepted $2.4 million in bribes from two defense contractors and a New York businessman. Those three, identified in court papers as "co-conspirators," have not been charged, nor has a fourth man who prosecutors said helped launder some of the bribes through his business. Bhandari wouldn't say when those men might face charges, but added, "You can expect follow-ups in this investigation on an expedited basis." Prosecutors hope Cunningham will give them new leads. "He's agreed to take a polygraph examination if necessary," said prosecutor Jason Forge, who also worked on the case. "Hopefully, we will at least drill to the bottom of what he knows about any other corruption." Halpern said investigators don't know how widespread the corruption case will become. "Agents are really working nights and weekends to make sure we can uncover the wrongdoing as quickly and efficiently as we've been able to," he said. But the corruption wasn't as easy to discover as it appears when spelled out in court documents, Halpern said. "There were very few direct cash payments, and those direct cash payments were covered in that they were for a boat or a car," he said. "Most of the payments, millions of dollars worth of payments, were actually laundered ... so unraveling that path is actually a lot harder than you think." Cunningham faces a maximum prison term of 10 years. If prosecutors find his cooperation helpful, they've agreed to recommend a lesser sentence. Had he gone to trial and lost, Cunningham was facing much more time, Forge said. The plea agreement lists 52 "overt acts" as part of the conspiracy. Any of them could have been charged as an individual crime carrying a significant prison sentence, he said.

Developer Helped Congressman By Buying Boat, Arranging Loan
Greek/Jewish developer

By Charles R. Babcock
Washington Post Staff Writer
Tuesday, July 5, 2005; A02
 

Thomas T. Kontogiannis, a Long Island developer, says he doesn't particularly like politics, so he never does business with the federal government. Still, he hit it off with Rep. Randy "Duke" Cunningham years ago, and recently Kontogiannis bought Cunningham's 65-foot yacht, the Kelly C, and helped the California Republican finance a house. The developer says the transactions are nothing like Cunningham's dealings on another house and yacht that are the subject of a federal investigation. A federal grand jury is examining Cunningham's relationship with Mitchell J. Wade, a Washington defense contractor who bought a home from Cunningham, possibly at an inflated price, and then let the congressman stay rent-free on Wade's 42-foot boat, the Duke-Stir, while in Washington The transactions between the congressman and Kontogiannis are not fully documented in the public record or the congressman's financial disclosure. Cunningham, for example, is still listed as the owner of the Kelly C, with his address listed as the home he bought more than a year after Kontogiannis said he bought the yacht from the congressman.

.Kontogiannis, of Glen Head, N.Y., said in interviews this weekend that he bought the Kelly C, a boat on which Cunningham used to live while Congress was in session, for $600,000 in summer 2002. Kontogiannis spent $100,000 more redecorating it the next year at the Glen Cove marina but didn't use it except for dockside parties, he said, because it wasn't stable in rough seas. Kontogiannis said he never got around to changing the title on the boat from Cunningham's name to his.

Then in late 2003, Kontogiannis said, when Cunningham bought a $2.55 million home in Rancho Santa Fe, the congressman asked if a mortgage company owned by Kontogiannis's nephew and daughter could finance $1.1 million in mortgages. The congressman bought that house shortly after Wade paid $1.675 million for Cunningham's previous home in Del Mar. Wade then sold that house for a $700,000 loss.

Kontogiannis said he recently paid off a $500,000 second mortgage on the Rancho Santa Fe home at the congressman's request, mostly with money he owed Cunningham for the yacht.

There is no mention of Kontogiannis's debt to Cunningham on the congressman's financial disclosure statements.

Cunningham's lawyers, K. Lee Blalack II and Mark Holscher, said in a written statement that the congressman's "business dealings with Mr. Kontogiannis have been entirely proper."

Cunningham called and visited the Long Island marina a month ago -- before news stories about Wade appeared -- to arrange for repairs so he could take the Kelly C back to Washington.

Kontogiannis, 56, said he had discussed reselling the Kelly C to Cunningham but decided against it. The source close to Cunningham said the congressman registered the boat this year using his new California address in anticipation of the resale. But that idea was jettisoned when San Diego area newspapers broke stories about the congressman's dealings with Wade.

The developer said his failure to record the change in title on the boat should not be taken as a sign that he was doing Cunningham a favor by paying for refurbishing his boat. "Why would I do that?" he said. "I don't need the man." Kontogiannis said he has never asked Cunningham for a favor.

The developer pleaded guilty to what he said was a misdemeanor state fraud charge in 2002 in connection with alleged bribes to a local school superintendent in return for $6 million in computer contracts. He said he agreed to pay $5 million in reimbursement.

Kontogiannis, who said he served in the Greek navy before coming to the United States in 1970, said he met Cunningham at a Washington function about 15 years ago. They talk a couple of times a year, he said. Cunningham was a Navy fighter pilot and an instructor at its Top Gun flight school.

Kontogiannis said he went to a party on the Kelly C around 1995, when it was owned by another congressman, and liked the steel-hull craft. After Cunningham bought it 1997, for a reported $200,000, Kontogiannis said he told the congressman: "If you ever decide to sell it, I'd love to buy it."

Cunningham "called and asked if I was still interested" in buying the boat, Kontogiannis said. He did so, he said, after getting the boat appraised at $1.2 million. The developer said he financed the transaction by giving the congressman about $30,000, assuming the payments on an existing $140,000 bank loan and financing the remaining $425,000 as a personal note that accumulated interest at the prime rate. He said a family company, Axxion LLC, made the payments on the bank loan.

The congressman approached him again in 2003 when Cunningham planned to buy the Rancho Santa Fe home, Kontogiannis said. The congressman asked if Coastal Capital, the company the developer said is owned by his nephew and daughter, could finance the mortgage at its wholesale price, which had a slightly lower interest rate than retail mortgage lenders. The decision was "a slam dunk," Kontogiannis said, because the house had been appraised at $2.55 million.

Kontogiannis said Cunningham asked him last year to pay back the Kelly C loan, which was accruing interest at about 3 1/2 percent, by paying off the second mortgage on the house. Interest on the congressman's loan was accruing at 10 percent, though Cunningham wasn't making payments, he said.

The developer paid off the mortgage, he said, after Cunningham wrote him a check for $70,000 to make up the difference between what he owed on the boat and what Cunningham owed on the second mortgage.

As of late June, land records in California did not show the congressman had paid off the second mortgage. "I sent him a letter of satisfaction" in March, Kontogiannis said. "It's up to him to get it recorded."

Staff researchers Alice Crites, Madonna Lebling and Meg Smith contributed to this report.

Defense Contractor Mitchell Wade Pleads Guilty to Bribing Lawmaker

By Freddie Mooche

(AXcess News) Washington - Defense contractor Mitchell Wade has pleaded guilty to bribing former Congressman "Duke" Cunningham in order to win US defense contracts.

Wade, 46, of Great Falls, Va., entered his guilty plea Friday in U.S. District Court to multiple felony counts related to his wholesale corruption of the defense procurement process. The conduct includes Wade making over $1 million in payoffs to then- Congressman Duke Cunningham, providing illegal benefits to Defense Department officials, and attempting to curry favor with two other members of Congress by making illegal campaign contributions.

Under the terms of Wade's plea agreement he has been cooperating with officials in this ongoing investigation.  But Wade still faces up to 135 months of incarceration even though he cooperated with investigators. A sentencing date has not yet been set.

According to the government's evidence, Wade grew his company, MZM, into a defense contracting company that, since 2002, received over $150 million in Department of Defense government contracts by engaging in a series of corrupt acts throughout the defense procurement process: from ensuring that the members of Congress who could appropriate funds for special Defense Department projects looked favorably on MZM, to the Department of Defense officials-some of whom Wade knew when he was a government official-who could give him favorable reviews and inside information to ensure that the work would continue to flow.

Wade was able to exploit the procurement system in three distinct ways: by bribing a sitting United States Congressman; by conspiring to give favors to Department of Defense officials responsible for procuring services from Wade's company; and by funneling illegal campaign contributions to two Members of Congress.

Randall "Duke" Cunningham was a powerful member of the Defense appropriations subcommittee, and Wade understood that Cunningham had the ability to make or break MZM. In order to become a Cunningham favorite in the use of special Congressional appropriations, Wade showered the Congressman with many types of gifts, including checks, cash, rugs, antiques, furniture, yacht club fees, boat repairs, and the use of a Rolls Royce. Wade also purchased Cunningham's house at a wildly inflated price and arranged for Cunningham to live on a yacht, the "Duke-Stir," anchored in the Potomac. Wade paid these bribes, totaling over $1 million, in order to receive special consideration in Cunningham's use of his special defense appropriations and to pay for Cunningham's use of his power in an effort to steer funds and contracts to MZM.

Cunningham has pled guilty to bribery conspiracy, and will be sentenced in San Diego on Friday, March 3.

One key to MZM's ability to receive government contracts was an umbrella contracting vehicle called Blanket Purchase Agreement (BPA). A BPA is a contract vehicle that permitted the Defense Department and other departments and agencies to obtain supplies and services on an as-needed basis through a "charge account" system. Operating under a BPA, MZM and Wade were shielded from the normal competitive bidding process used in government procurement and could solicit business from government components directly.

In September of 2002, MZM received its BPA from the Defense Information Technology Contracting Organization, with the acronym "DITCO," making MZM eligible to receive up to $225 million by performing work for Defense Department customers.

The next step was for Wade to arrange for Defense Department officials to buy what he was selling. Wade extended his corrupt behavior into the Defense Department to ensure that the business kept coming regardless of MZM's performance. Wade, himself a former Defense Department employee, knew a number of individuals within the Defense Department who could help him. Wade convinced two Defense Department components, the Counterintelligence Field Activity (CIFA), located in Arlington, Virginia, and the Department of the Army's National Ground Intelligence Center (NGIC), located in Charlottesville, Virginia, to provide task orders that MZM could perform under the BPA.

Wade then shielded MZM from the normal performance review by crossing the line into corrupt activities. Wade's activities included:

-- arranging for a Defense Department official's son to be hired as an MZM employee-the cost of that job was ultimately paid for by the government in reimbursement agreement with MZM; and

-- extending an offer of employment, and then ultimately hiring, a Department of Defense official who was responsible for overseeing much of MZM's work. Federal law prohibits government employees from, among other things, discussing potential employment with companies with whom they do government business.

-- Certain Department of Defense employees provided: valuable procurement information that MZM could use to tailor a proposal for work that MZM could perform under the BPA.

-- an official recommendation that MZM receive contracts under the BPA for certain activities involving the imaging and archiving of Defense Department documents; and

-- favorable performance reviews about MZM. These performance reviews were critical to MZM. Notwithstanding the fact that Wade received these purchase orders without competitive bidding as a result of his earlier receipt of the $225 million BPA, MZM could not be assured that they would continue to receive new purchase orders without receiving these type of favorable reviews by Defense Department officials.

Wade also made about $80,000 in illegal campaign contributions to the campaigns of two sitting Members of Congress. Wade targeted these two Members of Congress because he believed that these representatives had the ability to request appropriations funding that would benefit MZM.

Federal law prohibits campaigns from receiving more than $2,000 from any one individual per election, and prohibits entirely corporate contributions. Wade wanted to curry favor with these two members of Congress, so he needed a way around the campaign contribution laws. His solution was to have his employees and their spouses make contributions to these two campaigns under their own names, then reimburse them -a technique, known as "straw contributions" that is a felony under federal election law when the straw contributions amount to over ten thousand dollars. He did so often by simply handing the employees cash - two thousand dollars for each person - and then immediately "asking" them to make a contribution. All in all, he made 39 different "straw" contributions, with 19 different employees or spouses. In order to maximize the impact of these contributions, Wade personally handed a number of the campaign contributions, in the form of personal checks from employees and their spouses, to one of the representatives.

After Wade made the campaign contributions, Wade asked that one of the Representatives and his staff request appropriations funding for an MZM facility. The Representative's staff later confirmed to Wade that an appropriations bill would include $9 million for the facility. After making the illegal campaign contributions to the other Representative, Wade had a personal dinner with the Representative, in which the two discussed the possibility of MZM's hosting a fundraiser for the Representative later in the year, and the possibility of obtaining funding and approval for a Navy counterintelligence program. That program was never funded.

Wade did not inform the two Representatives that the contributions were ill

Cunningham's business

Martinsville branch of MZM may get funds

By Duncan Adams
 981-3324

Companywide, MZM Inc. needs a few good "counter-IED specialists" - with IED being the notorious improvised explosive device.

Based in Washington, D.C., MZM also needs media exploitation specialists, translators, geospatial intelligence analysts and other "highly talented individuals."

The high-tech, national security information technology firm's operations in Martinsville, Va., sound less sexy. But who knows, really, what MZM's 30 employees are up to in the company's office in Martinsville's Clearview Business Park.

MZM officials tend toward being tight-lipped. Company literature reports MZM helps government agencies and private industry solve "enigmatic problems" and "complex challenges in a changing environment." Complex challenges including counterterrorism, "foreign visitor tracking" and "threat analysis for government and commercial VIPs."

According to Caryl Clubb, a spokeswoman for the U.S. Department of Defense's Defense Security Service, about 14 members of MZM's Martinsville staff work under a DSS contract to run a Foreign Supplier Assessment Center on Clearview Drive. Clubb said the center completes background checks, in effect, on foreign firms that are suppliers to the Department of Defense.

U.S. Sen. John Warner, R-Va., chairman of the Senate Armed Services Committee, announced last month that the committee had recommended federal funding of $10 million for the Foreign Supplier Assessment Center in Martinsville. Warner's press office did not respond when asked why the committee believed the $10 million would be a good use of taxpayer dollars.

U.S. Rep. Virgil Goode, R-Rocky Mount, was instrumental in MZM's decision to locate an office in Martinsville, according to a press release from Gov. Mark Warner. MZM was the top campaign contributor to Goode in 2004, according to Web site opensecrets.org. According to Robert Beals, a spokesman for MZM, roughly another 16 employees in Martinsville focus on data storage related to the firm's other national security programs. Beals said he anticipates MZM's Martinsville office eventually will have about 150 employees. That was the three-year employment target emphasized when MZM and state and local officials announced in November 2003 that MZM would purchase a shell building in the Clearview Business Park and establish a field office there.

Beals acknowledged that the tragedy of Sept. 11, 2001, and the subsequent "war on terror" have been a boon to many defense contractors and companies operating in the arenas of intelligence gathering and national security.

According to MZM's Web site, the company's revenues tripled in 2004 and its staff nearly quadrupled. Beals said MZM has about 600 employees companywide.

MZM made Washington Technology's 2005 list of the top 100 federal contractors. Founded in 1993, MZM has offices in Washington, D.C., Baltimore, Charlottesville, Tampa, Fla., Martinsville and San Diego, as well as Seoul, South Korea, Stuttgart, Germany, and Baghdad.

 

 

On the Net:

$ 250 mil

Top 100 Federal Prime Contractors -- 2005   100: MZM Inc. Top 100 List Top 100 revenue: $66,181,872 Top 100 defense revenue: $65,718,599 Top 100 civilian revenue: $463,273 Headquarters: Washington Web address: www.mzminc.com Lines of business: Homeland security, critical infrastructure security, national security affairs, information operations, force protection, law enforcement affairs, integration and innovation, legal support, information technology, Congressional affairs and communications Major customers: The company declined to disclose any information. Major contracts/projects: The companay declined to disclose any information. Sources: Washington Technology, Federal Sources Inc.

Jews_Convict_cunningham

* 0 points for orchestrating the bribes (not clear either way if he did nor not)
* 0 points for public statements denying the crimes (Burns says that's common with public officials)
* 2 points for obstruction of justice (prompting rug vendors to lie).
* -3 points subtracted because Cunningham accepted responsibility
* -2 points for assistance to Department of Justice (more reduction may be coming for future assistance, but it's too early in the investigation).
* Total of 33 points, giving 135-168 months to sentencing guidelines.

Here's some comments made by Burns:
* Bribes spread over 5 years, 2000-2005 is aggravating. It wasn't just one "U turn".
* The $2.4 in bribes "emasculates" all other bribes.
* "Bid rigging" affected many defense contractors, who thought the system was honest
* Hugely affected confidence in government.
* Burns was bothered by Cunningham's bullying. It was reprehensible, beyond pale. Defense officials were trying to do their jobs.
* Burns was confounded by the choice you (Cunningham) made. Burns recalled reading an article about a lobbyist who made $2.5 million in 2003. Burns didn't name the lobbyist, but said Cunningham knows who he's talking about [my note: was this Bill Lowery, who earned $2 million in 2003? See http://www.signonsandiego.com/news/politics/20051223-9999-lz1n23lewis.html ]. Burns said Cunningham with his stature in Congress should have earned at least twice as much in a year as a lobbyist if he wanted more money. Burns said you (Cunningham) weren't wet, cold, hungry, yet you did these things (took bribes).
* Burns said the real harm was loss of confidence in government works.
* Burns lamented that politics today is more shrill today. Opponents are now "enemies". Burns said he was an optimist, that your (Cunningham's) conduct was an abberation (among members of Congress).
* Burns took in account Cunningham's brave military service in an unpopular war.
* Burns was also impressed by two letters of Support:
-- Ronald Ress -- Cunningham intervened with Vietnamese government to get Ress' wife out of custody and out of the country
-- Charles Nesby -- Cunningham mentored Nesby at a time when Black pilots were rare.

Burns then dished out the sentence
* 100 months (8 years, 4 months). Count 1 60 months [Conspiracy to Bribe] and Count 2 40 months [Tax Evasion]
* 3 years suspended release.
* $1,804,031.50 tax liability to be paid at $1500/month while in prison and $1000/month after release.
* Forfeit $1.8 million in cash.
* Forfeit furniture (now in possession of the U.S. government)
* No upgraded sentencing score.
* Imprisoned immediately at MCC San Diego. Report Friday by next week for the permanent facility. Burns *recommends* a Level 2 institution. He recommended Taft [Central California] (ran by a contract agency, not the U.S. Bureau of Prisons)
* Good time can reduce sentence by 10%-15%

We all left the courtroom and there were a billion (or so) cameras and newspeople outside the courthouse. Outside, the prosecution gave a quick news conference, as did Rep. Duncan Hunter, Fr. Joe Carroll, and Dan McKinnon.

Cunningham was immediately imprisoned across the street at MCC San Diego.

- Dan Anderson

Top_gun_cruise

But Cunningham's true claim to fame is that he was the dogfighting Vietnam War pilot who was the basis for Tom Cruise's character in the film Top Gun.

Cunningham told audiences that the "Maverick" character played by Tom Cruise in "Top Gun" was based on him, claiming credit for the "hit the brakes and he'll fly by" maneuver depicted in the movie and the scene in which Cruise flies upside down over a Soviet fighter. His campaign brochures showed Cruise posing with him on the set, until Cruise's agent objected.

Jew_Molestor

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.

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.

High Security

High security institutions, also known as United States Penitentiaries (USPs), have highly-secured perimeters (featuring walls or reinforced fences), multiple- and single-occupant cell housing, the highest staff-to-inmate ratio, and close control of inmate movement.