San Diego Union Tribune

September 10, 2005

Cunningham is linked to third boat
Poway contractor provided a loaner

By Dean Calbreath and Jerry Kammer

First there was the Kelly C. Then there was the Duke Stir. And now a third boat has emerged in the ongoing saga of favors offered to Rep. Randy "Duke" Cunningham by business executives whose companies won millions of dollars in government contracts with Cunningham's support.

Brent Wilkes, the Poway defense contractor whose home and offices were raided last month by federal agents, allowed Cunningham use of a 14.5-foot, 170-horsepower fiberglass boat several years ago when it was docked near Cunningham's yacht in Washington, D.C.

Critics say the boat is another example of the favors that some businessmen offered Cunningham and of his willingness to accept their offers as he advanced their interests.

Although the boat – which has since been sold – was typically kept on a trailer at the Washington Harbor, it was sometimes moored behind Cunningham's 65-foot Kelly C at the Capital Yacht Club. At the time, the Kelly C was Cunningham's home in the nation's capital.

"My understanding is that one summer several years ago it was, in fact, left tied up behind the Kelly C," said Wilkes' attorney, Michael Lipman. "It was made available to the congressman or any of Mr. Wilkes' friends who wanted to use it."

Cunningham's attorney, K. Lee Blalack, said Cunningham "did not own the boat, lease the boat or live on the boat. He simply accepted Mr. Wilkes' kind offer to use the boat periodically while it was located on the East Coast. Congressman Cunningham did not routinely use Mr. Wilkes' boat and it was not kept in his slip."

Lipman denied that Wilkes provided the boat to Cunningham as a political favor.

"My client went back and forth to Washington, and while in Washington he lived in a suite that did not have a boat slip," Lipman said. "There was a space on a body of water next to Cunningham, who was a friend of his, and that's where he left the boat."

Lipman said he did not think anyone viewed Cunningham's use of the boat as being improper.

But specialists in government ethics say Cunningham's use of the boat smacks of impropriety, especially because the House defense appropriations subcommittee on which Cunningham sits oversaw tens of millions of dollars' worth of contracts involving Wilkes' company, ADCS Inc.

"Even though Cunningham has said he is not going to be running for re-election, he intends to belong to the subcommittee for another year, and behavior like this certainly makes you wonder about his judgment as a member of that subcommittee, especially during a time of war," said Michael Surrusco, director of ethics at Common Cause, a nonpartisan group that lobbies for more openness in government.

Cunningham has been under investigation since June, when the Union-Tribune reported that Mitchell Wade, founder of the defense-contracting firm MZM, bought Cunningham's Del Mar-area house in 2003 for $1.675 million and sold it nearly nine months later for a $700,000 loss. At the time, Cunningham was supporting Wade's bids to win federal contracts.

Wade has since resigned as head of MZM, and the company is in the process of being sold to a New York-based equity firm.

In July, Cunningham said he would not seek re-election, but insisted that he had done nothing wrong. Last month federal prosecutors alleged in court documents that the Rancho Santa Fe Republican had "demanded and received" a bribe.

Cunningham's fondness for boats has been in the spotlight before.

Five years after buying the Kelly C for $200,000, Cunningham sold it in 2003 to New York developer Thomas Kontogiannis for $600,000, even though boats typically decrease in value. Kontogiannis, who had been convicted in a bid-rigging scheme involving the New York public schools, had sought Cunningham's help in exploring the possibility of a pardon from President Bush and the Justice Department. Cunningham put Kontogiannis in touch with a Washington law firm and recommended "two or three" lawyers to talk to, said the Long Island businessman.

After selling the Kelly C, Cunningham lived aboard a 42-foot yacht owned by Wade, who dubbed it the Duke Stir.

Since receiving its first federal contract in 2002, MZM has collected $163 million in government contracts. Cunningham has said that as a member of the House defense appropriations subcommittee he supported funding requests benefiting MZM.

Like Wade, Wilkes received Cunningham's support in his efforts to secure federal contracts for ADCS, which converts paper documents into a digital format. Since 1997, Wilkes and other ADCS insiders have given nearly $70,000 to Cunningham and his political action committee.

During that period, Wilkes' company gained at least $80 million in contracts from the Pentagon.

In April 2001, Wilkes bought his ski boat in Maryland and shortly afterward moored it behind the Kelly C. Lipman, Wilkes' attorney, said Wilkes used the boat often when he was in Washington. But Cunningham had access to the boat when Wilkes was not using it.

In addition to use of his boat, Wilkes allowed Cunningham to take trips on his corporate jet to such locations as Honolulu and Idaho.

"This just adds to the problem that we've seen with Cunningham, in that it appears he's taking gifts from a contractor who depends on support from Congress," said Larry Noble, executive director of the Center for Responsive Politics, a nonpartisan research group that tracks money in politics and its effect on public policy. "It's hard to understand the rationale in which Cunningham thought this would appear appropriate."

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