Diego Union Tribune
September 24, 2005
Developer linked to Cunningham has home raided
By Joe Cantlupe and Jerry Kammer
COPLEY NEWS SERVICE
ROSEDALE, N.Y. – In its third wave of raids linked to the investigation of Rep. Randy "Duke" Cunningham, federal agents on Thursday searched the New York home and office of a controversial businessman who has had a series of financial dealings with the congressman.
Agents seized records belonging to Thomas Kontogiannis, a Long Island developer who pleaded guilty in 2002 to bribery and kickback charges in connection with a $6.3 million bid-rigging scheme involving the New York public schools.
Kontogiannis has known Cunningham since shortly after the Rancho Santa Fe Republican arrived in Washington 15 years ago as a freshman member of Congress, according to Kontogiannis. In 2002, Kontogiannis purchased the congressman's aging, flat-bottom riverboat, the Kelly C, in a sale that has drawn scrutiny from investigators.
Kontogiannis bought the 65-foot boat for more than $600,000 in 2002. The lawmaker had purchased the boat five years earlier for $200,000.
Kontogiannis said he considered his purchase a "steal."
The businessman has also acknowledged that a mortgage company owned by his daughter and nephew provided Cunningham with two loans totaling $1.1 million for the purchase of the congressman's $2.7 million home in Rancho Santa Fe. Kontogiannis said he eventually paid off one of those loans in partial payment for the yacht.
In a previously undisclosed link between Cunningham and Kontogiannis, the developer accompanied the congressman to Saudi Arabia last year. A Saudi-American businessman flew Cunningham to Saudi Arabia twice last year aboard a private jet. On the second trip, the jet stopped in Athens to pick up Kontogiannis, a native of Greece with businesses interests in several countries.
Ziyad Abduljawad, founder and chairman of San Diego-based PLC Land Co., paid for Cunningham's two trips to Saudi Arabia, each at a cost of more than $10,000. Cunningham has described Abduljawad as an acquaintance who shares his interest in improving U.S.-Saudi relations.
Kontogiannis "went as a friend of Duke's," said Harmony Allen, Cunningham's chief of staff. "That's the extent of it. Duke asked him to go as a friend. I'm not sure if (Kontogiannis) had a special interest (in visiting) Saudi Arabia or not."
It was unclear who paid for Kontogiannis' trip.
On Thursday, a task force including representatives of the FBI, the Internal Revenue Service and the Defense Criminal Investigative Service raided Kontogiannis' Long Island home and office, according to a federal official, who declined to be identified. The agencies are working closely with the U.S. Attorney's Office in San Diego, the official said.
"Because this is an ongoing investigation, the agencies involved are not at liberty to discuss this matter further," said the official.
Agents searched Kontogiannis' offices at Cross Island Plaza in Rosedale, located in a commercial strip near John F. Kennedy International Airport. They also seized records from his home in an affluent section of Glen Head, near Long Island Sound.
Neither Kontogiannis nor his lawyer, Ira Cooper, could be reached for comment.
The FBI and a federal grand jury earlier this year began investigating the Republican lawmaker's ties to defense contractor Mitchell Wade, who bought Cunningham's Del Mar-area house and resold it at a $700,000 loss.
Wade is the founder of MZM Inc., a Washington, D.C.-based company that has received $163 million in defense contracts since 2002. Cunningham, a member of the influential House defense appropriations subcommittee and Permanent Select Committee on Intelligence, has said that he supported funding requests benefiting MZM. Cunningham also lived aboard Wade's 42-foot yacht, the Duke Stir, in the same slip once occupied by the Kelly C.
Wade resigned as head of MZM in June, and the company is in the process of being sold to a New York-based equity firm.
Cunningham, who has announced he will not seek re-election next year, has denied wrongdoing and said he will fight any possible criminal charges.
Federal prosecutors have alleged in a civil suit that Cunningham "demanded and received" a bribe.
In July, authorities searched Cunningham's Rancho Santa Fe home, MZM's Washington headquarters and Wade's yacht. In August, agents raided the offices of Poway defense contractor ADCS Inc. and the home of the firm's owner, Brent Wilkes.
Like Wade, Wilkes received Cunningham's support in his efforts to secure federal contracts for his company, 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.
The FBI's interest in the relationship between Kontogiannis and Cunningham has been evident in recent months.
Joe Weiser, owner of the Glen Cove, N.Y., marina where the Kelly C had been docked, said yesterday that FBI agents spent an entire day examining his records in an apparent effort to determine who actually owned the boat – Kontogiannis or Cunningham.
The Coast Guard has no record of any change of ownership from Cunningham to Kontogiannis.
Union-Tribune staff writer Dean Calbreath contributed to this report.
Joe Cantlupe can be reached at email@example.com.
Jerry Kammer can be reached at firstname.lastname@example.org