San Diego Union Tribune

July 18, 2007

Imprisoned 'Duke' tells of scope of corruption

Summary by FBI details contacts with contractor


WASHINGTON – In two days of prison interviews with federal agents this year, former Rep. Randy “Duke” Cunningham described a level of corruption on his part more extensive than previously known and dealt a potentially devastating blow to the defense being waged by one of the contractors alleged to have bribed him.



The interviews were conducted in February at the federal prison near Tucson, where the longtime Republican congressman from Rancho Santa Fe is serving an eight-year, four-month sentence after admitting to accepting more than $2.4 million in bribes. He pleaded guilty to charges of conspiracy and tax evasion.

According to an 11-page FBI summary of the sessions, obtained by Copley News Service, Cunningham was very much the initiator of his corrupt actions, demanding bribes, accepting envelopes with cash and displaying an insatiable appetite for more money, more cars, more drink, more fine food and more expensive goods.

Cunningham's answers are bad news for Brent Wilkes, president of Poway-based ADCS Inc., who is fighting bribery charges. They set the stage for what could be a dramatic courtroom showdown between Cunningham and his longtime benefactor.

Wilkes faces 30 counts in two indictments, including charges that he gave Cunningham $600,000 in gifts and cash in exchange for Cunningham's help in getting more than $80 million in defense contracts. Wilkes' two trials are expected to occur this fall. The government has not said whether it will bring Cunningham to San Diego to testify.

Cunningham was able to promote defense contracts for favored companies through the use of legislative “earmarks,” provisions lawmakers could slip anonymously into spending bills without debate, discussion or disclosure that benefit interests in their districts or their supporters. Wilkes has said a $100,000 payment he made to Cunningham in 2000 was not a bribe, but instead was to buy Cunningham's river yacht, the Kelly C.

“Cunningham said that there was never a sale,” said the FBI report. “Cunningham stated that he and Wilkes created the cover story of a boat sale to explain, if anyone ever found out and asked, his receipt of $100,000 from Wilkes.”

Cunningham told investigators that Wilkes fully understood there would be “no actual change in ownership” of the yacht. The two men agreed to divide the $100,000 into two checks because both “felt that the smaller checks might be less noticeable.”

The documents show that Cunningham had first asked Wilkes for $550,000.

“Wilkes said no to the $550,000 but then countered with an offer of $100,000 if Cunningham would ensure that the support and earmarks would continue to happen. Cunningham promised Wilkes that he would 'fight like hell' for Wilkes/ADCS.”

The FBI report made the point that Cunningham was clear about the quid pro quo:

“Cunningham stated that, by 2000, he had already been receiving numerous benefits from Wilkes that included such things as vacation trips, liquor, cash/maintenance money. . . . According to Cunningham, in return for these benefits, he had been helping Wilkes/ADCS in their efforts to secure government contracts.”

Phone messages for comment left at Wilkes' attorneys' offices last night were not returned.

Cunningham's admissions are very much at odds with the image that he tried to create after his downfall. In a letter made public and in private statements to friends, he portrayed himself as someone unable to withstand the blandishments of corrupt contractors and someone who merely accepted “gifts” but never sold his office.

His admissions to the investigators – who were from the FBI, the Internal Revenue Service, the U.S. Attorney's Office and the Defense Criminal Investigative Service – also shed light on the actions of others implicated in the scandal.

They include Mitchell Wade, president of MZM Inc. in Washington, who pleaded guilty in the case but has not been sentenced, and Thomas Kontogiannis, a New York developer accused of laundering the bribe money.

Kontogiannis pleaded guilty to providing $1.1 million in mortgages to Cunningham for a Rancho Santa Fe mansion, even though he knew the house was bought with proceeds from illegal activity. The plea was made in February but was not made public until last month.

According to the FBI summary, Cunningham admits to being provided with prostitutes, misleading congressional ethics officials, making others buy gifts for his daughters, personally devising the schemes to launder his bribes, lying to his staff and putting unrelenting pressure on government officials who thought the defense contracts he pushed with congressional earmarks were wasteful.

Cunningham was well-placed to steer military intelligence contracts to Wilkes and Wade because he was on the House defense appropriations subcommittee and the House Permanent Select Committee on Intelligence.

He also told investigators he demanded regular cash payments – he called them “maintenance money” – once even summoning one of his bribers to his Capitol office to give him $3,000 in cash.

In addition to the FBI summary of the prison interviews with Cunningham, Copley News Service obtained a 76-page affidavit filed by the FBI in support of a search warrant in the case. It provides glimpses of what investigators found as they built their case against Cunningham and those suspected of conspiring with him.

The FBI stated that:

More than $1 million in bribes was laundered by being sent to Kontogiannis instead of going directly to Cunningham. Investigators identified at least 70 bank accounts maintained by Kontogiannis at one bank.

Despite his many businesses, Kontogiannis has not filed a tax return since 2001.

For the first time, investigators shed light on what Kontogiannis expected to get from Cunningham – help on a potential sale of fighter jets to his native Greece.

The Rolls-Royce that drew so much attention early in the investigation was not the only car that Cunningham made the contractors buy for him. In only two days in early 2002, the congressman bought a $43,000 Thunderbird and a $41,000 BMW from Bob Baker Ford in San Diego with $63,000 of his payment coming from bribes. That was three months before Wade gave him $10,000 toward the used Rolls-Royce.

In mid-2004, when Cunningham needed to make repairs to his boat, he called Wade and demanded $6,500 in cash. Wade took the money out of his petty cash, stuffed it into a bulging envelope and rushed it over to a Cunningham fundraiser at a Washington restaurant, giving it to a Cunningham staffer.

In his prison interviews with investigators, as summarized by the FBI, the former congressman is reported to have:

Openly “recalled exerting pressure on government officials” to reward his bribers.

Said Wilkes told him he was “hiding money in a bank account in Panama” to pay him bribes.

Spoke of having had to find ways to get around objections from Sen. Richard Shelby, R-Ala., and Rep. Duncan Hunter, R-El Cajon, both of whom tried to block Cunningham's spending projects for Wade and Wilkes as wasteful and unneeded.


 »Next Story»