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Probe of Home Sale by Official Is Sought

Rep. Cunningham sold to a defense contractor he has backed. Deal has raised ethics questions.

June 16, 2005|Tony Perry | Times Staff Writer

SAN DIEGO — A profitable real estate deal in which Rep. Randy "Duke" Cunningham (R-San Diego) sold his home to a defense contractor whose firm he has supported in its bid to get federal contracts has led Democrats to demand an investigation into whether the deal constituted a bribe.

Cunningham and his wife, Nancy, sold their four-bedroom, 3,826-square-foot home to Mitchell Wade, president and chief executive of Washington-based MZM Inc., in November 2003 for $1,675,000.

The sale of the Cunninghams' home in the Del Mar Heights neighborhood of San Diego allowed the couple to buy a much larger house in Rancho Santa Fe, considered one of the most exclusive communities in America.

Within a month of his purchase, Wade put the Del Mar Heights home on the market and, seven months later, sold it for $975,000 -- a $700,000 loss. That loss, when revealed, led Democrats to call for an investigation to see whether Wade paid an inflated price to funnel money to a helpful congressman.

The home sale, first reported Sunday in the San Diego Union-Tribune, prompted immediate criticism of the eight-term congressman by Rep. Nancy Pelosi (D-San Francisco), the House minority leader.

Jennifer Crider, a spokeswoman for Pelosi, called the controversy "the sort of allegation that a nonpartisan, functioning Ethics Committee should consider: Did Mr. Cunningham receive an illegal gift and/or violate provisions of the criminal code that prohibit giving something of value in return for official action?"

The Ethics Committee has largely ceased to function because of partisan wrangling.

Republicans called the allegation absurd and a slur on a decorated Navy fighter pilot.

Rep. Tom DeLay of Texas, the House Republican leader, said he knew nothing of the home sale but defended Cunningham as "an honorable man with high integrity."

He also condemned Democrats for "using anything and everything they can to criminalize politics."

The Cunninghams bought the Del Mar Heights house in January 1988 for $435,000. They used the profit from its sale to buy a five-bedroom, 7,628-square-foot home in Rancho Santa Fe for $2.55 million.

Wade and his firm, a relative newcomer to the defense industry, have contributed a total of $20,000 to Cunningham's last three election campaigns in which he was easily reelected in a district considered "safe" for Republicans.

Elizabeth Todd, the real estate agent who helped with the sale, has donated $2,000 to Cunningham during the same period.

Cunningham, a member of the House Intelligence Committee and the defense appropriations subcommittee, has praised the work of Wade's firm MZM, which does classified intelligence work and received $41 million in defense contracts in 2003.

Cunningham, 63, declined a request for an interview, but his spokeswoman said the sale was arranged after Wade was given a list of comparable sales in the surrounding area, a common way to determine price.

The house was never listed on the Multiple Listing Service, though privately arranged sales are not uncommon in the coastal areas of northern San Diego County -- one of the hottest real estate markets in the state.

Scotty Brumett, a spokesman for MZM, said Wade bought the house at the asking price, based on the comparable figures, without seeing it.

"Bottom line: It was an arm's-length purchase, based on comps," he said.

When the sale was consummated in late 2003, the buyer was listed not by name but by the address of MZM's Washington headquarters. On its website, MZM lists branch offices in Miami; San Antonio; San Diego; Tampa, Fla.; and Suffolk, Va. Only the Tampa office has a listed phone number.

Figures from DataQuick Information Systems, which follows the California real estate market, suggest that the $1.65-million price did not appear to be out of line with comparable sales.

In the final months of 2003, 10 houses of more than 3,500 square feet were sold in Del Mar, with the median price being $1.37 million.

In 2004, 31 houses of more than 3,500 square feet were sold in Del Mar; the median price was $1.7 million. In the real estate market, homes in Del Mar Heights are considered part of Del Mar.

In comments published in the Union-Tribune, Todd said she could not explain why the home was on the market for seven months in 2004 before Wade sold it for $700,000 less than his purchase price.

Francine Busby, a Democrat who ran unsuccessfully against Cunningham last year and plans another attempt next year, criticized him for not meeting with the media to explain the sale.

"One of the reasons I am running for Congress is to bring the values of honesty and responsibility back to Washington," she said in a prepared statement.

Rep. Duncan Hunter (R-Alpine) defended his longtime friend.

"Duke Cunningham would die before he'd do anything dishonest," Hunter said Wednesday.

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