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Legislator Says Home Sale Was a Poor Decision

San Diego congressman denies misconduct in transaction with a military contractor, who later took a $700,000 loss on the house.

June 24, 2005|Tony Perry | Times Staff Writer

SAN DIEGO — Rep. Randy "Duke" Cunningham (R-San Diego), after a weeklong silence about his controversial home sale to a military contractor, issued a statement Thursday saying that he showed poor judgment in selling the house to "a friend who does business with the government."

Vowing to fight to defend his reputation, Cunningham said he did nothing wrong and that he never gave preferential treatment to the contractor's firm.

Cunningham, who has also been criticized for living on the contractor's 42-foot yacht, the Duke Stir, said he paid $13,000 in the past year in berthing fees and maintenance costs. Living aboard the yacht for free would violate ethics laws.

After releasing the statement, the 63-year-old, eight-term congressman declined, through a spokesman, to answer questions and said all further inquiries should be directed to his Washington attorney. The house sale is being investigated by the FBI.

"I would never put the interests of a friend or a contractor above the interests of my country," Cunningham's statement said. "I trust that the facts will bear out this truth over time."

Cunningham sold his home in the Del Mar Heights neighborhood of San Diego to Mitchell Wade, president and chief executive of Washington-based MZM Inc., for $1.675 million in November 2003.

Wade sold the home seven months later for $975,000, taking a $700,000 loss. Critics contend that Wade paid an inflated price as a way to reward Cunningham for backing MZM's bid for lucrative military contracts.

The firm has more than $66 million in federal contracts, most to provide sophisticated intelligence gathering and analysis. MZM's political action committee contributed $7,000 to Cunningham's 2004 reelection campaign.

In his statement, Cunningham repeated assertions that the sale was based on comparative sales figures developed by a real estate agent with a reputable firm. He said Wade wanted to buy a home in San Diego because MZM was beginning work on a classified project at the Miramar Marine Corps Air Station.

Cunningham said he and his wife, Nancy, an official with the U.S. Department of Education, became friends with Wade and his wife, Christiane. Their friendship led the Cunninghams to help with a foundation that the Wades founded to help refugee children, the statement said.

The statement said that any suggestion he secured contracts for Wade's firm or improperly influenced the awarding of contracts was "simply false."

A watchdog group, Citizens for Responsibility and Ethics in Washington, has filed a Freedom of Information Act request for records of contacts Cunningham has had with Pentagon and Department of Homeland Security officials about MZM.

Francine Busby, Cunningham's Democratic opponent in November's election, said Cunningham's response did little to clear up ethical questions raised by Cunningham and his connection to Wade and MZM.

"Coming clean is more than just admitting what everyone already knows," she said. "It's about showing that your actions meet the high standards of honesty and integrity."

Republicans defended Cunningham.

"When this is all over, I think the final story will be exactly what Duke says: He made an error in judgment and showed naivete in real estate, but he's done nothing wrong and has always put America first in everything he's done," said Rep. Darrell E. Issa (R-Vista).

Issa backed Cunningham's statement that no member of Congress is powerful enough to guarantee that a defense firm will receive a contract.

"We all champion particular technologies or companies whose products we have confidence in," Issa said in a telephone interview, "but not even a full committee chairman can put a company into legislation."

Cunningham serves on the Select Committee on Intelligence, the Military Appropriations Subcommittee and as chairman of the Subcommittee on Human Intelligence, Analysis and Counterintelligence.

Cunningham said he knew that Wade wanted a home near the Miramar base and had a real estate agent send him a list of prices for comparable homes.

"At the time of the sale, I failed to adequately consider how this transaction might be perceived by others who don't know me," Cunningham's statement said. "Again, I recognize that I showed poor judgment in not listing the house publicly for sale."

Rep. Thomas M. Reynolds (R-N.Y.), chairman of the National Republican Congressional Committee, called Cunningham's statement "a fairly complete and plausible explanation."

He said the controversy has taken a toll on Cunningham. "I think he's relieved to be telling his side," Reynolds said. "He's an emotional guy."

Wade and Elizabeth Todd, the agent who provided the comparable prices, have not responded to repeated requests for interviews.

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