Cunningham Quits House in Bribery Flap

SAN DIEGO – Rep. Randy "Duke" Cunningham resigned from Congress Monday after pleading guilty in a San Diego federal court to accepting bribes and violating tax laws in the sale of his home two years ago to a defense contractor.

Cunningham entered pleas in U.S. District Court to charges of conspiracy to commit mail fraud and wire fraud and tax evasion for underreporting his income in 2004. He answered, "Yes, Your Honor" when asked by U.S. District Judge Larry Burns if he had accepted cash in exchange for his performance of official duties.

Click here to read Rep. Cunningham's plea (pdf)

In a tearful apology, the 63-year-old Republican lawmaker said because he was "not strong enough," he disgraced his family and his congressional seat.

"I will forfeit my freedom, my reputation, all my worldly possessions and most importantly the trust of my friends and family," Cunningham said in a brief statement in which he announced that he will continue to cooperate with the government's ongoing investigation.

"In my life, I have known great joy and great sorrow and now I know great shame. I can't undo what I've done but I can atone. And now ... I enter the twilight of my life. I intend to use the remaining time that God grants me to make amends and I will," he said.

After the hearing, Cunningham was taken away for fingerprinting. He will be released on his own recognizance until a Feb. 27 sentencing hearing. He could receive a maximum sentence of 10 years in prison. The disgraced congressman also agreed to forfeit to the government his Rancho Santa Fe home, more than $1.8 million in cash and antiques and rugs.

House Ethics rules say that any lawmaker convicted of a felony no longer should vote or participate in committee work. Under Republican caucus rules, Cunningham also would lose his chairmanship of the House Intelligence subcommittee on terrorism and human intelligence.

In announcing the plea, prosecutors in San Diego said over four years, Cunningham accepted bribes worth $2.4 million in return for special treatment and government defense contracts worth tens of millions of dollars.

It is "clear from the facts that this was a crime of magnificent and extraordinary audacity," said U.S. Attorney Carol Lam.

The case started earlier this year when Cunningham and his wife, Nancy, were accused of using the proceeds from the $1,675,000 sale of his home in Del Mar home to buy a $2.55 million mansion in ritzy Rancho Santa Fe. Cunningham then had the capital gains tax on the property paid by his conspirators.

Though no others were named, in prior reporting, defense contractor Mitchell Wade was said to have bought the Del Mar, and then sold it nearly a year later for a loss of $700,000.

Lam said Cunningham also was given money for a yacht, a party for his daughter's graduation, rugs, antiques, furniture and a Rolls Royce as well as travel expenses for his wife and a payment of more than $1 million to pay the mortgage in the Rancho Sante Fe home.

At the same time Cunningham was getting the cash, he reported $121,079 in income on his 2004 IRS return. He claimed he was due a refund $8,504. The real amount earned and was more than $1.2 million, say prosecutors and Cunningham owed $385,077 in taxes.

Cunningham, an eight-term congressman, announced in July that he wouldn't seek re-election next year. The former Vietnam War flying ace is known on Capitol Hill for his interest in defense issues and his occasional temperamental outbursts.

He drew little notice outside his San Diego-area district before the San Diego Union-Tribune reported last June that he'd sold the home to Wade. However, after Monday's announcement, House Minority Leader Nancy Pelosi, D-Calif., repeated her charge that the Republican Party suffers from a "culture of corruption."

"Mr. Cunningham accepted a bribe to perform an official act — an egregious action that strikes at the very heart of our democracy and dishonors the people he has been elected to represent; it is only proper that he resign," he said. "This offense is just the latest example of the culture of corruption that pervades the Republican-controlled Congress, which ignores the needs of the American people to serve wealthy special interests and their cronies."

In addition to buying Cunningham's home at an inflated price, Wade let him live rent-free on his yacht, the Duke Stir, at the Capital Yacht Club. His firm, MZM Inc., donated generously to Cunningham's campaigns. Prosecutors did not specify if those allegations were part of Cunningham's guilty pleas.

Around the same time, MZM was winning valuable defense contracts. Cunningham sits on the House Appropriations subcommittee that controls defense dollars. In 2004 the little-known company based in Washington, D.C., tripled its revenue and nearly quadrupled its staff, according to information posted on the company Web site before Wade stepped down as president and the company was sold to a private equity firm.

An associate of Wade, Brent Wilkes, president of a Poway company called ADCS Inc., also gave Cunningham campaign cash and favors. Wilkes reportedly flew Cunningham in a corporate jet to go hunting in Idaho and golfing in Hawaii, and a charitable foundation Wilkes started spent $36,000 hosting a black tie "Tribute to Heroes" gala in 2002 that feted Cunningham with a trophy naming him a hero.

ADCS, which specializes into turning paper records into digital files, has received tens of millions in Defense Department contracts since the late 1990s. In some years, lawmakers on Cunningham's spending panel added the money themselves, even scolding the Pentagon for not requesting it in the first place.

Unlike Wade and Wilkes, the third man federal investigators focused on, Thomas Kontogiannis, apparently wasn't in the defense business. Like them he had a mutually beneficial relationship with Cunningham.

Cunningham wrote to prosecutors in 2000 on behalf of Kontogiannis, a New York developer then under investigation in a bribery and kickback scheme involving school computer contracts. Two years later, Cunningham made $400,000 selling his 65-foot flat-bottom riverboat to Kontogiannis.

Also, a company run by Kontogiannis' nephew and daughter helped Cunningham finance a condominium in Alexandria, Va., and his house in Rancho Santa Fe.

Kontogiannis ultimately pleaded guilty to fraud charges. He told the San Diego Union-Tribune that Cunningham gave him advice on attorneys to contact to explore getting a presidential pardon.

The Associated Press contributed to this report.