CA: (Duke) Cunningham says sale 'showed poor judgment'

After 11 days of near silence in the face of mounting controversy, Rep. Randy "Duke" Cunningham released a three-page statement yesterday acknowledging that he "showed poor judgment" in selling his Del Mar house to "a friend who does business with the government."

The Rancho Santa Fe Republican added that he welcomed "all appropriate investigations" and expressed confidence that they would show he "acted honorably and honestly."

The controversy stems from Cunningham's 2003 sale of his Del Mar house to Mitchell Wade, a Cunningham friend and founder of the Washington, D.C.-based defense contracting company MZM Inc.

Wade put the house back on the market almost immediately after purchasing it. Even though houses in San Diego County were selling quickly and prices were rising at that time, the house stayed on the market for 261 days before selling for $700,000 less than what Wade paid Cunningham.

Shortly after selling the house, Cunningham purchased a house in Rancho Santa Fe for $2.55 million.

The congressman, a member of the influential House defense appropriations subcommittee and Permanent Select Committee on Intelligence, said in an interview two weeks ago that he had supported funding requests benefiting MZM.

Cunningham, in his statement, also denied any impropriety in living aboard Wade's 42-foot yacht while in Washington.

His ties to Wade are the subject of inquiries by the FBI and a federal grand jury in San Diego.

Since The San Diego Union-Tribune disclosed the house sale June 12, real estate professionals have questioned the process Wade and Cunningham used in their private transaction, which involved no real estate agents or marketing.

Congressional ethics experts said the transaction, if not a genuine arms-length deal, could constitute an illegal contribution or bribe.

"I would never put the interests of a friend or a contractor above the interests of my country," he wrote. "I trust the facts will bear out this truth over time."

He added, "I want my constituents to know that, despite my personal friendship with Mr. Wade, I gave his company, MZM, no preferential treatment."

At one point in his statement, Cunningham addressed his constituents in the 50th Congressional District:

"They can be assured that I will continue to defend both my reputation and their interests in Washington," the eight-term congressman said.

His district includes Del Mar and several North County communities, including Carlsbad, Encinitas, San Marcos and Escondido.

Cunningham declined to divulge details of his financial relationship with Wade, citing an ongoing investigation.

"Because there is now a legal inquiry under way, I do not think it is appropriate for me to publicly address all of the specific questions that may be the subject of that inquiry ... ," he said. "From this point forward, any further questions should be directed to my legal counsel."

Cunningham spokesman Mark Olson said the lawmaker's attorney is Lee Blalack, a partner in the Washington law firm O'Melveny & Meyers. Blalack, reached last night, confirmed that he will serve as Cunningham's attorney but declined to comment further.

Cunningham used his statement to offer his most extensive defense yet on his house sale and his relationship with Wade, as well as to deny any improper actions in helping Wade get government contracts.

"Mr. Wade shared with me that his company hoped to acquire space where he could locate highly secure communications equipment along with quarters for employees visiting from other cities," Cunningham said in the statement. He then told Wade he and his wife wanted to sell their house, according to the statement.

"After learning about the size and location of our property, Mr. Wade advised me that MZM would be interested in purchasing our house. I understood that MZM wanted the property for use as an office and as corporate housing until such time as MZM could locate more secure facilities for its operations at one of the military installations in the San Diego area," Cunningham said.

He added that he believed MZM would continue to use the house for corporate housing even if the company had offices at Miramar Marine Corps Air Station. There was no mention of what business MZM had in San Diego at the time. Much of the company's work for the federal government is classified.

Realtor Elizabeth Todd, a Cunningham friend and campaign contributor, set the asking price for the house based on a review of comparable house sales in the area, he said.

"After reviewing the information provided by Ms. Todd, Mr. Wade confirmed that he wanted to purchase our home."

Cunningham said he didn't list the house for sale or hire a real estate agent because Wade had already agreed to buy the house.

"Like most people selling their own home, I hoped to avoid the additional costs associated with selling a house through a broker," he said.

"Again, I recognize that I showed poor judgment in not listing the house publicly for sale. I should have given more thought to the perception that it might create."

However, he added: "I categorically reject any suggestion that I secured a contract for Mr. Wade's company or that I supported funding (for an) important human intelligence program because MZM purchased my home in Del Mar Heights."

On his use of Wade's yacht, the lawmaker said he has been living on the boat since April 2004. The yacht is named Duke-Stir, an apparent play on Cunningham's nickname.

"Mr. Wade and I agreed that, in return for me staying on the boat, I would pay the monthly dock fees and maintenance costs associated with keeping Mr. Wade's boat at the marina," he said.

Cunningham estimated that he had paid "$8,000 in dock fees and well over $5,000 for service and maintenance" during the 13 months he has lived on the yacht. He indicated that the figures are preliminary and that his attorneys are still gathering information.

"There was nothing improper about my arrangement with Mr. Wade because I paid these monthly fees and costs in lieu of rent," he said.

Cunningham had previously suggested he did not have a special relationship with Wade.

When Copley News Service asked Cunningham two weeks ago whether he was friends with Wade, he answered, "No more than I am with (Qualcomm founder) Irwin Jacobs or (Titan Corp. founder) Gene Ray or any of the other CEOs."

"Mr. Wade and I have been friends for many years and continue to be friends today," he said. "Though I first met Mr. Wade in connection with his work as a defense contractor, Nancy and I came to know Mitch and his wife Christiane personally over the years. My family and I have socialized with the Wades on numerous occasions."

Wade and MZM's political action committee also have been contributors to Cunningham's campaigns. MZM's PAC donated $17,000 to Cunningham from 2000 to 2004. Donations included $12,000 to "Friends of Duke Cunningham" and $5,000 to his leadership political action committee, the American Prosperity PAC. Wade donated $6,000 between 2000 and 2004.

Cunningham gave a brief recitation of his years of service, both in Congress and as a Navy fighter pilot during the Vietnam War. He said he was "deeply saddened by this distraction from my regular duties."

"However, I intend to focus my time and attention on the needs of the people of the 50th district. I ask only that my constituents reserve judgment until any investigation is concluded and I have had the opportunity to defend myself against these false allegations."

http://www.signonsandiego.com/news/politics/images/050623cunninghamletter.pdf

California’s 50th District Congressman
Randy “Duke” Cunningham

FOR IMMEDIATE RELEASE: June 23, 2005
CONTACT: Mark Olson (202) 225-5452

Personal Statement from Congressman Cunningham

“In recent weeks, serious questions have been raised about my conduct in office. First and foremost, I want my constituents to know that I have acted honorably and honestly. I recognize, however, that I showed poor judgment in selling my home in Del Mar to a friend who does business with the government. At the time of the sale, I failed to adequately consider how this transaction might be perceived by others who don't know me. However, my work in Congress is and has always been directed at programs and policies that I believe are in the best interest of our nation and my constituents. I have always felt a duty to this country and its people -- a duty that motivated me to volunteer for the Navy, serve in combat in Viet Nam, and run for office. I would never put the interests of a friend or a contractor above the interests of my country. I trust that the facts will bear out this truth over time.

I welcome any and all appropriate investigations. I have faith that any investigation of these allegations will confirm that I have acted honestly. My constituents know me to be the same fighter that has always fought for this nation, whether in uniform or in the halls of Congress. They can be assured that I will continue to defend both my reputation and their interests in Washington.

Because there is now a legal inquiry underway, I do not think it is appropriate for me to publicly address all of the specific questions that may be the subject of that inquiry. However, I do want to explain my relationship with Mr. Wade, the sale of my home in Del Mar, and my support for human intelligence programs in the U.S. military. From this point forward, any further questions should be directed to my legal counsel.

Mr. Wade and I have been friends for many years and continue to be friends today. Though I first met Mr. Wade in connection with his work as a defense contractor, Nancy and I came to know Mitch and his wife Christiane personally over the years. My family and I have socialized with the Wades on numerous occasions. The Wades have also occasionally asked Nancy and me to support important charitable causes with which they are affiliated and we have willingly done so. This includes the Sure Foundation, which offers financial assistance to refugee children dislocated by war or civil unrest. Nancy and I have been pleased to assist the Sure Foundation’s important mission with our time, charitable contributions and political support. I want my constituents to know that, despite my personal friendship with Mr. Wade, I gave his company, MZM, no preferential treatment.

MZM provides highly classified human intelligence support to the U.S. Military. While I am not at liberty to discuss the specifics of MZM’s classified work, I can say that in 2003 MZM was actively seeking space for its operations close to Miramar Marine Corps Air Station. Mr. Wade shared with me that his company hoped to acquire space where he could locate highly secure communications equipment along with quarters for employees visiting from other cities. I informed Mr. Wade that Nancy and I were contemplating selling our home in the Del Mar Heights neighborhood, which is close to Miramar. After learning about the size and location of our property, Mr. Wade advised me that MZM would be interested in purchasing our house. I understood that MZM wanted the property for use as an office and as corporate housing until such time as MZM could locate more secure facilities for its operations at one of the military installations in the San Diego area. However, my understanding was that MZM would retain ownership of the property for use as corporate housing even if Mr. Wade was able to locate a more secure facility for their office operations at Miramar.

Elizabeth Todd, a realtor with the Willis Allen Company in Del Mar, set the asking price for our home. Ms. Todd and her husband are friends of mine and as a friend, she was kind enough to research the sale prices of similar homes in my neighborhood. Our home in Del Mar Heights was located in a desirable area west of Interstate 5 between the highway and the ocean. It was a large, two-story home measuring 3,826 square feet with 4 bedrooms, 3.5 baths and a limited ocean view from a loft on the top floor. My understanding is that the asking price recommended by Ms. Todd was very close to the average sale price per square foot of other homes sold in my neighborhood in the six months prior to the sale. Based on the information provided by Ms. Todd about comparable sale prices in my area, I thought the asking price was fair and reasonable. When I gave Mr. Wade the asking price, he requested that I provide him with evidence of comparable sales to substantiate the price. I then asked Ms. Todd to send Mr. Wade the information he requested and my understanding is that she did so. After reviewing the information provided by Ms. Todd, Mr. Wade confirmed that he wanted to purchase our home in Del Mar Heights for use by MZM.

I did not list my home in Del Mar Heights for sale or hire a real estate agent to sell the property because Mr. Wade had already indicated an interest in the property and, like most people selling their own home, I hoped to avoid the additional costs associated with selling a house through a broker. Again, I recognize that I showed poor judgment in not listing the house publicly for sale. I should have given more thought to the perception that it might create.

Recent press reports have incorrectly suggested that I secured a government contract for Mr. Wade’s company or that I improperly influenced the awarding of contracts to MZM. These reports are simply false. I do not have the authority or ability to award a contract to Mr. Wade’s company and no single Member of Congress, no matter how influential, can dictate to the Armed Services who will be awarded contracts. In fact, my understanding is that the Defense Department awarded MZM a contract in May 2002, a full year and half before Mr. Wade purchased my home in Del Mar Heights. I advocated funding of a human intelligence program that was supported by the military, and confirmed with the Defense Department that the program had significant value to military effectiveness. Funding for this program was also supported by the full House Appropriations Committee, both Houses of Congress and the President. In short, I categorically reject any suggestion that I secured a contract for Mr. Wade’s company or that I supported funding of this important human intelligence program because MZM purchased my home in Del Mar Heights.

Finally, recent news reports have questioned whether it was appropriate for me to live on a boat owned by Mr. Wade while I was working in Washington. It is important to note that I first came to Congress in 1991, and I only began living on Mr. Wade’s boat in roughly April 2004. Mr. Wade and I agreed that, in return for me staying on the boat, I would pay the monthly dock fees and maintenance costs associated with keeping Mr. Wade’s boat at the marina. There was nothing improper about my arrangement with Mr. Wade because I paid these monthly fees and costs in lieu of rent. Based on the records that I have been able to locate to date, I have paid well over $8,000 for the dock fees and well over $5,000 for service and maintenance. My attorneys are collecting the full payment records now and will make them available when they are all gathered.

I am deeply saddened by this distraction from my regular duties. However, I intend to focus my time and attention on the needs of the people of the 50th district. I ask only that my constituents reserve judgment until any investigation is concluded and I have had the opportunity to defend myself against these false allegations.

This year will mark the 36th year that I have stood in service to this nation – first as a young man volunteering to join the U.S. Navy at a time of war and great unrest, and more recently as a United States Congressman. I have had many proud moments in my career.

I am most proud of the work I do for and with the people of my district.

I continue to lead Congress’ work to dramatically increase federal funding for health and medical research – promoting both our national healthcare needs and the economic health of our local bio-technology industry.

I work for economic security in San Diego and our vital national security through funding for important defense and homeland security programs that have created and protected jobs for thousands of my San Diego County constituents. And through road, rail and other transportation funding, I work to help get hard-working San Diegans home to their families as quickly as possible every day so they can continue to enjoy all the life that our beautiful region has to offer.

Perhaps most importantly, I believe the work I am doing with educators and policy makers nationwide to improve education in San Diego and across the country will help lead our children to a better life than their parents enjoy today.

I have always done this job in the interest of my nation and my constituents. And I want the people of California’s 50th Congressional district to know that my drive to continue this work on their behalf is as strong today as it was when I first ran for Congress 15 years ago. I have always been humbled by the faith that my district has had in my leadership, and I will continue to work to earn their respect and endorsement.”

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