Rep. Cunningham to Plead Guilty
By ERICA WERNER, Associated Press Writer
Monday, November 28, 2005 Printable Version Email This Article
(11-28) 09:01 PST WASHINGTON, (AP) –
Rep. Randy “Duke” Cunningham will plead guilty to tax violations, a source close to the investigation of the California Republican has told The Associated Press.
Cunningham has been under investigation since his sale of his home to a defense contractor at an apparently inflated price in 2003 attracted the attention of federal investigators.
A hearing in the case was scheduled in federal court in San Diego on Monday, and two sources close to the investigation said Cunningham would enter a guilty plea. One of those sources said he would plead to tax violations related to the home sale.
Cunningham, 63, is an eight-term congressman and Vietnam War flying ace.
In November 2003, he sold his Del Mar, Calif., home to defense contractor Mitchell Wade for $1,675,000. Wade put the house back on the market and sold it after nearly a year for $975,000 — a loss of $700,000 in one of the nation’s hottest housing markets.
Cunningham and his wife, Nancy, used the proceeds from the sale to buy a $2.55 million mansion in ritzy Rancho Santa Fe, Calif.
Wade also let Cunningham live rent-free on his yacht, the Duke Stir, at the Capital Yacht Club. His firm, MZM Inc., donated generously to Cunningham’s campaigns.
Around the same time, MZM was winning valuable defense contracts at a time when Cunningham sat 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.
Though he denied wrongdoing when he announced in July that he wouldn’t seek re-election, Cunningham himself acknowledged that the sale didn’t look good.
Cunningham’s attorney, Lee Blalack, declined comment in advance of Monday’s hearing.
Associated Press reporter Elliot Spagat in San Diego contributed to this story.