A federal grand jury is investigating the relationship between Rep. Randy "Duke" Cunningham and a defense contractor, focusing particular attention on the sale of the congressman's Del Mar home to the company's owner, sources said.
The U.S. Attorney's Office issued subpoenas this week, some of which were delivered by FBI agents yesterday, said sources familiar with the probe and who asked not to be identified because grand jury proceedings are secret.
The seven-term Republican, who represents the 50th Congressional District, drew the attention of investigators regarding the November 2003 sale of his Del Mar home to Mitchell Wade, head of the contracting firm MZM Inc., the sources said.
Cunningham sold the home to Wade for $1,675,000 and used the proceeds of the sale to purchase a $2.55 million house in Rancho Santa Fe.
Wade put the Del Mar house back on the market almost immediately for roughly the same price, where it remained unsold and vacant for more than eight months. It eventually sold for $700,000 less than what Wade paid Cunningham.
Around the time Cunningham sold his house to Wade, MZM Inc. was winning large government contracts. Cunningham, 63, is a member of the House defense appropriations subcommittee and the Permanent Select Committee on Intelligence.
Cunningham, who has acknowledged that he has supported MZM in its efforts to win tens of millions of dollars in contracts from the Defense Department, also lives part time on Wade's 42-foot yacht in Washington, D.C. The vessel is named Duke-Stir, an apparent play on Cunningham's nickname.
Cunningham's spokesman, Mark Olson, said no one on Cunningham's staff has been served with a subpoena.
"We are not aware of any inquiry at this time. Nobody has contacted our office," Olson said.
Attempts to reach MZM representatives late yesterday were unsuccessful.
U.S. Attorney Carol Lam and FBI spokeswoman Jan Caldwell declined to comment.
Cunningham has portrayed the real estate transaction as "aboveboard" and said an independent source had set the asking price.
He said Elizabeth Todd, a Realtor with Willis Allen Co. in Del Mar, provided a list of comparable home sales in the area and set the asking price for the Del Mar home.
Todd has been a longtime contributor to Cunningham's political campaigns, as have two of her family members.
Todd was not a party to the transaction between Cunningham and Wade, which was conducted without Realtor representation on either side, but she represented Cunningham in the purchase of his Rancho Santa Fe home. Records show that was her first transaction as a Realtor.
Meanwhile, the controversy spilled over into Cunningham's North County district yesterday as 25 sign-waving protesters marched outside his house.
"Two, four, six, eight, shame on Duke in Mansiongate!" the protesters chanted. "Duke, Duke, we deplore, that you profit, from this war!"
The North County Coalition for Peace & Justice gathered protesters outside Cunningham's home. As she chanted, Army veteran Barb Parcells, 44, of Rancho Bernardo, shook a sign that read: "FOR RENT - CONGRESSMAN."
"I know how much the Army depends on its equipment," Parcells said. "This raises the question, is he choosing the contractors with the best equipment for our troops, or is he choosing the contractor who gives him the best deal on his house?"
The protest was one of two organized efforts yesterday to bring further media attention to Cunningham's relationship with the defense contractor.
Earlier, the newly formed Californians for a Cleaner Congress held a phone-in news conference calling for Cunningham to return the $700,000, resign from the defense appropriations subcommittee and reveal all of his communications with MZM.
Cunningham's spokesman said the congressman, who was in Washington yesterday, had no comment regarding the protests.
Staff writer Dani Dodge contributed to this report.
- 174 War & Disaster Profiteers Campaign