Ex-CIA No. 3 pleads guilty in fraud case

The former No. 3 official at the CIA pleaded guilty Monday to defrauding the government, closing an investigation that linked the nation’s preeminent spy service to the corruption scandal involving former Rep. Randy “Duke” Cunningham.

In admitting that he abused his rank to steer lucrative contracts to cronies, Kyle Dustin “Dusty” Foggo, the agency’s onetime executive director, became one of the highest-ranking officials in CIA history to be convicted of criminal charges.

But the deal also involved major concessions from prosecutors, who allowed Foggo to admit guilt to a single fraud charge, wiping out 27 additional counts that included money laundering and conspiracy. Foggo, 53, faces up to 20 years in custody and a $250,000 fine, but prosecutors indicated that they would recommend he serve no more than 37 months.

Mark MacDougall, an attorney for Foggo, said his client “made the difficult decision to bring this case to a close in the best interest of his family and to get on with the rest of his life.”

The revelations of Foggo’s crimes surfaced two years ago during one of the most tumultuous periods in recent agency history, and added to the pressure on the Bush administration to remove Porter J. Goss as CIA director in 2006.

Foggo, who served as a procurement officer in Germany before being named to manage most of the agency’s day-to-day operations, was accused of directing millions of dollars in business to a longtime friend, Brent Wilkes, who is serving a 12-year sentence after being convicted of bribing Cunningham.

Prosecutors said Foggo and Cunningham helped steer an estimated $100 million in contracts to Wilkes’ firms. Cunningham, a Republican from Rancho Santa Fe, is serving eight years in prison after pleading guilty in 2005 to taking $2.4 million in bribes from defense contractors and evading more than $1 million in taxes.

“Throughout the years-long scheme, Foggo had a standing offer for a high-level, high-paying position with his best friend Brent Wilkes,” prosecutors in San Diego and Alexandria, Va., said in a statement.

Foggo admitted to allowing Wilkes to conceal their close relationship by using shell companies and false cover stories to obscure Wilkes’ interest in the CIA contracts, they said. In one instance, Foggo was accused of helping Wilkes win a $3-million contract to supply bottled water to CIA personnel in Iraq and Afghanistan.

Prosecutors said that in addition to the promise of a lucrative job, Foggo received lavish gifts from Wilkes, including meals, private jet flights, a Hawaiian vacation and a weeklong stay valued at $44,000 at a Scottish castle.

The two had been friends since the early 1970s, when they were on the same high school football team in Chula Vista. They were roommates at San Diego State University, and each served as best man at the other’s wedding.

Many in the agency were stunned when Goss selected Foggo for the agency’s third-ranking position. Foggo had never served as a case officer or an analyst -- the jobs that typically garner the most respect within the CIA. But as a procurement officer at a secret CIA post in Frankfurt, Germany, he was in a position to cultivate contacts with members of Congress and other influential officials who visited during overseas trips to war zones. Goss had served as chairman of the House Intelligence Committee before being named CIA director.

Goss’ tenure as director was marked by clashes between his senior aides and longtime agency veterans, some of whom resigned in protest over what they described as disrespectful treatment.

The tumult became a distraction at the agency, which was already struggling to manage the demands of its pursuit of Al Qaeda and the spiraling violence in Iraq.

Foggo’s legal troubles became a source of particular embarrassment in May 2006, when his CIA office and his home were raided by federal agents as part of a widening criminal investigation.

Agency veterans said they could not recall a case when the FBI had raided an office at CIA headquarters.

A CIA spokesman declined to comment on Monday’s guilty plea, except to note that the CIA inspector general’s office had initiated an internal probe and cooperated with the FBI investigation.

Current CIA Director Michael V. Hayden eliminated the executive director position after joining the agency in 2006.

--

greg.miller@latimes.com