Congressman Sold Home -- and Could Pay Dearly

Times Staff Writer

On display at the Aerospace Museum in Balboa Park is one of the F-4 Phantoms that made Randy “Duke” Cunningham famous and propelled him into national politics.

Twenty miles up Interstate 5 is the house in upscale Del Mar Heights that threatens to scuttle his political career and result in criminal charges after eight terms as a Republican member of the House of Representatives.

For the record:

12:00 a.m. June 25, 2005 For The Record
Los Angeles Times Saturday June 25, 2005 Home Edition Main News Part A Page 2 National Desk 2 inches; 61 words Type of Material: Correction
Congressman’s home sale -- An article in Thursday’s Section A about the sale of a home belonging to Rep. Randall “Duke” Cunningham (R-San Diego) to a military contractor said the political action committee of San Diego-based Peregrine Systems contributed to Cunningham’s 2004 campaign. In fact, the contribution was made by a committee of San Diego-based Peregrine Semiconductor Corp., a different company.

Cunningham, 63, a former Navy fighter pilot who shot down five MIGs during the Vietnam War and was a role model for Tom Cruise in the movie “Top Gun,” is being investigated by the FBI and other federal agencies for selling his house in November 2003 to a military contractor for what may have been an inflated price.


Mitchell Wade, 42, president and chief executive of Washington-based MZM Inc., bought the house for $1,675,000, then sold it seven months later for $975,000, a $700,000 loss. The house deal was first disclosed earlier this month by the San Diego Union-Tribune.

Critics suggest that Wade paid Cunningham for the house as a way to illegally funnel money to a congressman who has supported his company.

The fact that for months Cunningham has lived on Wade’s yacht, named the Duke Stir, berthed in the Potomac River, has raised further questions about improper financial links.

Numerous questions remain about the relationship between Wade and Cunningham, among them, how the sale price for the house was determined, how Wade lost $700,000 on the resale amid one of the hottest real estate markets in the state and whether Cunningham is paying an appropriate rent for the use of Wade’s boat.

After San Diego’s North County Times revealed the yacht deal last week, Cunningham’s office issued a statement offering to prove that he pays rent, but no records have been produced.

Cunningham sits on the Defense Appropriations Subcommittee. Although congressional committees rarely vote on individual government contracts, members of key panels can influence who gets the awards. The appropriations subcommittee is one of the most influential.

Wade, a reserve officer in the Navy, was a program manager for communications and intelligence for the Navy and the Department of Defense for eight years before founding MZM in 1993. The firm specializes in sophisticated intelligence-gathering and analysis.

Records show that MZM has more than $66 million in at least 93 government contracts, enough to make the company No. 100 on Washington Technology magazine’s list of the top federal contractors.

Cunningham has said that MZM is among those military contractors he has favored. A watchdog group, Citizens for Responsibility and Ethics in Washington, has filed a Freedom of Information Act request for information about contacts made by Cunningham in favor of MZM with officials at the Pentagon or the Department of Homeland Security.

One of the few unclassified contracts between MZM and the federal government is a $1.2-million program to provide linguists and interpreters for Iraq and elsewhere. In another contract, MZM has joined General Dynamics and other firms to upgrade “warfare services” for the Air Force.

Like most military contractors, MZM has a political action committee that contributes to the campaigns of politicians who influence the awarding of contracts and shape public policy. The MZM political action committee has contributed to several politicians, including giving $7,000 to Cunningham’s 2004 campaign.

Wade has also contributed to Cunningham’s political action committee, the American Prosperity Political Action Committee, which doles out money to candidates and causes of his choosing.

In addition, Cunningham’s wife, a chief of staff for an Education Department official, and one of his daughters are on the advisory council to the Sure Foundation, a nonprofit group created by Wade and his wife to raise funds for projects to aid refugee children. Last year a congressional subcommittee on District of Columbia operations, with Cunningham as a member, allocated $100,000 to the foundation.

A month after selling their Del Mar Heights home, Cunningham and his wife, Nancy, paid $2.5 million for an 8,000-square-foot home in exclusive Rancho Santa Fe owned by Douglas and Karen Powanda.

Douglas Powanda is a former executive vice president at Peregrine Systems, a San Diego-based business-software company.

Peregrine was Cunningham’s third-largest corporate contributor in 2004, giving $14,000 in individual and corporate donations. In late 2004, Powanda was among eight former Peregrine executives indicted by a federal grand jury in an alleged multibillion-dollar securities fraud; he awaits trial.

Cunningham, known as accessible and cordial even to reporters who have written critically of him, has hunkered down in the wake of the disclosures about the Del Mar Heights house sale.

Meanwhile, Republicans are maneuvering to run for the seat from northern San Diego County if Cunningham opts to retire. Ron Nehring, chairman of the county GOP committee, has asked Cunningham to clarify the house sale and yacht situation.

Others think no amount of clarification will help. “I think he’s dead,” said Republican political consultant and lobbyist John Dadian.

County Supervisor Bill Horn pleaded for the public to reserve judgment. “I know everybody’s pounced on him, but I think he’s due his day in the public square, to explain himself,” said Horn.

Rep. Duncan Hunter (R-El Cajon) ) said that “people should remember that Duke Cunningham has honorably served this country, sometimes in great danger, for 35 years.”

A native of Los Angeles and a graduate of the University of Missouri, Cunningham served in Vietnam, where he was awarded the Navy Cross for bravery, second only to the Medal of Honor among Navy and Marine Corp medals.

He became an instructor at the Top Gun school in San Diego and after his retirement in 1987, decided to go into politics -- just after the movie “Top Gun,” released in May 1986, had made celebrities of Navy aviators.

In 1990 he challenged a Democratic incumbent, Rep. Jim Bates, who had been censured by the House for alleged sexual harassment of female staff members. After a narrow victory, Cunningham found himself in the national media.

In the Persian Gulf War, when the United States pushed Saddam Hussein’s army out of Kuwait, reporters were desperate for high-profile combat veterans to explain the war and its tactics, particularly the air war over Baghdad.

As one of the few decorated combat veterans in Congress, the freshman got the kind of exposure that few members of Congress receive. In 1992, looking for a more conservative district, he challenged Republican incumbent Bill Lowery, who was bogged down in the House banking controversy.

Lowery dropped out of the race and Cunningham was elected. In six successive elections he has never been seriously challenged; political professionals consider California’s 50th Congressional District a “safe” seat for the GOP.

Throughout his career, Cunningham’s views have been conservative and his rhetoric sometimes bombastic. He has referred to gays as “homos,” made a derogatory quip about the openly gay Rep. Barney Frank (D-Mass.), and suggested that Bill Clinton’s antiwar past would have made him a candidate for being “tried as a traitor and even shot” had he lived in another country.

In later years, he has supported medical research programs that he once blasted as wasteful. In 1998 he underwent surgery for prostate cancer. Last year, he was among Republicans who urged President Bush to ease restrictions on stem-cell research.

In recent years, Nancy Cunningham, a former school administrator in suburban Encinitas, moved to Washington to be with her husband, taking a post with the Education Department. The couple have three grown children.

His seniority has brought him prominent committee assignments. Cunningham serves on the Select Committee on Intelligence, and as chairman of the Subcommittee on Human Intelligence, Analysis and Counterintelligence in addition to his appropriations post.

He has become a favorite for military contractors and their lobbyists. For his 2004 campaign, he raised $832,173: of that, $74,550 came from the defense electronics industry, $42,500 from the defense aerospace industry, $33,550 from miscellaneous defense firms, and $45,250 from lobbyists with varied clients.

Cunningham has sought to carry on business as usual despite the controversy.

On Wednesday, a resolution he sponsored that would give Congress the power to ban desecration of the flag was approved 286 to 130 and forwarded to the Senate. The resolution was among 15 bills Cunningham sponsored in 2004.

Rep. Tom DeLay (R-Texas), the House majority leader, refused on Tuesday to comment on whether Cunningham’s house sale should be referred to the Ethics Committee. Cunningham has contributed $5,000 of his campaign funds to DeLay’s legal defense fund as he fights controversies of his own.

“Duke Cunningham is an honorable man,” DeLay told reporters. “He is a war hero. He was the first Top Gun.”

Times staff writers Richard Simon and Maura Reynolds contributed to this report.