Cunningham defends real estate deal

By: WILLIAM FINN BENNETT - Staff Writer | Monday, June 13, 2005 9:05 PM PDT ∞

NORTH COUNTY ---- Controversy continued to swirl Monday over U.S. Rep. Randy "Duke" Cunningham's sale of his Del Mar home to a Nevada company which then resold the home at a $700,000 loss.

Mitchell J. Wade is a corporate officer for the Nevada company that bought the home, records with the Nevada Secretary of State show.

The real estate deal has raised ethical questions because Wade is also president of a Washington D.C.-based contracting firm that has benefited from millions of dollars in defense contracts, some of which were approved by a committee on which Cunningham is a member.

Neither Cunningham, R-Escondido, nor his staff returned phone calls Monday. Officials with the contracting firm, MZM, Inc., also did not return phone calls.

However, Cunningham's office sent a written statement in response to a San Diego Union-Tribune article Sunday about the deal.

In that statement, which was issued Monday, Cunningham said he could assure his constituents that "this was an above board transaction."

While the deal may have been perfectly legal, it raises questions, an expert on government ethics said Monday.

"Even if it was absolutely above board, someone should have pointed out that you don't do business with someone looking for favors from you," said Bob Stern, president of the Los Angeles-based Center for Governmental Studies, a nonpartisan think tank that studies campaign finance.

UCLA Law School Professor Daniel Lowenstein said one must be careful not to pass judgement before knowing exactly what occurred.

"There might be something wrong here, and there might not be," Lowenstein said. "It is possible that a prosecutor might want to look into it, but that doesn't mean that after he looks into it, he would necessarily conclude that anything wrong has been done."

In late 2003, Cunningham sold his Del Mar home for $1.675 million to the Nevada company for which MZM president Wade is a corporate officer, according county property records and corporate records filed with the Nevada Secretary of State.

A short time later, the Nevada company, 1523 New Hampshire Avenue LLC, put the house back on the market. County property records show that it sold about eight months later for $975,000 ---- a $700,000 loss.

Cunningham purchased an 8,000 square-foot home in Rancho Santa Fe a short time later.

In Cunningham's Monday news release, he stated:

"Mr. Wade was interested in purchasing our home," Cunningham wrote. "He received comparables from an independent source establishing the value of the home. He made an offer based on that evaluation. Nancy and I accepted that offer. I have no reason to believe the value of the house was inflated then, and I have no reason to think so today. "

MZM is a Washington D.C.-based national security firm founded in 1993, according to its Web site.

According to a Washington think tank known as The Center for Public Integrity, MZM collaborated with 16 other organizations on a $252 million contract to provide engineering and information warfare services to the U.S. Air Force.

The center also reports that in 2003, MZM received a $1.2 million contract from the Defense Department to provide it with interpreters in Iraq. The value of that contract has since increased to $3.6 million, the center reports on its Web site, www.publicintegrity.org.

Now in his eighth term in Congress, Cunningham was first elected to the House of Representatives in 1990 as the representative for San Diego's South Bay region. In 1992, he ran for North County's then-51st District and won that seat. In 2002, the district became the 50th District. His district stretches from Carlsbad east to Escondido and as far south as Miramar and portions of northern San Diego.

The Center for Governmental Studies' Stern, however, said Cunningham's "moral compass should have been quaking."

"It looks like a sweetheart deal at the very least," Stern added. "This may be the only house in San Diego that didn't sell for more after somebody bought it."

Contact staff writer William Finn Bennett at (760) 740-5426, or wbennett@nctimes.com.