Judge allows Cunningham figure to remain free on bond

By: SCOTT MARSHALL - Staff Writer
Prosecutor says federal agents authorized defendant's trip to Greece | Tuesday, September 18, 2007 2:56 AM PDT ∞

SAN DIEGO -- A federal judge allowed a New York man who has admitted bribing former North County U.S. Rep. Randy "Duke" Cunningham to remain free on a $1.5 million bond Monday, after an assistant U.S. attorney said in court that the man's recent trip to Greece was at the direction of federal agents.

U.S. District Court Judge Larry Alan Burns had required Thomas Kontogiannis to appear in court Monday to show why he should not be jailed after the judge received what he described in writing as "information from reliable sources" that Kontogiannis had violated court-imposed travel restrictions.

Assistant U.S. Attorney Jason Forge said during a hearing Monday that, after speaking with other federal law enforcement officials, he was confident Kontogiannis complied with the court's order regarding travel outside of the country.

"My understanding is that everything Mr. Kontogiannis did was not just with permission, but at the direction of agents and other representatives of the government," Forge said.

Travel restrictions were put in place Feb. 23, when Kontogiannis pleaded guilty to engaging in a monetary transaction that he knew involved "criminally derived property." Kontogiannis, who is awaiting sentencing, admitted in a plea agreement that he paid what he knew was probably an inflated price for a yacht he bought from Cunningham and to having funneled hundreds of thousands of dollars in what he suspected were illegal funds into a mortgage company owned by his nephew to pay off real estate loans for Cunningham.

A wealthy Long Island real estate developer, Kontogiannis admitted in the plea agreement that he provided a $200,000 down payment for a Virginia condominium for Cunningham. Kontogiannis also agreed to buy the yacht from Cunningham at the higher price to maintain a relationship with the congressman, "a powerful public official who could assist (Kontogiannis) in various ways," the plea agreement states.

Transcipts of the February hearing show Kontogiannis said in court that he was buying Cunningham's influence as a congressman. Pressed by the judge to explain how he benefited from laundering money to pay Cunningham's mortgage, Kontogiannis told Burns that it was good to have a "powerful congressman" who can assist with anything you might need, the transcripts showed.

The guilty plea was not made public until June, and transcripts of the hearings were not released until August, in part because Kontogiannis is cooperating with federal authorities. Portions of the transcripts remain confidential.

Burns allowed Kontogiannis to remain free if he posted a $1.5 million bond, surrendered his passports to federal agents and remained in the United States. A form detailing the travel restrictions stated the Kontogiannis could travel outside the country with federal agents or with their permission.

Burns said in court Monday that he had made clear that Kontogiannis was not to travel outside the United States unless it was part of another investigation with which he has been assisting federal authorities. Burns said he has "a hard time understanding" how Kontogiannis' trip to Greece was part of that investigation when Kontogiannis was with his family.

Greece is a "completely different place" than what Burns thought the focus of the ongoing investigation was, the judge said.

Last month, the North County Times reached Kontogiannis by telephone at a room registered in his name at a five-star hotel in Greece. Kontogiannis declined to speak to the reporter and terminated the call shortly after it began.

Forge told Burns that he had the same reaction as the judge when he first learned of the trip to Greece, but changed his thinking after speaking with agents from the FBI and other federal prosecutors about the situation.

Forge said he might have handled the matter differently, but that he believes federal agents had a "reasonable basis" for the decisions they made to authorize Kontogiannis' travel to Greece.

Kontogiannis' attorney, Gregory O'Connell, also said the trip was made with the permission and at the direction of federal agents and that he had been assured that his client's trip to Greece "was appropriate." Kontogiannis deferred to federal agents and was "acting in good faith," O'Connell said.

O'Connell, Forge and other attorneys working on the case declined to comment as they left the courtroom Monday.

After hearing from the attorneys, Burns said in court that it was his understanding that Kontogiannis had not violated the travel restrictions, but Burns modified those conditions to require Kontogiannis to receive the judge's approval for any future trips outside of the United States.

Burns also ordered federal prosecutors to file a report within seven days from federal agents to explain why they authorized Kontogiannis' trip to Greece. That report can filed as a sealed document unavailable for public viewing, Burns said.

Kontogiannis also will be supervised by a federal pre-trial services officer pending his sentencing, which is scheduled in November. Kontogiannis faces up to 10 years in prison.

Money Kontogiannis funneled to pay off Cunningham's real estate loans involved a mortgage on a $2.5 million home Cunningham formerly owned in Rancho Santa Fe. That estate ultimately led to revelations about Cunningham's crimes.

Cunningham pleaded guilty in November 2005 to conspiracy to commit bribery and one charge of tax evasion. The former congressman admitted taking $2.4 million in bribes over several years in the largest congressional bribery scandal ever uncovered.

Cunningham is serving eight years in federal prison.

-- Contact staff writer Scott Marshall at (760) 631-6623 or smarshall@nctimes.com.