Former U.S. Rep. Randy Cunningham continues to adjust to life behind bars at a federal prison in North Carolina where he is said to be "steeling himself" for the years of incarceration he faces, according to his attorney.

Across the continent in San Diego, federal prosecutors and Cunningham's estranged wife, Nancy, are said to be inching closer to a deal resolving what happens to the money from the sale of the couple's former Rancho Santa Fe estate.

K. Lee Blalack, Cunningham's Washington-based attorney, said Wednesday that the former congressman was doing well when he spoke to him by telephone last week.

"His state of mind is good in the sense that he is a man in prison," Blalack said in a telephone interview. "While that weighs heavy on him, he is adjusting to prison life and has done so reasonably quickly."

Cunningham was sentenced to eight years and four months in prison in March after pleading guilty in U.S. District Court in San Diego to bribery and tax evasion. In the pleadings, he admitted taking more than $2.4 million in bribes and cheating on his taxes.

Blalack said the 64-year-old Republican is starting to regain some of the weight he lost last summer and fall while the target of a federal probe that led to his indictment and guilty pleas.

Cunningham has suffered from prostate and skin cancer, and although both are in remission, he continues to require medication and monitoring, Blalack said.

Cunningham is completing medical and psychological evaluations at a federal correctional center in Butner, N.C. Blalack has said he hopes his client will ultimately be assigned to the federal prison in Taft in Kern County.

"He knows that he has a long journey ahead and is steeling himself for that purpose," said Blalack, who now represents Cunningham for free after the disgraced lawmaker's assets were wiped out in his guilty pleas.

"He is getting exercise and he has put on weight and is getting more fit as he starts the physical and mental recuperation process."

Blalack also said that Cunningham is "doing what he is supposed to be doing" when it comes to assisting federal prosecutors with their ongoing investigations of unindicted co-conspirators and others tied to Cunningham.

"He's being cooperative where he is asked to be cooperative and that is all I will say about that," Blalack said. Government investigators complained earlier this year that Cunningham was not being as cooperative as they had hoped.

After Cunningham has served one year of his sentence, prosecutors can ask the court for a reduction in the remainder of his sentence if the information he provided was deemed useful.

There is no parole in the federal system. The best Cunningham can hope for is 54 days of credit per year for good behavior. Assuming Cunningham received such credit and there is no other reduction in his sentence, the earliest he could be released is June 2013.

Cunningham's travails and the resulting investigations are featured in the latest issue of Vanity Fair magazine in an article by Judy Bachrach titled "Washington Babylon."

Several unresolved aspects to Cunningham's case remain, including what will become of unindicted co-conspirators Brent Wilkes of the Poway defense firm ADCS and New York developer Thomas Kontogiannis and his son-in-law, John T. Michael.

Also undetermined is the sentence that one of his chief co-conspirators, Mitchell Wade of the now-defunct Washington defense firm MZM, will receive.

Wade pleaded guilty this spring to bribery and election fraud and faces up to 11 years when he is sentenced. His sentencing date has not been set because prosecutors say his cooperation with the case is "ongoing" and that it could be months before he goes before a judge to find out his fate.

Congressional panels also say they are continuing to examine their records for all of Cunningham's actions that may have been improper.

In San Diego, the case the government brought against the Cunninghams' former Rancho Santa Fe estate also remains unresolved. Prosecutors allege that the mansion was purchased with bribe money and that neither Randy nor Nancy Cunningham is entitled to the sale proceeds.

While Randy Cunningham gave up on his claim on the money, Nancy Cunningham argues she should receive a portion of the proceeds because part of the funds used to buy the home for $2.1 million in 2004 came from the sale of their former home in Del Mar Heights in late 2003.

Assistant U.S. Attorney Jason Forge in San Diego declined to comment Wednesday on that aspect of the case or his office's continuing investigation. The couple sold the property in December for $2.6 million.

The latest court filing involving the Rancho Santa Fe property says that Nancy Cunningham's "comprehensive proposal to resolve various matters, including this action, has been submitted to the U.S. Attorney Office's and awaits the response of the U.S. Attorney in this district."

Forge declined to say what the "various matters" referred to in last week's court filing involved.

Nancy Cunningham's attorney, Douglas Brown of San Diego, also declined to address the court filing but said he hoped to be able to settle her case later this month.

Contact staff writer Mark Walker at (760) 740-3529 or mlwalker@nctimes.com.