U.S. Rep. Randy "Duke" Cunningham said Thursday he "showed poor judgment" in the 2003 sale of his Del Mar Heights home to defense contractor and campaign contributor Mitchell J. Wade, who paid more for the house than it apparently was worth.

He also defended his use of the contractor's yacht as a residence where he stays while in Washington without having to pay a traditional form of rent.

Cunningham said that instead of rent, he paid dock and maintenance fees to stay on the 42-foot yacht named the "Duke-Stir," an apparent reference to Cunningham's nickname. Those fees appear to amount to thousands less than Cunningham would have paid to rent a yacht or to live in a Washington-area apartment.

In a lengthy written statement, the Escondido Republican, who was first elected in 1990, denied any impropriety and said he never attempted to influence the awarding of government contracts to Wade's company, MZM Inc.

The FBI, working with the U.S Attorney's Office in San Diego, is reportedly probing whether the lawmaker's coziness with Wade resulted in a tripling of MZM's defense contract revenue.

Wade has refused repeated requests for interviews. When reached by telephone at his Washington home Thursday after Cunningham issued his statement, Wade hung up and did not answer subsequent calls.

Regarding the living arrangement, Cunningham wrote that a law firm he has hired is working to produce records showing he has paid "well over $8,000 for the dock fees and well over $5,000 for service and maintenance." The congressman did not include documentation of those payments along with his statement.

A check of the marina where the boat was moored along Washington's Potomac River indicated than annual moorage fees are $4,800 a year and included electricity and sewer services.

Cunningham said he paid the $13,000 in lieu of rent to Wade, whom he described as a personal friend of many years.

Because Cunningham previously lived in his own boat and paid dock fees to the marina, the fees cited in the statement add up to an additional $5,000 for the use of Wade's boat, or about $357 per month.

Rentals for 42-foot yachts in San Diego cost nearly $400 per night, according to a Web site for Harbor Island Yacht Club. Apartments in the northwestern section of Washington where many lawmakers live rent for between $1,000 and $1,500 per month, according to rental listings.

Statement details

Cunningham's statement was issued through his Washington congressional office on Thursday afternoon, breaking a nearly two-week silence about his dealings with Wade and MZM.

In the statement, Cunningham wrote:

- He didn't use his congressional position to help Wade.

"I want my constituents to know that, despite my personal friendship with Mr. Wade, I gave his company, MZM, no preferential treatment," the statement read.

- The home sale was based on comparable sales and was arranged through a personal friend.

"Elizabeth Todd, a realtor with the Willis Allen Company in Del Mar, set the asking price for our home," he said in the statement. "Ms. Todd and her husband are friends of mine. Based on the information provided by Ms. Todd about comparable sales prices in the area, I thought the asking price was fair and reasonable."

Cunningham said he understands that Todd provided those comparable sales figures to Wade and that he does not have a record of them.

- Mitchell Wade and his wife, Christiane, have sought his support for charitable causes such as the Sure Foundation Inc., which offers assistance to refugee children. Cunningham's wife, Nancy, and one of his daughters also worked with the foundation as members of its advisory board. Members of that panel do not receive compensation, according to foundation financial statements.

Cunningham said his ties to the foundation didn't influence a subcommittee he sits on to award it a $100,000 federal grant in 2004.

"Nancy and I have been pleased to assist the Sure Foundation's important mission with our time, charitable contributions and political support," he wrote.

- His stay aboard Wade's boat was not improper.

"Mr. Wade and I agreed that, in return for me staying on the boat, I would pay monthly dock fees and maintenance costs associated with keeping Mr. Wade's boat at the marina," the statement read.

- The real estate transaction that is the focal point of Cunningham's troubles was simply an arrangement between friends worked out when MZM was looking for office space and corporate housing in the Miramar area.

"At the time of the sale, I failed to adequately consider how this transaction might be perceived by others who don't know me. I would never put the interests of a friend or a contractor above the interests of my country. I trust that the facts will bear this out over time."

- The purchase came long after MZM received one of its defense contracts for human intelligence that was given to the company by the Defense Department in May 2002.

"I categorically reject any suggestion that I secured a contract for Mr. Wade's company or that I supported funding of this important human intelligence program because MZM purchased my home in Del Mar Heights."

'Reserve judgment'

Cunningham used much of the statement to defend his record in Congress, writing that he was "saddened by this distraction from my regular duties.

"I ask only that my constituents reserve judgment until any investigation is concluded and I have had the opportunity to defend myself against these false allegations," he wrote.

Cunningham, 63, a former U.S. Navy commander and highly decorated Vietnam War combat pilot, has hired K. Lee Blalack to represent him in what the lawmaker said was "a legal inquiry now under way."

The statement's reference to a "legal inquiry" confirmed published accounts saying a federal probe is ongoing. The Associated Press, quoting an unnamed law enforcement official on Thursday, reported that the U.S. Attorney's Office in San Diego is heading the investigation with the FBI doing the legwork.

Blalack is a former chief counsel and staff director of the U.S. Senate's Permanent Subcommittee on Investigations. Blalack said he could not comment about the case because he had just been hired and has not fully investigated the issues.

Blalack previously represented Cunningham in connection with a House investigation of the passage of the Medicare Modernization Act. In that case, a complaint alleged that Cunningham and others attempted to influence Rep. Nick Smith's vote for the bill in exchange for supporting the congressional candidacy of Smith's son. Cunningham was absolved of any violation in that case.

Cunningham's campaign records show that Wade and his wife and the company's political action committee have donated $35,000 to Cunningham since 2002.

In October 2003, Cunningham sold the four-bedroom Del Mar Heights home to Wade for $1.675 million. Eleven months later, Wade sold the home for $975,000, a $700,000 difference between what he paid the congressman and what he was willing to accept as a sale price.

Two months after the Del Mar home sale, the Cunninghams purchased a sprawling, $2.6 million home in upscale Rancho Santa Fe. The five-bedroom home is gated and includes a pool and spa and sits on 2.9 acres of land.

In the same time frame, MZM, which Cunningham wrote provides "highly classified human intelligence support to the U.S. military," saw its defense revenues soar.

No more comment

Harmony Allen, Cunningham's chief of staff in his congressional office, said her boss would refuse any future requests for interviews about his dealings with Wade.

"Duke and his staff are getting back to the business of the people of the 50th District," Allen said.

Numerous congressional watchdog groups and Democrats have demanded that the House Ethics Committee open an investigation. That committee is currently not functioning because of partisan wrangling over staffing issues.

Republican lawmakers and local GOP officials have said they intend to stand by Cunningham and give him the benefit of the doubt until all inquiries have been completed.

Ron Nehring, chairman of the San Diego County Republican Party who earlier this week called on Cunningham to make a statement, said he thought the document issued Thursday "answers as many questions as possible considering there's an investigation going on."

Nehring also predicted that Cunningham would not be forced out of office.

"I don't believe Congressman Cunningham is going to step down," he said. "Why would someone step down when they haven't done anything wrong?"

While Cunningham might not step down or be forced to resign, Democrat Francine Busby is already working to unseat the veteran lawmaker. Busby opened a campaign office in Encinitas earlier this month for a second run at Cunningham.

The 54-year-old former Cardiff school board member was her party's nominee in the 2004 election and drew about 36 percent of the vote in the traditionally Republican district.

Busby said Thursday that Cunningham, who earns a congressional salary of $162,100 a year, needs to come back to the district and address his constituents directly. Cunningham's current term expires in 2006.

"Coming clean is more than just admitting what everybody already knows," Busby said. "It's about showing that your actions meet the high standards of honesty and integrity from a congressional representative."

Busby said there should not be any unanswered questions and that Cunningham needs to "prove flat out and openly that there are no violations here. I don't think his statement meets that standard."

In Washington, Keith Ashdown, vice president of policy and communications for Taxpayers for Common Sense, a nonpartisan Washington budget watchdog, took issue with part of what Cunningham said.

"His statement that no congressman steers contracts to their favorite contractors is absolutely not true," Ashdown said. "It happens all the time.

"Committee members are very influential," Ashdown said. "They control the purse strings of the armed services and they can make military officials' lives miserable if they don't do what they are told."

Ashdown added that Cunningham was presenting his own point of view but not offering any supporting documentation.

"He has to show real evidence and words are not going to cut it," Ashdown said. "These accusations are going to stick like glue until he provides evidence that proves otherwise."

U.S. Rep. Darrell Issa, R-Vista, said the most important element of Cunningham's statement was the admission of an error in judgment surrounding the home transaction.

"After 36 years of public service, he is entitled to the benefit of the doubt and for this process to be allowed to go forward in a fair way," Issa said, referring to Cunningham's 21 years in the Navy as well as his congressional service.

Besides his seat on the Appropriations Committee and its Defense Subcommittee, Cunningham also serves on the House Permanent Select Committee on Intelligence and is chairman of its Terrorism, Human Intelligence, Analysis and Counterintelligence Subcommittee.

Foundation officers are unpaid

The Sure Foundation Inc., a charity group run by the family of defense contractor Mitchell Wade, does not pay its board members or advisory council members, including the wife and daughter of U.S. Rep. Randy 'Duke' Cunningham, according to the group's tax returns.

The foundation, which pays for programs for refugee children in war-torn countries, is one of the many connections between the contractor and Cunningham, who has come under fire for his business dealings with Wade. Wade's company, MZM Inc., has received millions of dollars in contracts from the Defense Department, and there is reportedly an investigation into whether Cunningham used his position on House defense budget panels to steer contracts toward MZM.

Cunningham's wife and daughter are members of the foundation's advisory council.

Tax returns for the foundation show that the group pays no compensation to its board members or advisory council members.

Cunningham statement

The following is the complete text of the statement issued Thursday by U.S. Rep. Randy 'Duke' Cunningham:

In recent weeks, serious questions have been raised about my conduct in office. First and foremost, I want my constituents to know that I have acted honorably and honestly. I recognize, however, that I showed poor judgment in selling my home in Del Mar to a friend who does business with the government. At the time of the sale, I failed to adequately consider how this transaction might be perceived by others who don't know me. However, my work in Congress is and has always been directed at programs and policies that I believe are in the best interest of our nation and my constituents. I have always felt a duty to this country and its people — a duty that motivated me to volunteer for the Navy, serve in combat in Viet Nam, and run for office. I would never put the interests of a friend or a contractor above the interests of my country. I trust that the facts will bear out this truth over time.

I welcome any and all appropriate investigations. I have faith that any investigation of these allegations will confirm that I have acted honestly. My constituents know me to be the same fighter that has always fought for this nation, whether in uniform or in the halls of Congress. They can be assured that I will continue to defend both my reputation and their interests in Washington.

Because there is now a legal inquiry underway, I do not think it is appropriate for me to publicly address all of the specific questions that may be the subject of that inquiry. However, I do want to explain my relationship with Mr. Wade, the sale of my home in Del Mar, and my support for human intelligence programs in the U.S. military. From this point forward, any further questions should be directed to my legal counsel.

Mr. Wade and I have been friends for many years and continue to be friends today. Though I first met Mr. Wade in connection with his work as a defense contractor, Nancy and I came to know Mitch and his wife Christiane personally over the years. My family and I have socialized with the Wades on numerous occasions. The Wades have also occasionally asked Nancy and me to support important charitable causes with which they are affiliated and we have willingly done so. This includes the Sure Foundation, which offers financial assistance to refugee children dislocated by war or civil unrest. Nancy and I have been pleased to assist the Sure Foundation's important mission with our time, charitable contributions and political support. I want my constituents to know that, despite my personal friendship with Mr. Wade, I gave his company, MZM, no preferential treatment.

MZM provides highly classified human intelligence support to the U.S. Military. While I am not at liberty to discuss the specifics of MZM's classified work, I can say that in 2003 MZM was actively seeking space for its operations close to Miramar Marine Corps Air Station. Mr. Wade shared with me that his company hoped to acquire space where he could locate highly secure communications equipment along with quarters for employees visiting from other cities. I informed Mr. Wade that Nancy and I were contemplating selling our home in the Del Mar Heights neighborhood, which is close to Miramar. After learning about the size and location of our property, Mr. Wade advised me that MZM would be interested in purchasing our house. I understood that MZM wanted the property for use as an office and as corporate housing until such time as MZM could locate more secure facilities for its operations at one of the military installations in the San Diego area. However, my understanding was that MZM would retain ownership of the property for use as corporate housing even if Mr. Wade was able to locate a more secure facility for their office operations at Miramar.

Elizabeth Todd, a realtor with the Willis Allen Company in Del Mar, set the asking price for our home. Ms. Todd and her husband are friends of mine and as a friend, she was kind enough to research the sale prices of similar homes in my neighborhood. Our home in Del Mar Heights was located in a desirable area west of Interstate 5 between the highway and the ocean. It was a large, two-story home measuring 3,826 square feet with 4 bedrooms, 3.5 baths and a limited ocean view from a loft on the top floor. My understanding is that the asking price recommended by Ms. Todd was very close to the average sale price per square foot of other homes sold in my neighborhood in the six months prior to the sale. Based on the information provided by Ms. Todd about comparable sale prices in my area, I thought the asking price was fair and reasonable. When I gave Mr. Wade the asking price, he requested that I provide him with evidence of comparable sales to substantiate the price. I then asked Ms. Todd to send Mr. Wade the information he requested and my understanding is that she did so. After reviewing the information provided by Ms. Todd, Mr. Wade confirmed that he wanted to purchase our home in Del Mar Heights for use by MZM.

I did not list my home in Del Mar Heights for sale or hire a real estate agent to sell the property because Mr. Wade had already indicated an interest in the property and, like most people selling their own home, I hoped to avoid the additional costs associated with selling a house through a broker. Again, I recognize that I showed poor judgment in not listing the house publicly for sale. I should have given more thought to the perception that it might create.

Recent press reports have incorrectly suggested that I secured a government contract for Mr. Wade's company or that I improperly influenced the awarding of contracts to MZM. These reports are simply false. I do not have the authority or ability to award a contract to Mr. Wade's company and no single Member of Congress, no matter how influential, can dictate to the Armed Services who will be awarded contracts. In fact, my understanding is that the Defense Department awarded MZM a contract in May 2002, a full year and half before Mr. Wade purchased my home in Del Mar Heights. I advocated funding of a human intelligence program that was supported by the military, and confirmed with the Defense Department that the program had significant value to military effectiveness. Funding for this program was also supported by the full House Appropriations Committee, both Houses of Congress and the President. In short, I categorically reject any suggestion that I secured a contract for Mr. Wade's company or that I supported funding of this important human intelligence program because MZM purchased my home in Del Mar Heights.

Finally, recent news reports have questioned whether it was appropriate for me to live on a boat owned by Mr. Wade while I was working in Washington. It is important to note that I first came to Congress in 1991, and I only began living on Mr. Wade's boat in roughly April 2004. Mr. Wade and I agreed that, in return for me staying on the boat, I would pay the monthly dock fees and maintenance costs associated with keeping Mr. Wade's boat at the marina. There was nothing improper about my arrangement with Mr. Wade because I paid these monthly fees and costs in lieu of rent. Based on the records that I have been able to locate to date, I have paid well over $8,000 for the dock fees and well over $5,000 for service and maintenance. My attorneys are collecting the full payment records now and will make them available when they are all gathered.

I am deeply saddened by this distraction from my regular duties. However, I intend to focus my time and attention on the needs of the people of the 50th district. I ask only that my constituents reserve judgment until any investigation is concluded and I have had the opportunity to defend myself against these false allegations.

This year will mark the 36th year that I have stood in service to this nation ñ first as a young man volunteering to join the U.S. Navy at a time of war and great unrest, and more recently as a United States Congressman. I have had many proud moments in my career.

I am most proud of the work I do for and with the people of my district.

I continue to lead Congress' work to dramatically increase federal funding for health and medical research ñ promoting both our national healthcare needs and the economic health of our local bio-technology industry.

I work for economic security in San Diego and our vital national security through funding for important defense and homeland security programs that have created and protected jobs for thousands of my San Diego County constituents. And through road, rail and other transportation funding, I work to help get hard-working San Diegans home to their families as quickly as possible every day so they can continue to enjoy all the life that our beautiful region has to offer.

Perhaps most importantly, I believe the work I am doing with educators and policy makers nationwide to improve education in San Diego and across the country will help lead our children to a better life than their parents enjoy today.

I have always done this job in the interest of my nation and my constituents. And I want the people of California's 50th Congressional district to know that my drive to continue this work on their behalf is as strong today as it was when I first ran for Congress 15 years ago. I have always been humbled by the faith that my district has had in my leadership, and I will continue to work to earn their respect and endorsement.

Staff writer Erin Schultz contributed to this report, as did staff writer William Finn Bennett in Washington, D.C.