Cunnningham Pleads Guilty to Tax Evasion

11/28/2005

Nov 28, 2005 — LOS ANGELES (Reuters) - U.S. Rep. Randy “Duke” Cunningham, a California Republican, pleaded guilty on Monday to felony conspiracy and tax evasion for taking money from a defense contractor in exchange for help in securing Defense Department contracts.

Cunningham, 63, an eight-term Congressman and decorated Vietnam War veteran, had been under federal investigation for his ties to Washington-based defense contractor MZM Inc. since the summer.

In July he denied any wrongdoing but said he would not seek reelection in 2006. He is scheduled to be sentenced on February 27. He could be ordered to spend 10 years in prison and pay hundreds of thousands of dollars in fines.

While there was no immediate word if Cunningham would resign from Congress, under House rules a member convicted of a felony loses the right to vote in the U.S. House of Representatives and in committee.

Cunningham’s plea was entered at a San Diego federal court hearing following several months of investigation by the Internal Revenue Service, the criminal investigative arm of the Pentagon, the FBI and federal prosecutors.

“Yes, your honor,” Cunningham said when Judge Larry Burns asked him if he had accepted bribes.

Cunningham pleaded guilty to conspiracy to commit mail fraud and wire fraud and tax evasion. The last charge stemmed from the underreporting of his income in 2004.

The investigation into the former Vietnam War fighter pilot stemmed from his $1.6 million sale of his Del Mar, California, home in 2003 to Mitchell Wade, until recently the chief executive of MZM, Inc.

Wade quickly sold the home for a $700,000 loss in the midst of San Diego’s booming housing market.

Prosecutors alleged that Cunningham demanded and received an inflated price for his home from Wade in return for official favors. Cunningham and his wife then used the inflated proceeds to buy another house in the San Diego area.

Cunningham is a member of the House intelligence committee and the appropriations sub-committee that controls defense spending.