Prosecutors scrutinize others in Cunningham probe

Following yesterday's dramatic confession by Rep. Randy "Duke" Cunningham (R-Calif.) of taking bribes and evading taxes, attention also is being focused on Cunningham's relationship with former Washington defense contractor MZM Inc. and its president, Mitchell Wade.

Prosecutors said Cunningham admitted to receiving more than $2 million in cash, home payments, cars, vacations and other illicit payments from several co-conspirators, whom they did not name. News reports from the Associated Press today quote prosecutors as saying the investigation is continuing and, presumably, indictments of co-conspirators may follow.

While the prosecution has not named Wade as a co-conspirator, the plea agreement Cunningham signed identifies "Co-conspirator No. 2" as a defense contractor who is the managing member of a company named "1523 New Hampshire Ave. LLC." That is the address of MZM Inc.

In addition, the San Diego Union-Tribune reported in June that a grand jury was investigating Wade's purchase of Cunningham's home in 2003. Wade purchased the home for $1.7 million, but sold it several months later at a loss of $700,000.

Cunningham served on the House Appropriations Subcommittee on Defense, which oversaw several MZM defense contracts. After the allegations arose, Wade resigned from MZM and Cunningham announced he would not seek re-election next year.

Cunningham, in his plea agreement released Monday, agreed to cooperate with the ongoing investigation. Prosecutors have suggested additional indictments may be handed down.

In July, the Pentagon stopped work on MZM's $250 million blanket purchase agreement, following news of the investigation. At the time, the Defense Department said the cancellation was unrelated to news of the California grand jury subpoenas.

MZM had received $163 million to date for IT-related work performed under the blanket purchase agreement, which was awarded in September 2002. The company is ranked No. 100 on Washington Technology's 2005 Top 100 list of the largest government contractors.

In August, private equity firm Veritas Capital purchased MZM Inc. for an undisclosed amount. Veritas formed a new company, Athena Innovative Solutions Inc., which will take over the employees, assets and contracts from MZM, Veritas said. James King was named as the chief executive officer of Athena. Wade stepped down as CEO prior to the sale.

Citizens for Responsibility and Ethics in Washington, a good government group in Washington, filed a complaint with the Federal Elections Commission related to allegations by former MZM employees that they were pressured to make political contributions.

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

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