Cunningham financier admits role in guilty plea
Sign On San Diego
By Dean Calbreath
UNION-TRIBUNE STAFF WRITER
June 15, 2007

A New York financier has admitted playing a key role in the scandal that brought down former Rep. Randy "Duke" Cunningham, according to a guilty plea unsealed this week.

Thomas Kontogiannis said he helped finance the purchase of Cunningham's $2.5 million house in Rancho Santa Fe, in a deal that evolved from two military contractors' alleged plans to bribe the congressman.

The home purchase – and the sale of Cunningham's previous home in Del Mar – was at the center of a scandal that resulted in a prison sentence of more than eight years for the former legislator.

The housing transactions were part of a bribery scheme involving military contractors Mitchell Wade of Washington, D.C., and Brent Wilkes of Poway, according to Cunningham's guilty plea and other court documents.

In return for numerous favors – including the purchase of Cunningham's Del Mar house at an inflated price, the financing of his Rancho Santa Fe home and gifts of Persian rugs, antique furniture, a Rolls-Royce and free vacations – the two contractors received millions of dollars in contracts through the House Appropriations Committee, where Cunningham sat, according to federal prosecutors.

Wade has pleaded guilty in the case but has not yet been sentenced. Wilkes has pleaded not guilty and is awaiting trial.

Kontogiannis, in a guilty plea that was rendered under seal in February but made public in San Diego federal court this week, admitted providing $1.1 million in mortgages for the Rancho Santa Fe house even though he believed the home purchase involved "the proceeds of illegal activity."

Beyond the home deal, Kontogiannis also said he financed the purchase of Cunningham's condominium in Arlington, Va., and bought Cunningham's yacht – even though he had no interest in owning the boat and knew that he was overpaying.

Kontogiannis, who had sought Cunningham's help when fighting bribery charges in New York, said he agreed to the transactions "because he wanted to maintain his relationship with Cunningham, a powerful public official who could assist him in many ways," according the plea.

By pleading guilty to knowingly engaging in monetary transactions involving property associated with unlawful activity, Kontogiannis could face up to 10 years in prison as well as $250,000 in fines. But because he is cooperating with federal officials, it is unlikely he will receive the maximum punishment.

According to court documents, Kontogiannis has a net worth of about $70 million and has business operations in Greece, Russia and Ukraine as well as the United States. He and his family operate a string of relatively small mortgage and finance companies on Long Island, including Coastal Capital, run by his daughter Annette and his wife's nephew, John T. Michael.

In the early 1990s, a mutual friend introduced Kontogiannis to Cunningham, who had just been elected to Congress. They sometimes dined together in Washington, D.C., and visited the White House together, Kontogiannis told The San Diego Union-Tribune last year. One of his nieces worked in Cunningham's congressional office for several years, according to House legislative records.

Cunningham occasionally extended a helping hand to Kontogiannis.

For instance, when prosecutors in Queens, N.Y., launched an investigation into Kontogiannis in 2000 – probing whether he had bribed a local school superintendent for lucrative computer contracts – Cunningham wrote a letter of support. He told the prosecutors he believed Kontogiannis was being "victimized" by the investigation.

The prosecutor did not respond to the letter, and two years later Kontogiannis and three others pleaded guilty to fraud and bid-rigging.

After the guilty plea, Kontogiannis asked Cunningham to help him secure a presidential pardon. Kontogiannis met with lawyers that Cunningham recommended, but he eventually dropped the idea of a pardon because it was "not worth the aggravation."

To maintain his relationship with Cunningham, Kontogiannis helped him financially. In late 2001, for instance, Kontogiannis financed the purchase of Cunningham's $350,000 condo, and paid $600,000 for his aging yacht, the Kelly C – $400,000 above what Cunningham had paid four years before.

In November 2003, Kontogiannis helped finance the purchase of Cunningham's house in Rancho Santa Fe, after Wade bought his home in Del Mar at an inflated price, roughly $700,000 above market value. Wade and Cunningham have both admitted that the home deal was part of a scheme to provide Cunningham with illicit favors in return for government contracts.

In his guilty plea, Kontogiannis said he believed Cunningham was buying the Rancho Santa Fe house with illegal proceeds, but he nevertheless directed Michael to provide $1.1 million in financing through Coastal Capital.

Michael has pleaded not guilty to conspiracy charges in the case and is awaiting trial. His attorney could not be reached for comment yesterday.

When Cunningham failed to make a $500,000 mortgage payment on time, Kontogiannis and Michael, as well as other unnamed persons, wrote and sold fraudulent mortgages to make the payment, according to the guilty plea. Some of the properties involved in the mortgages were not built or were only partially constructed. But Kontogiannis and Michael obtained false appraisals that enabled them to write and sell the mortgages, the guilty plea says.

In May 2004, Cunningham informed Kontogiannis that Poway contractor Wilkes would pay off his mortgage. Federal authorities say Wilkes made the payment as part of a bribery scheme.

Kontogiannis believed that Wilkes' payment was "the proceeds of unlawful money, but he deliberately decided not to inquire about the source of the money," the plea states.

Wilkes' attorney, Nancy Luque, declined to comment.

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