Archive for the 'Randy “Duke” Cunningham' Category

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Who paid for Cunningham’s bribes? You did.

That’s the true meaning of today’s sentencing of defense contractor Mitchell Wade, who supplied former Rep. Randy “Duke” Cunningham with $1.8 million in bribes.

Judge Ricardo Urbina sentenced Wade to 30 months in prison and, unbelievably, imposed a fine of only $250,000. If I’m reading the prosecution’s court filings correctly, that means the judge is allowing Wade to keep most of the wealth his corruption bought.

Prosecutors had asked for a much higher “significant” fine. In court filings, the government said the $250,000 fine Wade’s attorneys were seeking was “far too low” a penalty, noting that it’s only  $16,000 more than the mandatory minimum penalty.

“Wade, whose company earned $150 million from Defense Department from 2002-2005, is still a wealthy man. He has the capacity to pay more, and he should pay more,” Assistant U.S. Attorney Howard Sklamberg wrote in a court filing.

Judge Urbina had the tricky task of balancing what prosecutors called Wade’s “mammoth acts of corruption” with the extraordinary assistance he provided the government in its investigation of Cunningham and others. The judge rewarded Wade for his cooperation with reduced prison time.

By failing to impose a significant fine and seize the ill-gotten gains, the judge is  assuring Wade can pay his $2 million legal team at WilmerHale and still profit from his corruption.

And here I thought the criminal justice system was supposed to discourage crime.

Mitch Wade’s Sentence: 30 months

Mitch Wade, the defense contractor who bribed former Rep. Randy “Duke” Cunningham and then helped to swiftly put the congressman behind bars, was sentenced to 30 months in prison today in return for the extraordinary assistance he provided the government. With time off for good behavior, Wade will serve about two years.

Prosecutors had sought four years in prison and a “significant fine” for the $1.8 million in cash, a yacht, a used Rolls-Royce, antiques and the purchase of the congressman’s Del Mar home for an inflated price. Wade’s attorneys had asked for a year of home detention.

Equally significant, Judge Ricardo Urbina ordered Wade to pay a $250,000 fine. That essentially allows Wade to keep much of the money he made bribing Cunningham, who used his positions on the powerful Defense appropriations subcommittee and the House intelligence committee to steer lucrative contracts to Wade’s firm, MZM Inc. Over three years, MZM was awarded more than $150 million in government contracts. In the end, taxpayers are stuck with the bill for Cunningham’s bribes.

Wade also made $78,000 in illegal campaign contributions to Reps. Harris and Goode. (Wade was fined $1 million by the Federal Election Commission, the second-largest fine in its history.) And he provided job offers and other goodies in the Defense Department to ensure favorable treatment for his company.

When his corruption was exposed by Copley News Service reporter Marcus Stern, Wade quickly became the government’s main informant. He was debriefed 23 times and provided a searchable, electronic database of 150,000 documents. It was Wade who handed over the most infamous evidence of Cunningham’s corruption — the “bribe menu.” Wade also testified at the bribery trial of his former boss, Poway defense contractor Brent Wilkes, the man who introduced him to Cunningham.

According to a sentencing memo filed by Wade’s attorneys says he also aided the government in its investigation of “at least five other members of Congress” under investigation for “corruption similar to that of Mr. Cunningham.”  Sources with knowledge of the investigation say these five include Sen. Dan Inouye (D-Hawaii), Rep. Allan Mollahan (D-W.Va.), Rep. Jerry Lewis (R-Calif.), outgoing Rep. Virgil Goode (R-Va.), and former Rep. Katherine Harris (R-Fla).

The extent of his cooperation is reflected in Wade’s sentence, the lowest of any of the major figures caught in the Cunningham scandal. The former congressman is serving 100 months. Wilkes was convicted at trial and sentenced to 12 years. Thomas Kontogiannis was sentenced to eight years for laundering the congressman’s bribes.

Judge Urbina specifically commended Wade’s $2 million legal team at WilmerHale for their work on the case.

Mitch Wade Column for Voice of San Diego

My column on Mitch Wade’s sentencing is up.

If you haven’t heard of the Voice of San Diego, it’s a not-for-profit that The New York Times thinks may represent the future of watchdog journalism.

Please take a look, and support the Voice or a not-for-profit near you, like ProPublica, where Marcus Stern, the reporter who exposed Cunningham’s corruption, has hung out a shingle.

Readers share their thoughts on Mitch Wade

Reader Jim A. writes to say that Mitch Wade’s fitness reports in 1989 and 1990 and  1992 from supervisors including future Director of National Intelligence John McConnell aren’t so impressive when you take a closer look:

 Naval Reserve officers who came on board active duty commands for two-week annual training periods usually got this very same (or very similar) fitrep, year in, year out as long as they managed to stay out of trouble and not set the place on fire. This sort of inflated fitness report is also a major reason why the Naval Officer Fitness Report system was overhauled a few years later (didn’t work out very well, but that’s a different story). With everyone a superlative water-walker, it was hard to separate the wheat from the chaff and I saw way too much chaff promote up during the 1990’s.

When I read his write-ups (the textual portion on page 2), it appeared to me he didn’t really do all that much during those two training periods. Morocco and Somalia weren’t all that “hot” in July, 1989 (Somalia was not too much later, though). By Dec, 1990 the Pentagon wasn’t “the” place to be for an aspiring junior officer. This was during the final phase of Operation Desert Shield, the buildup to Desert Storm, the first Iraq War, which kicked off the next month. Guys really looking to promote up were out in the fleet or elsewhere in the Middle East, most typically Saudi Arabia. Mitchie-boy was in the rear with the beer. Myself, I was more than happy to be at a small Naval facility in the Great Dismal Swamp on the Virginia-North Carolina state line at the time.

I guess what I really wonder is didn’t he think someone out here wouldn’t recognize his fitreps for what they are? They’re simply attestations that he spent some time at a particular command on annual training and managed not to incur the wrath of the Chain of Command.

How do I know all this? I was in the Navy from 1973 to 2006, both as an enlisted sailor and as an officer. Not so long after Wade’s visitation there, I also served at that very same JCS/J2, only for two years, not two two-week training periods. I’ve seen more than a few Mitch Wades in my time.

You can read his full comment here. And here’s another comment from someone who knows quite a bit about Wade’s charitable venture,  the Sure Foundation:

I notice Mitchell Wade’s attorneys left the Sure Foundation off the list of his good deeds. It only took fourteen directors and four advisors to spend a grand total of $390k on the Sure Foundation’s “worldwide projects” over a four-year period.I wonder what happened to the $100k grant for Marion Barry’s wife, Effie, to promote art for children in DC.

As far as I know, no one ever questioned why the Sure Foundation sponsored a White House Fellows trip to an Irish resort which was advertised on the official White House website. The trip was supposed to be for orphans but I don’t know how many orphans, if any, ever made it to camp.

Two former directors and one former deputy chief of staff of the Defense Intelligence Agency served on the foundation’s board of directors and the president was the head of an obscure, loosely monitored, give-away program at the Department of Energy.

I’m “sure” they all enjoyed a lovely day of racing and picknicking at the Foxfield Races in Charlottesville and the “elegant and lively black-tie gala” held in the garden at historic Seven Oaks Farm in Greenwood that followed.

And I’m “sure” the taxpayers picked up the tab for this so-called charitable event.

How Congress succeeds by not failing

Rep. Ray LaHood, R-Ill., who’s giving up his powerful post on the House Appropriations Committee and retiring after 14 years, says that he’s leaving with his head held high. By the abysmally low standards in Congress, his tenure was a smashing success. Apparently, a member of the Appropriations Committee is doing well if he or she doesn’t end up in prison.

“I’m going out on top. I’ve seen colleagues voted out or carried out or prosecuted out. It’s a pretty good time to leave,”  LaHood told the Peoria Journal-Star in a story published Sunday.

One of LaHood’s colleagues on the House Appropriations Committee was Randy “Duke” Cunningham. Others include Jerry Lewis, R-Calif.; Allan Mollohan, D-W.Va.; and Virgil Goode, R-Va., all of whom have come under scrutiny from investigators for their ties to Cunningham’s briber, Mitch Wade, who’s back in the news as his sentencing next month approaches.

Sometimes departing congressmen give us a rare glimpse of truth. Not LaHood. He says that Randy “Duke” Cunningham “poisoned the well on earmarks.” He has it backwards: the well is poisoned, and it’s making Congress sick.

“I’ve never been embarrassed by an earmark; they all came from people in my district who had a good idea,” LaHood said.

The Man from Peoria has to defend earmarks; he’s one of the biggest porkers in the House. Citizens Against Government Waste scored LaHood at the bottom of all House Republicans in 100 votes that would have reined in government spending in 2007. (Two Democrats scored even lower.)  LaHood was also selected by the non-partisan group as “porker of the month” two years earlier

Appropriators protect each other. When Rep. Jeff Flake, R-Ariz., dared to try and kill then-Speaker Denny Hastert’s $2.5 million earmark for the Illinois Technology Development Corp. because it was inappropriate for a defense bill, LaHood reminded him — on the House floor — “Do you know who earmarked this money?”

The Journal-Star ran a more insightful story Sunday headlined “LaHood showed 18th District the money.” He sure did:

“The reason I went on the Appropriations Committee, the reason other people go on the Appropriations Committee, is they know that it puts them in a position to know where the money is at, to know the people who are doling the money out and to be in the room when the money is being doled out,” LaHood has said.

This perfectly encapsulates the attitude of the appropriators. They think in terms of getting money, not spending it wisely, and you can forget about saving it. So what if Congress wastes billions of dollars on planes that don’t fly, bridges to nowhere, defense systems the military doesn’t want, monuments to themselves or a hippy museum? Occasionally, an earmark actually helps someone, so that justifies the whole lot.

Through earmarks, Congress is frittering away its most important power of Congress — “the power of the purse.” Nothing comes out of the U.S. Treasury until Congress gives its assent. This is a deliberate check on the president and gives Congress “the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people,” as James Madison wrote in The Federalist Papers. So in Congress, especially the House, the appropriators are greater among equals: They hold the power.

In the 1980s, appropriators started to skim the cream off the federal budget and send it back home to their districts in the form of earmarks. Lobbyists saw it as a way to guarantee money for their clients, and they flocked to the appropriators like bears to honey. After the GOP takeover, earmarks rose from $31 billion in 1994 to more than $65 billion in 2006, according to Congressional Research Service.

The appropriators were getting high on their own supply, and like all addicts, they rationalized their self-destruction. Earmarks are chump change in the $3 trillion federal budget. And everyone else is doing it, right? It’s going to happen anyway, so “I gots to get mine.” It’s was no different on Wall Street, of course. This is what happens when you have hustlers and showmen running things.

LaHood had a reputation for reaching across the aisle, but it was an unmistakably partisan Ray LaHood who tried to minimize embarrassment to the GOP during the Cunningham scandal. LaHood, like Cunningham, also served on the House intelligence committee. (That’s CIA director George Tenet to the right of LaHood in the photo above.) Cunningham’s actions on the intelligence committee were and remain deeply embarrassing. The panel still hasn’t released an unclassified report detailing how Cunningham manipulated the committee to funnel millions of dollars to Mitch Wade and his company, MZM Inc. Committee members like LaHood didn’t want it to get around that they didn’t know what was going on, didn’t care, or both.

But Democrat Jane Harman, ranking member on the intelligence committee, had the temerity to release a five-page executive summary of the Cunningham report. LaHood was incensed. He got a Democratic staffer on the House Intelligence Committee suspended, and suggested it was political payback. “If the ranking member wants to play politics,” LaHood told Fox News, “there are some of us on the other side that can play politics, and I’m not afraid to do it.”

This is a different Ray LaHood than the one David Broder of The Washington Post tells us will be missed in Congress. LaHood’s decision to retire last year sent “shock waves through the whole chamber,” Broder says. LaHood “embodies the characteristics that make the House work as an institution” — he takes care of constituents, carries a heavier share of the legislative workload, and cultivates relationships on the other side of the aisle.

Broder says it’s a shame when the House lets go of a member like LaHood. I say it’s a shame that the standards of our polity as so low that a man like LaHood who succeeds by not failing may actually may be missed.

The prosecution’s “own private law firm”

Federal prosecutors in Washington, D.C., responded today to defense contractor Mitchell Wade’s request for a sentence of a year of home detention for the extraordinary cooperation he provided the government in its investigations of Randy “Duke” Cunningham and many others. Simply put, the government thinks Wade’s good deeds don’t cancel out his bad ones.

Wade, after all, is a man who shelled out $1.8 million in bribes to Randy “Duke” Cunningham. Add in Wade’s corruption of officials in the Defense Department  and the election fraud scheme he conceived and led, and you have a conduct that prosecutors think merits four years in prison.

And Wade’s suggestion of a $250,000 fine is “far too low.” MZM Inc., earned $100 million to $150 million in Defense Department contracts from 2002-2005. (See my earlier post below on MZM’s profitability.) Although prosecutors don’t note this, Wade spent $2 million on his legal team at WilmerHale.

“Wade … is still a wealthy man. He has the capacity to pay more and should pay more,” wrote Assistant U.S. Attorney Howard Sklamberg.

Prosecutors from San Diego chime in with their own piece of Wade fan mail. In a letter to the sentencing judge, Assistant U.S. Attorney Jason Forge says that Wade “transformed” the nascent investigation of Cunningham in 2005. Without his help, convicting the congressman might have taken years, instead of months.

On more than one occasion, several of us observed that the responsiveness and thoroughness of Wade and his legal team made us feel as if we had our own private law firm.

When Wade said Cunningham had written out on his congressional stationery a price list for increasing levels of government contracts, Forge thought it was a great story, but found it hard to believe.  Wade’s counsel found the document, which became known as the “bribe menu,” a damning symbol of corruption.

The discovery of this bribe menu marked a high point in our investigation and also marked the last time we would seriously doubt any information Wade provided.

The MZM money machine

When defense contractor Mitchell Wade’s corrupt relationship with Randy “Duke” Cunningham was exposed in 2005, Robert McKeon saw opportunity.

McKeon heads Veritas Capital, a New York private equity firm that buys defense contractors, and Wade’s company MZM Inc. looked like a good candidate for acquisition. The company was in distress, but it also had potentially lucrative intelligence contracts and more than 300 employees with Top Secret and above security clearances.

In September 2005, Veritas bought MZM for a “full price” of around $20 million, according to BusinessWeek. The deal was swiftly approved. “Veritas is profiting from the spoils of congressional bribes,” Keith Ashdown of Taxpayers for Common Sense complained, to no avail.

So how has Veritas done on its investment? Quite well.

By getting rid of Wade and keeping 94 percent of his old firm’s contracts, Veritas unlocked MZM’s revenue stream. In its first fiscal year of operation under new management, the company — renamed Athena Innovative Solutions — posted more than $100 million in sales.Athena also boosted the size of the workforce and acquired three small Virginia companies, including Business Defense and Security Corp.

In September 2007, two years after acquiring MZM, Veritas sold Wade’s old company for $200 million to CACI Inc. For those keeping score at home, that’s an annualized return of 900 percent. 

(Update: Veritas also employs former Gen. Barry McCaffrey, which has gotten them in some trouble.)

The Wade Five

As I first revealed here last week, defense contractor Mitchell Wade aided the government in its investigation “of at least five other members of Congress” who were the subject of government investigations into whether they had engaged in “corruption similar to that of Mr. Cunningham,” according to a defense sentencing memo.

Wade is to be sentenced next month for providing former Rep. Randy “Duke” Cunningham with $1.8 million in bribes. He’s asking for a year of home detention in return for the extraordinary cooperation that he provided the government in its investigations of Cunningham and other current and former members of Congress (none of whom has been charged with a crime). They include:

  • Sen. Dan Inouye, D-Hi.
  • Rep. Alan B. Mollohan,  D-W. Va
  • Rep. Jerry Lewis, R-Calif.
  • Rep. Virgil Goode, R-Va.
  • Rep. Katherine Harris, R-Fla.

The Inouye and Lewis connections involve Wade’s former employer, defense contractor Brent Wilkes, who introduced Wade to Cunningham.

During his trial, Wilkes testified that it was a “total misrepresentation” to say he relied on the Congressman Cunningham to do everything for him; Jerry Lewis, along with Rep. John Porter of Ill., were far more important, Wilkes said. (There’s excellent background on Lewis’ lobbying operation here.) The U.S. Attorney’s office in Los Angeles reportedly opened an investigation into Lewis back in 2006.

By contrast, Inouye, the Senate’s third-most senior Democrat, hasn’t yet been linked to an investigation of “corruption similar to Mr. Cunningham.” Wilkes was seeking the veteran Senate  appropriator’s help in lining up military and government contracts for his Honolulu document conversion subsidiary, Akamai Info Tech. Inouye was also one of more than a dozen members of Congress Wilkes unsuccessfully attempted to subpoena for his trial last year.

Mollohan’s ties to Wade are more direct. He received $23,000 in campaign contributions and gifts to a family foundation from Wade’s company, MZM Inc., and another firm that did business with MZM. In October 2002, MZM gave $20,000 to Mollohan’s Summit PAC. As Roll Call reported:

One of those who created Summit PAC for Mollohan was Robert Hytner, vice chairman of Information Manufacturing Corp. of Rocket Center, W.Va. — a company that had a close but apparently troubled business relationship with MZM.

In 2002, IMC paired with MZM on what was to be the initial round of a $12 million Defense Department contract. The contract was issued for support work for the Pentagon’s Joint Counter-Intelligence Assessment Group, Congressional sources said. Mollohan, who serves as ranking member on the Appropriations subcommittee on Science, State, Justice, Commerce and related agencies, said he had no role in securing any funding for that program.

How IMC and MZM came to share the $12 million DOD contract is unclear. IMC was to open a 70-person intelligence operation in West Virginia, and MZM would have filled 30 of those slots. Sen. Robert Byrd (D-W.Va.) issued a press release in October 2002 in which Wade thanked Byrd for helping secure the funds for the program.

But at some point in early 2003, IMC lost control of the contract to MZM, which took it over and then failed to open a West Virginia branch, according to a source familiar with the incident. Inquiries were made with the Pentagon by members of the West Virginia delegation about why Defense awarded the entire program to MZM. But since the work was classified, the Defense Department offered little insight into what happened, the source said.

The Defense contract eventually grew to be worth roughly $50 million over four years, all of which went to MZM, added the source.

Wade’s ties to Goode and Harris are old news. As I said last week, Wade wanted to open facilities in their districts and made $78,000 in “straw” contributions  to grease the wheels. To settle the charges, Wade agreed to pay  a $1 million civil fine to the Federal Elections Commission, the second-largest penalty in the commission’s history.

As I said earlier, neither Harris nor Goode nor any of the other three on this list has been charged with wrongdoing. Even so, I still love this letter that Harris wrote to Wade after the first of their two dinners at Citronelle, “the best dinner I have ever enjoyed in Washington.”

Wade and Congress

Repeating something I posted here last year. In a court affidavit (pdf), the FBI cited a document from Mitch Wade’s company, MZM Inc., that bragged of all the firm had done for a CIFA, the brand-new Counterintelligence Field Activity:

Wade boasted in 2002 that he could deliver money to CIFA from Cunningham and his other buddies in Congress (without mentioning that the money then came back to Wade in the form of contracts).

In a Nov. 8, 2002 presentation entitled “Benefits to CIFA from Congressional Mandates Initiative Support,” Wade trumpeted one item: “Delivery of over $67.62M in the last three fiscal years over budget – no other entity within the CIFA family has accomplished this task.”

On a page entitled “Election Impact on Congressional Mandates,” Wade wrote listed a number of politicians. The list included Randy “Duke” Cunningham, Duncan Hunter, Majority Leader Tom DeLay, Speaker Denny Hastert, Jerry Lewis, Allan Mollohan, John Murtha, David Weldon, and Bill Young; Senators Robert Byrd, Larry Craig, Orin Hatch, Daniel Inouye, Trent Lott, Jay Rockefeller, and Richard Shelby.

At the bottom, Wade wrote “Election enchanced MZM Inc….Thus CIFA position.”

Mitch Wade and the madness of spies

Well, I was wrong about nobody caring about yesterday’s post about defense contractor Mitch Wade. The Washington Post ran a story today on the sentencing memo, highlighting the congressional corruption angle.

Wade is being sentenced next month for paying $1.8 million in bribes to former Rep. Randy “Duke” Cunningham in return for government contracts. He’s one of the more interesting, but least known characters in the whole sordid saga.

Wade was once at the top of D.C.’s social strata. As outwardly successful as he seemed, Wade was inwardly troubled. He had classic symptoms of mania — he was equally smart, gracious, and charming as well as ruthless, relentlessly ambitious and control-obssessed.

At MZM Inc., his defense contracting firm, Wade opened mail addressed to his employees, screened employee e-mails and railed about those who received personal messages in their MZM accounts. No detail was too small for him to obsess about and nothing got done without his say-so.  As I wrote in my book:

It occurred to more than one employee that Wade had deep psychological problems. His paranoia, his compartmentalization, and his secrecy were all traits that many of his employees recognized from their experience in the intelligence world. Suspicion and paranoia were a job hazard, particularly in the spy-vs-spy of counterintelligence that was MZM’s specialty. Too many much time spent wondering if your colleagues were really your enemies did tend to make people a bit loony.

In a wonderful essay in The New Yorker, writer John Le Carre, a former spy himself, says that madness is endemic to the intelligence world “hard to detect and harder still to eradicate.” The most famous case was James Jesus Angleton, a “deranged CIA inpatient,” in Le Carre’s words, who nearly destroyed the spy agency in his quest for a Soviet mole that he could never find.

There were rumors that Wade was connected to some sort of covert intelligence network, which might explain all the paranoia. I heard stories of secret passageways, safehouses and nasty covert ops, but it was never clear to me that this was anything more than a product of Wade’s massive ego, a fantasy that he was playing at the spy world’s “great game” and not just acting like a shabby huckster.

At the same time, I’ve been thinking about the glowing fitness reports (here and here) Wade received from John McConnell, the director of national intelligence. And I can’t help but wonder whether the attributes in Wade that I think might earn him time on the psychiatrist’s couch might actually be viewed as useful traits in certain corners of the intelligence world.