Randy "Duke" Cunningham (R-CA 50th), a member of the powerful Defense Subcommittee of the House Appropriations Committee, resigned from Congress Monday hours after pleading guilty to having taken "at least $2.4 million in bribes to help friends and campaign contributors win military contracts," the New York Times reported Tuesday in a front-page story. -- This case might offer an opportunity to examine the inner workings of the military-industrial-Congressional complex, but those paying the bribes were identified only as "four unnamed co-conspirators." -- It was the discovery by last summer, however, by the Copley News Service and the San Diego Union-Tribune, that Mitchell J. Wade, the founder of MZM Inc., a military contracting firm, had purchased Mr. Cunningham's home in Del Mar, CA, for $1,675,000 and sold it nine months later for a $700,000 loss that was where "Mr. Cunningham's troubles began." John M. Broder reported. -- Background: a decorated Vietnam fighter pilot, "Duke" Cunningham marketed himself politically as a reactionary super-patriot. He has said that Bill Clinton's antiwar past would have led to him being "tried as a traitor and even shot" if he had lived in another country, complained to an Army official at a subcommittee hearing about "B.S." efforts to combat sexual harassment and discrimination in the military (2004 Almanac of American Politics, p. 291). -- On MZM, Inc.: The Center for Public Integrity called the company "a high-tech national security firm based in Washington, D.C." that "provides intelligence gathering, technology, and homeland security analysis and consulting for both international and domestic governments and private-sector clients," with field offices in Miami, Tampa, San Antonio, San Diego, and Suffolk, Va. -- MZM Inc. experienced rapid growth in the aftermath of 9/11. The company collaborated in 2003 as part of "the General Dynamics team" in a five-year, $252 million contract to provide engineering and information warfare services to the Air Force Information Warfare Center at Lackland Airforce Base in Texas, and has been deeply involved in digital mapping contracts; in addition, in 2003 MZM received a $1.2 million contract from the Defense Department to send 21 interpreters to Iraq who also "produce written and/or taped materials to support civil affairs and/or psychological operations (PSYOPS)," according to a copy of the contract obtained under the Freedom of Information Act. The executive vice president of MZM Inc. is the former head of the Defense Intelligence Agency's Technology Assessment Group, its senior vice president is a lieutenant general retired from the U.S. Army and a member of the Council on Foreign Relations, another executive vice president worked for eight years on the Senate Appropriations Committee, and its "vice president for homeland security and future conflict" is a retired military general who commanded a military intelligence battalion during the 1991 Gulf War. -- MZM Inc. was sold this summer to Veritas Capital, "a private equity firm with ties to high-ranking officials who served in the Clinton and Bush administrations," the San Diego Union-Tribune reported on Aug. 15, and its contracts have been taken over by a newly created subsidiary known as "Athena Innovative Solutions Inc.," which still uses the old MZM Inc. URL for its web site....
LAWMAKER QUITS AFTER HE PLEADS GUILTY TO BRIBES
By John M. Broder
New York Times
November 29, 2005
[PHOTO CAPTION: Representative Randy Cunningham announced in July that he wouldn't seek re-election.]
LOS ANGELES -- Representative Randy Cunningham, a Republican from San Diego, resigned from Congress on Monday, hours after pleading guilty to taking at least $2.4 million in bribes to help friends and campaign contributors win military contracts.
Mr. Cunningham, a highly decorated Navy fighter pilot in Vietnam, tearfully acknowledged his guilt in a statement read outside the federal courthouse in San Diego.
"The truth is, I broke the law, concealed my conduct and disgraced my office," he said. "I know that I will forfeit my freedom, my reputation, my worldly possessions and, most importantly, the trust of my friends and family."
Mr. Cunningham, 63, pleaded guilty to one count of tax evasion and one count of conspiracy to commit bribery, tax evasion, wire fraud, and mail fraud. He faces up to 10 years in prison and hundreds of thousands of dollars in fines and forfeitures.
Prosecutors said he received cash, cars, rugs, antiques, furniture, yacht club fees, moving expenses and vacations from four unnamed co-conspirators in exchange for aid in winning military contracts. None of this income was reported to the Internal Revenue Service or on the congressman's financial disclosure forms, the government said.
Mr. Cunningham, who is known as Duke, lived while in Washington on a 42-foot yacht, named the Duke-Stir, owned by one of the military contractors that received tens of millions of dollars in federal contracts that prosecutors said Mr. Cunningham helped steer its way.
Mr. Cunningham, who is known for his combative conservatism and his emotional outbursts, served on the defense subcommittee of the House Appropriations Committee and as chairman of the House Intelligence subcommittee on terrorism and human intelligence.
"He did the worst thing an elected official can do," Carol C. Lam, the United States attorney, said in a statement. "He enriched himself through his position and violated the trust of those who put him there."
Mr. Cunningham's plea adds to the ethics cloud over the Republican-controlled Congress and the Bush White House.
In the Senate, Bill Frist, Republican of Tennessee and the majority leader, is under scrutiny by the Securities and Exchange Commission for the timing of his trades in the stock of his family's health care company. In the House, Representative Tom DeLay, Republican of Texas, was forced to step down as majority leader after he was indicted on conspiracy and money laundering charges.
In a separate Justice Department investigation, Michael Scanlon, a former spokesman for Mr. DeLay, pleaded guilty last week to bribery. Prosecutors said Mr. Scanlon was part of a conspiracy to defraud Indian tribes and win legislative favors from lawmakers in return for campaign donations, meals, entertainment, and other benefits. A former White House aide has also been indicted in that investigation, which is centered on Jack Abramoff, a lobbyist and an ally of Mr. DeLay who worked with Mr. Scanlon. As part of his plea, Mr. Scanlon agreed to cooperate in the investigation.
In addition, I. Lewis Libby Jr., the former chief of staff to Vice President Dick Cheney, was indicted last month on charges of perjury and false statements in the investigation of the leaking of the name of a C.I.A. operative. Other White House officials, including the senior political adviser Karl Rove, remain under investigation in that case.
Democrats in Congress hope that the legal and ethical woes afflicting Republicans will weaken the party in policy debates and at the polls next November. Representative Nancy Pelosi of California, the House Democratic leader, called Mr. Cunningham's acceptance of bribes an "egregious act" that was symptomatic of Republican values.
"This offense is just the latest example of the culture of corruption that pervades the Republican-controlled Congress, which ignores the needs of the American people to serve wealthy special interests and their cronies," Ms. Pelosi said in a statement.
The charging document said that in addition to the other gifts and services, Mr. Cunningham received from several unnamed co-conspirators a Rolls Royce, a graduation party for his daughter, a $200,000 down payment on a condominium, and the payment of capital gains taxes.
Federal authorities said that Mr. Cunningham was cooperating with the continuing investigation and that further charges involving the bribery conspiracy were likely.
Mr. Cunningham entered his plea before Judge Larry A. Burns of the United States District Court for the Southern District of California. He was fingerprinted and photographed and released on his own recognizance.
Judge Burns set sentencing for Feb. 27. Mr. Cunningham, in his statement, said he expected to do time in prison. "In my life, I have known great joy and great sorrow. And now I know great shame," he said. "I cannot undo what I have done. But I can atone."
Under California law, Gov. Arnold Schwarzenegger has 14 days to call a special election to fill Mr. Cunningham's seat. The election must occur within 120 days.
Mr. Cunningham's troubles began last summer when the Copley News Service and the *San Diego Union-Tribune* reported that Mitchell J. Wade, the founder of MZM Inc., a military contracting firm, bought Mr. Cunningham's home in Del Mar for $1,675,000 in 2003 and sold it nine months later for $975,000, a $700,000 loss.
Mr. Cunningham denied any wrongdoing in the house sale, but announced a few weeks after the reports appeared that he would not seek a ninth term in Congress in November 2006.
Mr. Cunningham used the profits from the sale to buy a luxury home in Rancho Santa Fe for $2.55 million, which he and his wife, Nancy, have since put up for sale. Under the plea agreement announced on Monday, he will forfeit the Rancho Santa Fe house and nearly $2 million in cash and home furnishings.
--Carl Hulse contributed reporting from Washington for this article.
Windfalls of War
By Brooke Williams
Center for Public Integrity
[Undated (circa 2004)]
1523 New Hampshire Ave., NW
Washington, DC 20036
Phone: (202) 518-5240
Fax: (202) 518-5241
MZM Inc. is a high-tech national security firm based in Washington, D.C. The private firm provides intelligence gathering, technology, and homeland security analysis and consulting for both international and domestic governments and private-sector clients. The firm also provides consulting on political and public message strategies. Its government clients include Congress, the White House, the Defense Department, the U.S. intelligence community, the Foreign Terrorist Tracking Task Force, and state and local governments, according to the company's Web site. MZM refused to provide any information, however, about its corporate structure, including names of other principals.
In addition to its D.C. headquarters, MZM has field offices in Miami, Tampa, San Antonio, San Diego, and Suffolk, Va. The company employs about 70 people.
Following the Sept. 11, 2001 attacks on the World Trade Center and the Pentagon, MZM expanded its counterintelligence and national security efforts. It soon experienced an influx of government contracts. The company now predicts a growth rate of more than 35 percent in the 2003 fiscal year. Mitchell Wade, president and CEO, reportedly expects to increase sales from $25 million to $120 million and to hire 230 more employees over the next five years. Wade told the Richmond Times-Dispatch that recently the company has "come out of a flat period" with defense industry contracts.
In September 2003, MZM collaborated with 16 other organizations, called the General Dynamics team, as part of a five-year, $252 million contract to provide engineering and information warfare services to the Air Force Information Warfare Center at Lackland Airforce Base in Texas.
In November 2002, MZM opened a computer center in Charlottesville, Va., to house classified engineering intelligence in a digital mapping and architecture analysis system. Twelve employees in that office are developing the program for the Pentagon. It is designed to provide digital maps of thousands of buildings worldwide. The Richmond Times-Dispatchreported that the mapping system will help soldiers and planners know details of buildings -- even which way doors open and close.
Also in 2002, MZM subcontracted with Information Manufacturing Corporation, a W. Va.-based company that won a $12 million Defense Department contract to open a 70-person intelligence operation in West Virginia. MZM will fill 30 intelligence analysis jobs for the project. (Sen. Robert Byrd, D-W. Va., reportedly helped IMC get the contract.) Joseph Romano, executive vice president for analysis, and James King, senior vice president, are directing this project. For an October press release put out by Sen. Byrd, Wade said, "We appreciate the support of Senator Byrd and the opportunity to work with IMC."
MZM is a member of the Association of the United States Army and a corporate member of the Military Intelligence Corps Association.
On March 21, 2003, MZM received a $1.2 million contract from the Defense Department to send 21 interpreters to Iraq. MZM would not disclose any specific information about the contract. But, according to a copy of the eight-page contract, which the Center for Public Integrity received under the Freedom of Information Act, MZM will provide linguists to serve as interpreters for U.S. government representatives, ministries, and other government offices, and during interrogations and investigations. The company will "provide collections of foreign language voice signals" and transcribe recorded voice communications. The contract also calls for MZM to "produce written and/or taped materials to support civil affairs and/or psychological operations (PSYOPS)." There are two amendments to the contract, but the Defense Department redacted descriptions of the modifications, and also blacked out the final, post-modification estimated price and the ceiling price for MZM's services.
Joseph Romano, executive vice president, is the former head of the Defense Intelligence Agency's Technology Assessment Group.
James C. King, senior vice president, is a retired lieutenant general in the U.S. Army, where he spent 33 years. King established and led the National Imagery and Mapping Agency, which is an agency in the Defense Department that collects and analyzes satellite images. NIMA is currently leading the U.S. government-funded effort to develop a spy satellite that can focus in on something as small as a person. Also, after failing to end public distribution of some topical maps of the U.S., NIMA announced a "review" of all publicly available maps of the U.S. King is also a member of the Council on Foreign Relations, a private organization that unofficially advises the U.S. government on matters of foreign policy.
Susan Hogan, executive vice president, National Security Liaison, worked for eight years on the Senate Appropriations Committee, where she handled classified defense spending.
Wayne M. Hall, vice president for homeland security and future conflict, is a retired military general. He commanded a military intelligence battalion during the 1991 Gulf War.
The value of MZM's contract to provide interpreters for work in Iraq was increased to $3,640,896, reflecting updated figures released by the CPA.
Randy 'Duke' Cunningham
EMBATTLED MZM SOLD TO INVESTMENT COMPANY
By Dean Calbreath
San Diego Union Tribune
August 18, 2005
MZM Inc., a defense contractor embroiled in the recent controversy surrounding Rep. Randy "Duke" Cunningham, was sold yesterday to a private equity firm with ties to high-ranking officials who served in the Clinton and Bush administrations.
Veritas Capital, an investment firm focused on companies with federal government contracts, signed an agreement to buy all of MZM's existing contracts and take over its work force of roughly 420 employees for an undisclosed sum.
Under the terms of the sale, which is expected to be completed in mid-September, most of MZM's operations will be taken over by Veritas and molded into a newly created subsidiary, Athena Innovative Solutions Inc.
Under the plan, Veritas will not assume most of MZM's liabilities.
Washington, D.C.-based MZM, whose activities include security counterintelligence, has been under federal scrutiny in recent weeks, especially after the San Diego Union-Tribune reported that its founder, Mitchell Wade, bought Cunningham's Del Mar-area house at a cost above market value and then sold it a few months later at a $700,000 loss.
It was later revealed that Wade allowed the Rancho Santa Fe Republican to live aboard his yacht, the Duke-Stir, while in Washington, D.C. At the time, MZM depended on Cunningham's assistance to win contracts from the federal government.
Federal agents raided MZM headquarters as well as Cunningham's residence in June.
Making matters worse, the Defense Department in late June cut off one of MZM's most lucrative contracts, a $250 million "blanket purchase agreement" that allowed the company to sell services to the government under a streamlined process. Pentagon officials said at the time that there was no relation between the cutoff and the relationship between Wade and Cunningham.
Veritas founder Robert McKeon appeared undaunted by MZM's recent troubles. He said he intends to increase the company's military work under its new Athena Innovative Solutions name.
"Our goal is to build on this exceptional talent base to continue to grow the company through new program wins as well as acquisitions," he said in a statement.
New York-based Veritas, which was founded in 1992, has close ties to the government and military.
Its advisory council includes Richard Armitage, a former deputy secretary of state in the Bush administration; Gen. Barry McCaffrey, who headed the Clinton administration's war on drugs; and Gen. Anthony Zinni, who headed U.S. military operations in the Middle East in the Clinton administration.
James C. King, a former three-star general who became president of MZM after Wade stepped down in late June, has been picked to head Athena. In a statement, he said that he expects Veritas' advisory board members to "provide us a unique strategic perspective as we grow the company."
Veritas officials said that Athena's employees -- 85 percent of whom have federal security clearances -- will continue to provide a broad array of national security services, including campaign planning, language translation, investigative support, counterterrorism activities, law enforcement, security and information technology.